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IRS Increases 2021 PCORI Fee for Health Plans

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Benefits Consultants
Lumity, Inc.

Internal Revenue Service (IRS) issued Notice 2020-84 to increase the Patient-Centered Outcomes Research Institute (PCORI) fee amount for plan years ending on or after Oct. 1, 2020, and before Oct. 1, 2021. Under the Affordable Care Act (ACA), health insurers and self-funded health plans are subject to this fee.

Key Highlights

For employers who sponsor self-funded (and level-funded plans):

  • The amount has increased to $2.66 multiplied by the average number of lives covered under the plan.
  • The fee has been extended an additional 10 years (from 2020 through 2029).
  • Fees are due annually by July 31—but the deadline for plans ending in 2020 will be Aug. 2, 2021 (because 7/31/21 falls on a Saturday).
  • The fee is collected by the IRS through Form 720.
  • No transition relief applies for 2021.
  • For calculating the PCORI fee, plan sponsors must use one of the methods defined by the IRS.

For Background

The Affordable Care Act (ACA) established the Patient-Centered Outcomes Research Institute (PCORI) to fund and conduct research to determine the effectiveness of various forms of medical services. The work of PCORI is partially funded by a fee on employer group health plans, called the Comparative Effectiveness Research Fee (CERF). 

For Lumity Clients

For clients who are subject to PCORI, Lumity calculates the fee that needs to be submitted to the IRS, and we provide step-by-step instructions for Form 720.

Want to Learn How A Transition From PEO Would Work For Your Company? Schedule a Free Benefits Consultation Today.