In Notice 2023-70, the IRS announced that for plans that end on or after October 1, 2023, and before October 1, 2024, the PCOR rate per covered individual is $3.22 per plan participant. The PCOR fee is calculated based on the average number of lives covered under the policy or plan. As a reminder, the IRS announced in Notice 2022-60, that the applicable amount for PCOR fees for policy or plan years ending on or after October 1, 2022, and before October 1, 2023, will be $3.00 per plan participant.

PCOR fees are reported and paid annually using IRS Form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. This means that, for plan years ending in 2023, the PCOR fees are due by July 31, 2024.

For self-funded plans, the self-insured employer is responsible for submitting the fees and accompanying paperwork to the IRS. PCOR fees are reported on IRS Form 720, Quarterly Federal Excise Tax Return. On page two of Form 720, under Part II, the employer needs to designate the average number of covered lives under its applicable self-insured plan. Although the fee is paid annually, employers should indicate on the Payment Voucher (720-V) – located at the end of Form 720-that the tax period for the fee is the second quarter of the year. Failure to properly designate “2nd Quarter” on the voucher will result in the IRS’s software generating a tardy filing notice.

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an instructional email no later than mid-June which will include the PCOR calculation worksheet and a blank, fillable 720 Form with completion instructions.

Please Note: Effective July 31, 2021, Diversified Group will no longer complete the 720 Form on our client’s behalf. We will continue to provide the data needed to complete the form, along with a blank form and instructions.

Please feel free to contact your Diversified sales representative or account executive with any questions at (888) 322-2545.

DG Compliance