Reminder: PCORI Fee Due July 31

The PCORI fee is due July 31 for plan years ending in 2019. As reported in our client alert of January 20, 2020, the Further Consolidated Appropriations Act, 2020, extended the PCORI fee an additional ten years.  In Notice 2020-44, the IRS updated the fee amount and provided some transition relief for determining the average number of covered lives.

Action 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, 2020, 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. The fee is reported 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, 2019 and before October 1, 2020, the applicable dollar amount is $2.54.

Plan Year Ending in the Months of:

Applicable Rate:

October 2018 through September 2019


October 2019 through September 2020



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 2019 Form 5500 by July 31, 2020. Our alerts as of July 6, 2016, and July 2, 2013, provide additional information about counting lives.

Transition Relief For Plan Years Ending October 2019 through September 2020

Notice 2020-44 states that “due to the anticipated termination of the fee … for plan years ending after September 30, 2019, plan sponsors of applicable self-insured health plans may not have anticipated the need to identify the number of covered lives for this period.”  Therefore, in addition to the existing methods specified in the regulations for plan sponsors and insurance issuers to identify the number of covered lives, Notice 2020-44 provides some relief.

Under the notice, for plan years ending on or after October 1, 2019, and before October 1, 2020, a plan sponsor may use any reasonable method for calculating the average number of covered lives, provided that the reasonable method is used for such plan year is applied consistently for the duration of the plan year.  Similar relief is provided for issuers of health insurance policies for policy years ending after October 1, 2019, and before October 1, 2020.

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 2019. 

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.