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June 5, 2023
2023-1004

PCORI fee due by July 31

  • The Patient-Centered Outcomes Research Institute (PCORI) fee must be paid on Form 720 by July 31, 2023.
  • Employers will need to include the PCORI fee in the one Form 720 that they file for the applicable second quarter, which is due by July 31, 2023.
  • For the 2022 plan year, the PCORI fee per covered life depends on when the plan year ends.

Issuers of specified health insurance policies and plan sponsors of self-insured health plans must pay PCORI fees by July 31, 2023, using their Form 720, Quarterly Federal Excise Tax Return.

Background

The PCORI fee was mandated by the Affordable Care Act to help fund research on the comparative effectiveness of medical treatments. The fees must be paid by July 31 following the last day of the plan year (e.g., for policy years and plan years ending on December 31, 2022, the fee is due by July 31, 2023).

The PCORI fee was originally scheduled to sunset on September 30, 2019. In December 2019, the Further Consolidated Appropriations Act of 2020 extended the PCORI fee for 10 years, so it continues to apply to all plan years ending on or before September 30, 2029.

Calculating PCORI fees

Under the Affordable Care Act, issuers of specified health insurance policies (under IRC Section 4375) and plan sponsors of self-insured health plans (under IRC Section 4376) must pay PCORI fees calculated by using the average number of lives covered under the policy or plan multiplied by the applicable dollar amount for that policy or plan year.

For the 2022 plan year, the PCORI fee per covered life, which is due July 31, 2023, depends on when the plan year ends. For plan years ending after January 1, 2022, and before September 30, 2022, the PCORI fee is $2.79 per covered life. For plan years ending on or before October 1, 2022, through December 31, 2022, the PCORI fee is $3.00 per covered life.

Implications

Only a single Form 720 should be filed each quarter, so plan sponsors will need to coordinate with their tax department to make sure the PCORI fee is included with the Form 720 for the second quarter. Given the fee depends on the number of covered lives, employers should start gathering data on the number of covered lives now, so they can calculate and pay the fee by the July 31, 2023 deadline.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services – Affordable Care Act Compliance
   • Rebecca Truelove (rebecca.truelove@ey.com)
   • Lori Maite (lori.maite@ey.com)
   • Belinda Sharp Cline (belinda.sharp@ey.com)
   • Michael E. Toth (michael.toth@ey.com)

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor

 

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