On October 6, 2017, the IRS issued Notice 2017-61, which sets forth the applicable dollar amount for the Patient-Centered Outcomes Research Institute (PCORI) for policy and plan years ending on or after October 1, 2017, and before October 1, 2018. Generally, the PCORI fee is imposed for policy and plan years ending between October 1, 2012 and October 1, 2019. Fees for a year are due by July 31 of the following year. For 2018, the PCORI fee filing date is July 31, 2018.

Action Needed: No immediate action is needed, however, sponsors of plans subject to the PCORI fee will have to determine the average number of covered lives and file IRS Form 720 by July 31, 2018, along with payment of the required fee.

PCORI Fee Amount

The PCORI 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, 2014, 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 reported only once a year on the second quarter Form 720. The payment amount is calculated by multiplying the "applicable dollar amount" by the "average number of covered lives" for the plan year. For policy years and plan years that end on or after October 1, 2017 and before October 1, 2018, the applicable dollar amount is $2.39, an increase of 13 cents from the prior period.

Plan sponsors can use the actual count method, the snapshot method, or the Form 5500 method to determine the average number of lives covered during a plan year. Calendar year sponsors that elect to use the Form 5500 method for counting lives must file their appropriate 2017 Form 5500 by July 31, 2018.

Additional Information

For additional information, please see the following:

• Our alerts as of July 11, 2017, July 6, 2016 and July 2, 2013 provide additional information.
• 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 2017.

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.