The ACA’s PCOR fee had expired with the 2019 plan year, although non-calendar year plans were still required to remit their fees on July 31, 2020. However, as part of the year end budget/spending bill, Congress authorized an extension of the Patient Centered Outcomes Research Institute Fee (PCOR) for another ten years through 2029.
The ACA created the Patient Centered Outcomes Research Institute (PCORI) to support clinical effectiveness research. It is intended to help patients, clinicians, purchasers and policymakers make informed healthcare decisions by advancing comparative clinical effectiveness research findings. The entity was originally to be funded in part by fees (sometimes referred to as “PCOR fees,” “PCORI fees,” or “CER fees”) paid by certain health insurers and applicable sponsors of self-insured health plans through 2019. The fee (as adjusted for inflation) now stands at $2.45 times the average number of covered lives for the year. With its Congressional reauthorization through 2029, the amount due per life covered under a policy will continue to be adjusted annually and remitted on IRS Form 720 by July 31st each year.
All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted benefit:
- A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
- An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.
The PCOR fee is calculated off the average number of lives covered during the policy year. PCOR allows several methods to calculate covered lives. Diversified uses the snapshot method on a quarterly basis. That means that all parties enrolled will have to be accounted for, such as dependents, spouses, retirees and COBRA beneficiaries. For HRA and health FSA plans, employers can just count each participating employee as a covered life.
As part of our compliance services, Diversified Group assists clients with their PCOR reporting obligations. In the past your group may have elected to have Diversified Group assist with the PCOR fee calculation, which consists of a completed Form 720 and a PCOR calculation worksheet with supporting documentation. Because we had anticipated the ending of the PCOR fee obligation, you were not given the opportunity to elect the PCOR service on your Diversified Administrative Services Agreement. The cost of this reporting service is $100 annually.
We will assume that you want us to continue to provide PCOR reporting services on your behalf and will proceed as such.
If you are new to Diversified and were not given the opportunity to elect PCOR reporting services in your administrative agreement, please notify your Diversified Group Salesperson or Account Executive if you would like Diversified to assist with your PCOR reporting for July 2020.