CLASSIC VALUES, INNOVATIVE ADVICE.
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2016 PCORI Fee Payment Due by July 31, 2017

Notwithstanding any executive orders or pending legislation, plan sponsors still are required to pay the Patient-Centered Outcomes Research Institute (PCORI) fee for 2016. The PCORI fee applies to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. Fees for a year are due by July 31 of the following year. This Alert also provides answers to certain questions regarding the PCORI fee rules.

Actions Needed Now: Sponsors of plans subject to the PCORI fee need to determine the average number of covered lives and file IRS Form 720 by July 31, 2017 with payment of the required fee.

PCORI Fee Amount

The fee is imposed by Sections 4375 and 4376 of the Internal Revenue Code, which were added by the Affordable Care Act. For policy and plan years ending after Sept. 30, 2015, and before Oct. 1, 2019, the applicable dollar amount is adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services. The fee is calculated by multiplying the "applicable dollar amount" by the "average number of covered lives" for the plan year. The following chart shows the applicable dollar amount for plan years ending in 2016.

Plan Year Ending in the Months of:

Applicable Rate

Jan. 2016 through Sept. 2016

$2.17

Oct. 2016 through Dec. 2016

$2.26

In addition, sponsors that elect to use the Form 5500 method for counting lives must file their appropriate Form 5500 (2015 5500 Form for plan years ending in 2016 but prior to December 31, 2016 or 2016 5500 Form for calendar year plans, respectively) by July 31, 2017.

Additional Information

For additional information, please see the following information:

  • Our alerts as of July 6, 2016 and July 2, 2013 provide more information on the methods used to count lives and responses to other FAQs.
  • A copy of the final regulations is at this link.
  • A copy of the IRS form 720 is at this link.

CHEIRON OBSERVATIONS: Plan sponsors should determine which method of counting covered lives is most advantageous.

Cheiron health consultants can assist with your determination of covered lives and calculation of the PCORI fee due for 2016.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.

 
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