Form 720 PCORI Instructions[2025]
The Affordable Care Act (ACA) established PCORI, an independent organization that carries out research to assist healthcare customers in making better decisions for their individual needs and results. The ACA requires sponsors of self-insured health plans to pay a charge to finance PCORI.
Who must pay a PCORI fee?
Here are some Form 720 PCORI Instructions for those who owe this fee:
●
Generally, prepaid health care
plans with set premiums for health or accident coverage are known as specified
health insurance policies that are subject to PCORI costs.
●
Employers must pay the PCORI
charge if their company provides a self-insured health plan, such as an HRA.
● However, if an integrated HRA is provided when combined with a self-insured plan from the same plan sponsor, it is not subject to PCORI. For the PCORI charge, the HRA and medical plan are considered a single plan.
PCORI Fee applies to organizations providing employee insurance benefits, such as:
● HRAs(Health Reimbursement Arrangement).
● Health flexible spending accounts (FSAs) if employer contributions surpass $500 or the employee's contribution.
Which plans do not have to pay the PCORI fee?
The following health plans are exempt from the PCORI fee:
●
Government initiatives include the
Children's Health Insurance Programme (CHIP), Medicaid, and Medicare.
●
Insurance plans that solely
include excluded benefits, such as dental or eye.
●
Programs for wellness (so long as
they don't offer substantial benefits in terms of therapy or medical care).
●
Workers' compensation
●
Policies that only protect workers
from abroad.
●
Medical savings accounts from
Archer (MSAs).
●
Hospital Liability Protection.
● Accident-only insurance.
When is the PCORI fee due in 2025?
The due date for the PCORI fee is July 31st every year. In 2025, July 31st falls on a Thursday.
A yearly inflation adjustment is made to the amount by the Secretary of Health and Human Services. According to the Form 720 PCORI Instructions, if you owe a PCORI charge, you have until July 31st, the last day of the plan year.
File your PCORI Fee online with Simple720 to avoid the PCORI Penalty.
How to calculate the PCORI "number of lives"?
There are three ways to calculate the fee as per the Form 720 PCORI Instructions published by the IRS:
- The Actual Method: Add the total number of lives covered each day in the plan year, then divide it by the total number of days in the plan year.
- The Snapshot Method: Each quarter, take the total number of lives covered on one day in the first, second, or third month and divide it by the total number of dates you counted.
- Form 5500 Method: Consider the total number of members listed on Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, or Form 5500, Annual Return/Report of Employee Benefit Plan.
If you provide numerous self-funded plans or an integrated HRA from a medical insurance provider, you also need to follow particular calculations for covered lives.
To know in detail, you can read our blog on PCORI Fee Reporting.
Conclusion
The deadline for submitting IRS Form 720 and paying PCORI fees for employers who qualify is July 31.
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