The Internal Revenue Service (IRS) recently issued Notice 2023-70, marking a significant update for employers: the increased fees paid to fund the Patient-Centered Outcomes Research Institute (PCORI) for the 2024 plan year. Employers must understand this change, especially those managing self-funded and fully insured health plans.
PCORI Fee Increase Details
For plan years ending on or after October 1, 2023, and before October 1, 2024, the updated PCORI fee is $3.22 per covered individual, up from $3.00 in the previous year. This affects both self-funded and fully insured group health plans.
What Employers Need to Know
Self-Funded Plans
Employers with self-funded plans must file and pay the PCORI fee annually using IRS Form 720. The deadline for filing is July 31st of the year following your plan year-end.
Fully Insured Plans
For fully insured plans, insurance carriers handle the PCORI fee, usually included in monthly premiums. However, employers may owe additional PCORI fees for specific accounts like Health Care FSAs or HRAs.
Calculating the PCORI Fee
Calculate the fee using the average number of individuals covered under your plan multiplied by the updated fee rate. Refer to the IRS guidelines for detailed calculation methods.
2024 PCORI Filing and Payment Date Deadlines
| Plan Year End Date | PCORI Fee Rate | Filing and Payment Date |
|---|---|---|
| January 2023 | $3.00/covered life | July 31, 2024 |
| February 2023 | $3.00/covered life | July 31, 2024 |
| March 2023 | $3.00/covered life | July 31, 2024 |
| April 2023 | $3.00/covered life | July 31, 2024 |
| May 2023 | $3.00/covered life | July 31, 2024 |
| June 2023 | $3.00/covered life | July 31, 2024 |
| July 2023 | $3.00/covered life | July 31, 2024 |
| August 2023 | $3.00/covered life | July 31, 2024 |
| September 2023 | $3.00/covered life | July 31, 2024 |
| October 2023 | $3.22/covered life | July 31, 2024 |
| November 2023 | $3.22/covered life | July 31, 2024 |
| December 2023 | $3.22/covered life | July 31, 2024 |
HRAs, FSAs, HSAs, and Excepted Benefits
Certain accounts and benefits have specific rules regarding the PCORI fee. For example, HRAs integrated with fully insured medical plans may treat each HRA as covering a single life. Health Care FSAs generally are exempt unless employer contributions exceed certain thresholds. HSAs and most dental/vision coverage are not subject to the PCORI fee.
Next Steps for Employers: Navigating the PCORI Fee Changes
As we approach the 2024 plan year, it’s imperative for employers to stay informed about these changes to the PCORI fees. Understanding and adhering to these guidelines ensures compliance and helps maintain the integrity of your employee benefits offerings. For personalized guidance or additional information, feel free to contact our team or refer to the detailed IRS resources provided.
