Introduction to PCORI Fees
The Patient-Centered Outcomes Research Institute (PCORI) fee is a federal tax imposed on certain health insurance policies and self-insured health plans. The fee is used to fund research that helps patients and healthcare providers make informed decisions about medical treatments.
The PCORI fee is reported and paid using Form 720, which is a quarterly federal excise tax return. The form is used to report and pay various federal excise taxes, including the PCORI fee.
Who Must Pay PCORI Fees
The PCORI fee applies to certain health insurance policies and self-insured health plans. This includes major medical insurance policies, Medicare Advantage plans, and self-insured health plans sponsored by employers.
The fee does not apply to certain types of health insurance policies, such as stand-alone dental and vision plans, and health reimbursement arrangements (HRAs).
How to Calculate PCORI Fees
The PCORI fee is calculated based on the average number of lives covered under a health insurance policy or self-insured health plan. The fee is $2.54 per life for plan years ending on or after October 1, 2021, and before October 1, 2022.
The fee is reported and paid using Form 720, which is filed quarterly with the IRS. The form is due on the last day of the month following the end of the quarter.
How to File and Pay PCORI Fees
To file and pay PCORI fees, health insurance companies and self-insured health plans must complete Form 720 and attach a schedule reporting the PCORI fee. The form and schedule are filed with the IRS and the fee is paid electronically or by check.
The PCORI fee is due on the last day of the month following the end of the quarter. For example, the fee for the first quarter of 2022 is due on April 30, 2022.
Penalties for Failure to Pay PCORI Fees
Failure to pay the PCORI fee can result in penalties and interest. The IRS may impose a penalty of up to $15,000 for failure to file Form 720 and pay the PCORI fee.
In addition to the penalty, the IRS may also impose interest on the unpaid fee. The interest rate is determined by the IRS and is based on the amount of the unpaid fee and the length of time it remains unpaid.
Frequently Asked Questions
What is the PCORI fee used for?
The PCORI fee is used to fund research that helps patients and healthcare providers make informed decisions about medical treatments.
Who must pay the PCORI fee?
The PCORI fee applies to certain health insurance policies and self-insured health plans, including major medical insurance policies and self-insured health plans sponsored by employers.
How is the PCORI fee calculated?
The PCORI fee is calculated based on the average number of lives covered under a health insurance policy or self-insured health plan.
What is the deadline for paying the PCORI fee?
The PCORI fee is due on the last day of the month following the end of the quarter.
What are the penalties for failure to pay the PCORI fee?
Failure to pay the PCORI fee can result in penalties and interest, including a penalty of up to $15,000 and interest on the unpaid fee.
How do I report and pay the PCORI fee?
The PCORI fee is reported and paid using Form 720, which is filed quarterly with the IRS.