In last week’s blog, we mentioned that the Patient-Centered Outcomes Research Institute (PCORI) fees for plan years ending between October 1, 2019 and December 31, 2019 had not been released. In Notice 2020-44, the IRS provided the adjusted PCORI fees for plan years ending in October 2019 through September 2020.
The guidance does not provide for an extension of the July 31st deadline to report and pay the PCORI fee, but there is a bit of relief provided for certain plans in the method used to count covered lives.
Which employers have to pay by the current deadline of July 31, 2020?
Employers that sponsored self-insured medical plans, including HRAs, for plan years that ended from January of 2019 to December of 2019.
Payment amounts due by July 31, 2020 differ based on the employer’s plan year.
- $2.45 per covered life for plan years ending in January – September 2019.
- $2.54 per covered life for plan years ending in October – December 2019.
Note: The IRS chart illustrating plan year end dates and applicable fees has not yet been updated to reflect the adjusted PCORI fees for plan years ending in October through December 2020. You can find the chart here. The Form 720 (Line 133) has not been updated yet either.
Calculating the Average Covered Lives: Transition Relief
Self-funded plans may generally use one of three methods to determine the average covered lives used for reporting and paying the PCORI fee: (i) the actual count method; (ii) the snapshot method; or (iii) the Form 5500 method. Plan sponsors must stick with one method for the entire plan year, but are allowed to change from year to year.
Due to the fact that employers of self-funded plans ending in October 2020 or later may not have been tracking covered lives because the PCORI fee was supposed to expire, in addition to the counting methods set forth above, such employers are also permitted to use any reasonable method to calculate the average number of covered lives so long as the method is used consistently for the duration of the plan year.