PCORI Fees for HRA Plans
What is the PCORI Fee?
The PCORI Fee (Patient-Centered Outcomes Research Institute Fee) was created under the Affordable Care Act (ACA) to fund PCORI, a non-profit organization that researches ways to improve healthcare outcomes and decision-making.
This fee supports studies on the effectiveness of medical treatments to help improve healthcare quality in the U.S. It applies to issuers of certain health insurance policies and sponsors of eligible self-insured health plans.
What is an HRA for the PCORI Fee?
Does the PCORI Fee Apply to HRAs?
Yes, the PCORI fee applies to HRAs because they are considered self-insured health plans. However, there are some exceptions.
If you already have another self-insured plan—like a major medical or high-deductible plan—and the HRA is just a part of that plan, you only need to pay the PCORI fee once for the whole plan. You don’t have to pay it separately for the HRA.
But if the HRA is a standalone plan, or if it’s paired with an insured health plan, then you do have to pay the PCORI fee specifically for the HRA.
PCORI Fees for HRAs – Two Special Rules
HRAs (Health Reimbursement Arrangements) are employer-funded plans that reimburse employees for medical expenses tax-free. The IRS does not exempt HRAs from the PCORI fee, but it allows two key exceptions:
Single Life Rule:If an employer only offers an HRA (and no other self-insured plan), they can count just one life per employee when calculating the fee—no need to include spouses or dependents.
- Combined Plan Rule:If the HRA is offered along with another self-insured medical plan (with the same plan year and sponsor), they can be treated as one plan. In this case, the fee is paid only once per person covered under both.
Find the below table which shows the conditions for different types of HRA’s.
When PCORI Fees Don’t Apply to HRAs
PCORI fees don’t apply to coverage that only includes “excepted benefits” under HIPAA. This includes stand-alone dental or vision plans, accident-only coverage, disability income, liability insurance, workers’ comp, credit-only insurance, or on-site clinic care.
So, if an HRA mainly covers these types of benefits, the employer doesn’t have to pay the PCORI fee.
Key HRA Types You Should Know
Qualified Small Employer HRA (QSEHRA)
Since January 1, 2017, small employers (with fewer than 50 full-time employees) who don’t offer group health plans can set up a special kind of HRA called a QSEHRA. It allows them to reimburse employees for individual health insurance and medical expenses, up to set limits.
Starting in 2020, employers of any size can offer an ICHRA, which reimburses employees for individual health insurance policies or Medicare premiums, as long as certain rules are followed. However, employers can’t offer both an ICHRA and a traditional group health plan to the same employee—they must choose one.
Important IRS Rule for Missed PCORI Fee Payments
If an HRA plan hasn’t reported or paid the PCORI fee, the IRS generally has up to 3 years to review and take action for that tax year. This period is known as the statute of limitations and applies to all open tax years.
WRAP:
Understanding how PCORI fees apply to different types of HRAs is essential for staying compliant. Whether your HRA stands alone or is paired with other coverage, knowing the rules can help avoid unnecessary penalties. Special exemptions and IRS guidelines can simplify reporting. Stay informed to manage your healthcare responsibilities with confidence.
File PCORI Fees Online through Simple720 Portal for a seamless PCORI filing experience.