The Patient-Centered Outcomes Research Institute (PCORI) fee remains a critical compliance requirement for self-insured health plans. As HR directors and benefits brokers navigate the complexities of healthcare administration, understanding PCORI obligations ensures smooth operations while contributing to meaningful healthcare research that benefits your plan participants.
With an approaching due date of July 31, let’s examine PCORI, fee structures, how the money is used, and the future of PCORI compliance.
Understanding PCORI’s Mission and Your Role
Established in 2010 through the Affordable Care Act, PCORI operates as a private, non-profit organization dedicated to funding patient-centered comparative clinical effectiveness research (CER). This research directly benefits your organization’s health plan participants by providing evidence-based information to improve healthcare decisions and outcomes.
PCORI fees represent more than a compliance obligation; they’re an investment in healthcare research that directly benefits your organization’s participants. By understanding current requirements, implementing efficient calculation methods, and recognizing the strategic value of PCORI-funded research, HR directors and benefits brokers can transform this administrative requirement into a meaningful contribution that improves healthcare.
The research funded through your PCORI contributions helps create the evidence base that informs better healthcare decisions, ultimately supporting your organization’s goals of providing high-quality, cost-effective health benefits to your participants.
Current PCORI Fee Structure
- For plan years ending between October 1, 2024, and September 30, 2025, the PCORI fee is $3.47 per covered life
- For plan years ending between January 1, 2024, and September 30, 2024, the fee is $3.22 per covered life
- Annual deadline: July 31st; file by using IRS Form 720
The fee structure is updated yearly based on expected health spending per person, helping to fund research that improves healthcare and patient outcomes.
Who Must Comply with PCORI
The PCORI fee applies to most self-insured medical plans, including COBRA coverage. However, several important exclusions protect specific plan types:
Primary Exclusions
Plans serving employees working or residing outside the United States, as well as those classified as excepted benefits, are exempt from PCORI fees. Also excluded are:
- Healthcare Flexible Spending Account (FSA) plan for which the employer contributes less than $500 annually and offers another medical plan with non-excepted benefits.
- Health Reimbursement Arrangement (HRA) that reimburses for excepted benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and does not integrate with the group medical plan.
- Health Savings Accounts (HSAs)
For comprehensive guidance on specific plan types, consult the IRS’s detailed coverage chart.
Calculating PCORI Fees
The IRS provides three approved methods for determining average covered lives, allowing flexibility based on your administrative capabilities:
Actual Count Method
The most precise approach involves tracking daily enrollment throughout the plan year. Calculate by adding the total covered lives for each day, then dividing by the total days in the plan year.
Snapshot Method
This streamlined approach uses enrollment counts from specific dates within each quarter. Count covered lives on one date (or multiple dates if equally distributed across quarters) during the first, second, or third month of each quarter, then divide by the number of snapshot dates.
Form 5500 Method
Leverage existing compliance reporting by using participant numbers from your Form 5500 filing Annual Return/Report of Employee Benefit Plan (or Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan). This method works well for plans already maintaining detailed participant records for Department of Labor reporting.
How PCORI Fees Drive Healthcare Innovation
Your PCORI contributions fund research that directly benefits your plan participants and the broader healthcare ecosystem. Understanding this connection helps demonstrate value to stakeholders and participants.
Research Portfolio Impact
PCORI continues expanding its research funding, with over $500 million in opportunities available for 2025. Studies focus on patient-centered outcomes in pain management, mental health, and the management of chronic diseases, while research findings inform coverage decisions and treatment protocols.
Tangible Benefits for Your Organization
Evidence-based treatment guidelines enhance participant outcomes, while comparative effectiveness research informs formulary decisions. Patient engagement strategies reduce healthcare costs, and implementation science helps translate research into practice within your organization.
Continuing Through 2029
The Further Consolidated Appropriations Act of 2020 extended PCORI fee collection through 2029, providing predictability for long-term benefits planning. This extension ensures continued funding for research initiatives while allowing organizations to incorporate PCORI obligations into multi-year budgeting processes.
Annual fee adjustments based on healthcare cost projections ensure continued focus on patient-centered outcomes research while integrating with broader healthcare policy initiatives. This creates the potential for research findings to influence future coverage requirements and industry standards.
Beneliance has provided Arkansas employers with comprehensive third-party employee benefits administration and compliance services since 1996. Please enter your email (above right) to receive notifications about new blog articles as they are published.
