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PCORI Fees and HRAs

PCORI Fees and HRAs

3.5 minute read

The Affordable Care Act created the PCORI (Patient-Centered Outcomes Research Institute) to help patients, payers, the public, and clinicians make more informed healthcare decisions. It’s partially funded by fees paid by health insurance insurers and sponsors of self-insured health plans. PCORI fees were supposed to expire back in 2019 but were extended and continue to apply for the 2020-2029 fiscal years.

The fee is set by the IRS each year and calculated based on the plan’s average number of lives covered. PCORI fees must be paid annually by July 31st of each year using IRS Form 720.

Since an HRA is considered a self-insured health plan, PCORI fees may be applicable even if the employer or insurance carrier is already paying fees for a primary group health plan. Note, unlike primary group health plans, there is no need to make an adjustment to reflect coverage for the employee’s spouse or dependents.

For employers who offer a Health Reimbursement Arrangement (HRA) with a fully insured or self-insured health plan, there can be several questions regarding who is responsible for paying the PCORI fees and if fees are applicable to both an HRA and a primary group health plan. Below are two scenarios that should help bring some clarification.

Scenario 1: Does the employer pay a PCORI fee on both plans if the HRA is integrated with a fully insured group health plan?

Answer: No, the employer pays the PCORI fee for the HRA and the insurance carrier pays the PCORI fee for the fully insured group health plan.

Question 2: Is the employer subject to a separate fee if the HRA is integrated with a self-insured group medical plan?

Answer: The employer’s HRA plan is not subject to a separate fee if the employer also sponsors a self-insured group health plan with the same plan year. In that case, the employer is permitted to treat the HRA and the primary self-insured group health plan as a single self-insured health plan and pay the PCORI Fee once with respect to each life covered under the HRA and self-insured group health plan.

Per the IRS, there are special rules for coverage under multiple applicable self-insured health plans. Generally, separate fees apply for lives covered by each health insurance policy or self-insured health plan. If the employer has two or more self-insured health plans with the same plan sponsor and same plan year, then they can be combined and treated as a single self-insured health plan for purposes of calculating the PCORI fee.

If an employer is unsure whether their type of insurance coverage or arrangement is subject to a PCORI fee, they can refer to this IRS chart.

For questions about PCORI fees, contact your NIS Retirement Income Representative at 800.627.3660

 

RESOURCES

PCORI Filing Due Dates and Applicable Rates

Learn More About PCORI Fees

Download the 2022 IRS Contribution Limits Info Sheet

National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.

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Adam Kuck

Adam Kuck

The first things you will notice about Adam Kuck are how personable and organized he is. As your Account Representative, Adam will be on hand to walk you through your group's plans, conduct employee and retiree meetings, and be your advocate when a problem arises. Adam first joined National Insurance Services (NIS) in 2013 as an intern in the Marketing Department. He enjoyed NIS’ company culture and team values so much that he later applied and was hired as a Retirement Income Account Representative for NIS and MidAmerica Administrative & Retirement Solutions. Adam specializes in Health Reimbursement Arrangements (HRAs), Flexible Spending Accounts (FSAs), and 403(b) Special Pay Plans (SPP) for clients in Minnesota, Pennsylvania, and Oklahoma. He is a licensed Health and Life insurance agent.