The IRS has issued N-2022-59 which sets forth the applicable dollar amount for the Patient-Centered Outcomes Research Institute (PCORI) fee for policy years and plan years ending on or after October 1, 2022 and before October 1, 2023.

The PCORI fee is imposed by Sections 4375 and 4376 of the Internal Revenue Code, which were added by the Affordable Care Act and extended to 2029 by the Consolidated Appropriations Act, 2020. The fee is reported on the second quarter Form 720, due by July 31.

PCORI Fee Amount: The payment amount is calculated by multiplying the "applicable dollar amount" by the "average number of covered lives" for the plan year. 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 following chart reflects the respective applicable dollar amounts for policy years and plan years that end on or after from October 1, 2021, and before through October 1, 2023:

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. Plan sponsors that elect to use the Form 5500 method for counting lives must file their appropriate Form 5500 by July 31, 2023. Our alerts as of July 6, 2016, and July 2, 2013, provide additional information about counting lives.

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 2022.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are not attorneys, accountants, or clinicians. Accordingly, we do not provide legal services, tax advice, or medical advice.