By: HUB’s EB Compliance Team

The IRS recently released IRS Notice 2024-83 announcing the updated PCORI fee as $3.47 per covered life, for all plan years ending on or after October 1, 2024, and before October 1, 2025. For plan years ending prior to that period, the fee is $3.22. This is the largest single fee increase to date, driven by the effects of inflation. It is also five cents per life higher than last year’s increase, which previously held the record for the largest increase.

Background

The Affordable Care Act (ACA) established the Patient-Centered Outcomes Research Institute with a mandate to improve the quality and relevance of evidence available to help patients, caregivers, clinicians, employers, insurers, and policy makers make better-informed health decisions. To do this, the PCORI collaborates with healthcare stakeholders to identify critical research questions and answer them through comparative clinical effectiveness research (CER), focusing on outcomes important to patients. Additionally, PCORI ensures the research findings are shared in practical, user-friendly ways.

These efforts are funded, in part, by fees paid by certain health insurers and sponsors of self-insured health plans. For fully insured plans, the fee is paid by the carrier, through the monthly premium payments made by the employer plan sponsor. For self-funded plans (including HRAs (Health Reimbursement Arrangements) offered alongside insured medical plans), the fee is paid by the employer plan sponsor. Currently, PCORI fee assessments will be payable for plan years through September 30, 2029.

How it’s Paid

The amount of the fee is based on the average number of covered lives for the plan year. The PCORI fee is determined by multiplying the average number of covered lives for the plan year multiplied by the applicable dollar amount. There are three simplified permissible methods (explained here) that plan sponsors can use to determine the average number of covered lives.

The PCORI fee is paid to the IRS on an annual basis. The fee is due by July 31st each year. The fee is paid on IRS Form 720 for the second calendar quarter (that is, the quarter ending June 30) of the calendar year after the end of the plan year. The Form 720 for the second calendar quarter is due by July 31 of each year. This means, for example, that a plan year that ended on December 31, 2024, would pay the fee by before July 31, 2025.

If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory. 

NOTICE OF DISCLAIMER

Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Later developments may result in this information becoming outdated or incorrect, and Hub International is not obliged to update it. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.