On Novem­ber 5, 2018, the Inter­nal Rev­enue Ser­vice (IRS) released Notice 2018–85 to announce that the health plan Patient-Cen­tered Out­comes Research Insti­tute (PCORI) fee for plan years end­ing between Octo­ber 1, 2018 and Sep­tem­ber 30, 2019 will be $2.45 per plan par­tic­i­pant. This is an increase from the pri­or year’s fee of $2.39 due to an infla­tion adjustment.


The Afford­able Care Act cre­at­ed the PCORI to study clin­i­cal effec­tive­ness and health out­comes. To finance the non­prof­it institute’s work, a small annu­al fee — com­mon­ly called the PCORI fee — is charged on group health plans.

The fee is an annu­al amount mul­ti­plied by the num­ber of plan par­tic­i­pants. The dol­lar amount of the fee is based on the end­ing date of the plan year. For instance:

  • For plan year end­ing between Octo­ber 1, 2017 and Sep­tem­ber 30, 2018: $2.39.
  • For plan year end­ing between Octo­ber 1, 2018 and Sep­tem­ber 30, 2019: $2.45.

Insur­ers are respon­si­ble for cal­cu­lat­ing and pay­ing the fee for insured plans. For self-fund­ed health plans, how­ev­er, the employ­er spon­sor is respon­si­ble for cal­cu­lat­ing and pay­ing the fee. Pay­ment is due by fil­ing Form 720 by July 31 fol­low­ing the end of the cal­en­dar year in which the health plan year ends. For exam­ple, if the group health plan year ends Decem­ber 31, 2018, Form 720 must be filed along with pay­ment no lat­er than July 31, 2019.

Cer­tain types of health plans are exempt from the fee, such as:

  • Stand-alone den­tal and/or vision plans;
  • Employ­ee assis­tance, dis­ease man­age­ment, and well­ness pro­grams that do not pro­vide sig­nif­i­cant med­ical care benefits;
  • Stop-loss insur­ance poli­cies; and
  • Health sav­ings accounts (HSAs).


A tra­di­tion­al health reim­burse­ment arrange­ment (HRA) is exempt from the PCORI fee, pro­vid­ed that it is inte­grat­ed with anoth­er self-fund­ed health plan spon­sored by the same employ­er. In that case, the employ­er pays the PCORI fee with respect to its self-fund­ed plan, but does not pay again just for the HRA com­po­nent. If, how­ev­er, the HRA is inte­grat­ed with a group insur­ance health plan, the insur­er will pay the PCORI fee with respect to the insured cov­er­age and the employ­er pays the fee for the HRA component.

A qual­i­fied small employ­er health reim­burse­ment arrange­ment (QSEHRA) works a lit­tle dif­fer­ent­ly. A QSEHRA is a spe­cial type of tax-pre­ferred arrange­ment that can only be offered by small employ­ers (gen­er­al­ly those with few­er than 50 employ­ees) that do not offer any oth­er health plan to their work­ers. Since the QSEHRA is not inte­grat­ed with anoth­er plan, the PCORI fee applies to the QSEHRA. Small employ­ers that spon­sor a QSEHRA are respon­si­ble for report­ing and pay­ing the PCORI fee.

PCORI Nears its End

The PCORI pro­gram will sun­set in 2019. The last pay­ment will apply to plan years that end by Sep­tem­ber 30, 2019 and that pay­ment will be due in July 2020. There will not be any PCORI fee for plan years that end on Octo­ber 1, 2019 or later.


The IRS pro­vides the fol­low­ing guid­ance to help plan spon­sors cal­cu­late, report, and pay the PCORI fee:


Orig­i­nal­ly post­ed on thinkhr.com