Winston & Strawn LLP: Benefits Bulletin – IRS Increases PCORI Fees Payable in 2024

In Internal Revenue Service (IRS) Notice 2023-70, the IRS released the new Affordable Care Act’s (ACA) Patient-Centered Outcomes Research Institute (PCORI) fee for policy and plan years that end on or after October 1, 2023 and before October 1, 2024. The new PCORI fee for policy and plan years that end on or after October 1, 2023 and before October 1, 2024 is $3.22; an increase of $0.22 per covered life as compared to the PCORI fee assessed on or after October 1, 2022 and before October 1, 2023.

PCORI was established under the ACA to conduct research to evaluate and compare the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs, or other items or strategies that treat, manage, diagnose, or prevent illness or injury. The PCORI fee is assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year. Self-insured plan sponsors should use IRS Form 720 (Quarterly Federal Excise Tax Return) for the second quarter of the calendar year to report and pay the PCORI fee. Issuers of health insurance policies are responsible for paying the PCORI fee for insured plans.

The IRS website provides further details regarding the PCORI fee, including how to calculate the fee and the process for reporting and paying the fee.

Winston Takeaway – Employers and insurers will need to calculate the fee, file IRS Form 720, and pay the 2023 PCORI fee by July 31, 2024.