PCOR Fee, Form 720 Filing Due July 31

The ACA imposed the PCOR fee on health plans to support clinical effectiveness research. The PCOR fee, which applies to plan years ending on or after October 1, 2012, and before October 1, 2029, is generally due by July 31 of the calendar year following the close of the plan year.

PCOR fees must be reported annually on Form 720, Quarterly Federal Excise Tax Return, for the second quarter of the calendar year. Plan sponsors that are subject to PCOR fees and no other types of excise taxes should file Form 720 only for the second quarter.

Generally, the PCOR fee is assessed based on the number of covered lives, which include enrolled employees, retirees, and COBRA participants and their enrolled spouses, domestic partners, and dependents. The fee for policy and plan years ending on or after October 1, 2022, but before October 1, 2023, is calculated based on the applicable rate of $3.00, multiplied by the average number of covered lives under the plan. For plan years ending on or after October 1, 2023, but before October 1, 2024, the fee is increased to the applicable rate of $3.22, multiplied by the average number of covered lives under the plan.

As a reminder, the insurer is responsible for filing and paying the fee for a fully insured plan. The employer plan sponsor is responsible for filing for a self-insured plan, including an HRA or point solution program that provides medical care. But stand-alone dental or vision plans and health FSAs that qualify as excepted benefits would not be subject to the PCOR fee.

According to the IRS, the fee is tax-deductible as a business expense. ERISA plan assets should not be used to pay the fee.

For further information regarding the PCOR fee and filing, please see the PPI publication ACA: A Quick Reference Guide to the PCOR Fee.