PCORI Fee Worksheet

Effective for plan years ending on or after 10/1/12 and before 10/1/29 (e.g., beginning with 2012 plan year for calendar year plans), health insurance issuers and plan sponsors of self-funded health plans are required to pay an excise tax to fund the Patient Centered Outcomes Research Institute - often referred to as the “PCORI fee.” The fee is calculated based on the average number of lives covered under the plan (including employees, dependents, COBRA participants, and covered retirees) and is due by July 31 following the end of each applicable year.

Health reimbursement arrangements (HRAs) are considered self-funded health plans and are subject to the PCORI fee. However, special rules apply to HRAs for purposes of calculating the PCORI fee:

  • If the plan sponsor also maintains a self-funded medical plan with the same plan year, the medical plan and HRA may be treated as one plan for purposes of the PCORI fee. However, if the medical plan is fullyinsured, the medical plan and HRA must be treated as separate plans for purposes of the PCORI fee, with the insurer paying the fee for the medical plan and the employer/plan sponsor paying the fee for the HRA.
  • For purposes of counting covered lives for HRAs, only employees need to be counted; spouses/dependents are not included. There are multiple methods available to determine the fee for HRAs that must be treated as separate plans from a fully-insured medical plan, which we'll go into below.

Methods for Determining the Fee

The following information is intended ONLY for HRAs that must be treated as seperate plans from a fully-insured medical plan. *

Below is a worksheet outlining the calculation methods available under the PCORI fee final regulations,** modified as applicable for HRAs that must be treated as separate plans from a fully-insured medical plan. HRA plan sponsors must choose one method to be used for the entire plan year; however, a different method may be chosen for subsequent plan years.

For plan years beginning before 7/11/12 and ending on or after 10/1/12, the average number of covered employees for purposes of the PCORI fee may be determined using “any reasonable method.” Otherwise, one of the following methods must be used: (1) the Actual Count Method, (2) the Snapshot Method or (3) the Form 5500 Method.


* Use the PCORI Fee for Self-Funded Plans worksheet to calculate the PCORI fee for self-funded plans and HRAs that may be treated as a single plan.

** Starting in 2014, health insurance issuers and plan sponsors of self-funded plans must also make contributions to a temporary reinsurance program, which will also be based on the number of covered lives. Proposed regulations indicate that the methods to calculate the temporary reinsurance program fee will be similar to those required for the PCORI fee. Different methods may be used to determine the PCORI fee and the temporary reinsurance program fee. HRAs that are integrated with self-funded or fully-insured medical coverage are not subject to the temporary reinsurance program fee.

METHOD 1: Actual Count

In this method, the fee is determined by adding the actual number of employees covered on each day of the plan year and dividing by the number of days in the plan year.

Company has 10 employees employed for the full year, 365 days (10*365=3,650). Company has 2 employees employed for 180 days (2*180 = 360). Company has 1 employee employed for 34 days (1*34=34). The Company has a sum of 4,044. (3,650+360+34=4,044).

÷
(365 days)

Note: 2020 and 2024 are leap years (366 days)

=
(A ÷ B)
x

  • $2.08 for plan years ending between 10/1/14 and 9/30/15
  • $2.17 for plan years ending between 10/1/15 and 9/30/16
  • $2.26 for plan years ending between 10/1/16 and 9/30/17
  • $2.39 for plan years ending between 10/1/17 and 9/30/18
  • $2.45 for plan years ending between 10/1/18 and 9/30/19
  • $2.54 for plan years ending between 10/1/19 and 9/30/20.
=
(C x D)

This is the amount that will be remitted to the IRS using Form 720.

$

METHOD 2: Snapshot

Determined by adding the totals of employees covered on a date during each quarter of the plan year (or more dates in each quarter if an equal number of dates is used in each quarter) and dividing by the number of dates on which a count was made. Each date used for the second, third and fourth quarter must be within three days of the date that corresponds to the date used for the first quarter (e.g., if the first quarter count is on 1/7, the second quarter count must be between 4/4 and 4/10), and all dates must fall within the same plan year.

Date count is made:

Number of employees covered on that date:

Date count is made:

(Must be within 3 days of the Q1 count)

Number of employees covered on that date:

Date count is made:

(Must be within 3 days of the Q2 count)

Number of employees covered on that date:

Date count is made:

(Must be within 3 days of the Q1 count)

Number of employees covered on that date:

(A + B + C + D):

If more than one count per quarter is made, repeat steps A through D for each additional count, and add the totals for all quarters to determine this sum.

(Divided by the number of counts made in the year)

÷

Will be four (if one count per quarter), or a multiple of four (if more than one count per quarter)

=

  • $2.08 for plan years ending between 10/1/14 and 9/30/15
  • $2.17 for plan years ending between 10/1/15 and 9/30/16
  • $2.26 for plan years ending between 10/1/16 and 9/30/17
  • $2.39 for plan years ending between 10/1/17 and 9/30/18
  • $2.45 for plan years ending between 10/1/18 and 9/30/19
  • $2.54 for plan years ending between 10/1/19 and 9/30/20.
=
(F x G)

This is the amount that will be remitted to the IRS using Form 720.

$

METHOD 3: FORM 5500

Determined based on the number of participants (i.e., employees) reported on the Form 5500 (or Form 5500–SF) filed for that plan year, provided that the Form 5500 is filed no later than the due date for the PCORI fee for that plan year. The average number of lives equals the sum of the total participants covered at the beginning and the end of the plan year, divided by 2.

+

Divided by two (C ÷ 2)

÷ 2
=
x
  • $2.08 for plan years ending between 10/1/14 and 9/30/15
  • $2.17 for plan years ending between 10/1/15 and 9/30/16
  • $2.26 for plan years ending between 10/1/16 and 9/30/17
  • $2.39 for plan years ending between 10/1/17 and 9/30/18
  • $2.45 for plan years ending between 10/1/18 and 9/30/19
  • $2.54 for plan years ending between 10/1/19 and 9/30/20.
=
(D X E)

This is the amount that will be remitted to the IRS using Form 720.

$

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