QUESTION: Our company has paid PCOR fees for our self-insured health plan for several years, but I have heard that this requirement is expiring soon. When can we stop paying PCOR fees for our plan?
ANSWER: Patient-Centered Outcomes Research (PCOR) fees are paid by health insurers and self-insured health plan sponsors and are used to fund research on patient-centered outcomes. They were initially required for plan and policy years ending before October 1, 2019—so, for calendar-year plans and policies, the 2018 plan or policy year was to be the last year for which PCOR fees applied. However, budget legislation passed in December 2019 reinstated the PCOR provision and continued the fee requirements through plan years ending before October 1, 2029.
A PCOR fee is considered an excise tax under the Code, and is reported on IRS Form 720 (see our Checkpoint article). Although Form 720 is filed quarterly for other federal excise taxes, PCOR fee reporting and payment are only required annually, by July 31 of the year following the calendar year in which the applicable policy or plan year ended. Thus, the Form 720 reporting liability for the PCOR fee imposed for a calendar-year plan year ending on December 31, 2019, must be filed by July 31, 2020. The instructions to Form 720 advise taxpayers to keep their tax returns, records, and supporting documentation for at least four years from the latest of the date the tax became due or the date the tax was paid.
For more information, see EBIA’s Health Care Reform manual at Section XXXVI.H (“Patient-Centered Outcomes Research (PCOR)”). See also EBIA’s Self-Insured Health Plans manual at Section VI.H (“Additional Taxes Under Health Care Reform”) and EBIA’s Consumer-Driven Health Care manual at Section XXV.G.5.b (“HRA Issues Raised by Certain Health Care Reforms That Are Not PHSA Mandates: Fees to Fund Research on Patient-Centered Outcomes”).
Contributing Editors: EBIA Staff.