PCORI Fee Increase for Health Plans

Kathleen A. Berger, CEBS

Kathleen A. Berger, CEBS

On November 24, 2020, the Internal Revenue Service (IRS) released Notice 2020-84 to announce that the health plan Patient-Centered Outcomes Research Institute (PCORI) fee for plan years ending between October 1, 2020 and September 30, 2021 will be $2.66 per plan participant. This is an increase from the prior year’s fee of $2.54 due to an inflation adjustment.


The Affordable Care Act created the PCORI to study clinical effectiveness and health outcomes. To finance the nonprofit institute’s work, a small annual fee — commonly called the PCORI fee — is charged on group health plans.

The fee is an annual amount multiplied by the number of plan participants. The dollar amount of the fee is based on the ending date of the plan year. For instance:

  • For plan year ending between October 1, 2019 and September 30, 2020: $2.54.
  • For plan year ending between October 1, 2020 and September 30, 2021: $2.66.

Insurers are responsible for calculating and paying the fee for insured plans. For self-funded health plans, however, the employer sponsor is responsible for calculating and paying the fee. Payment is due by filing Form 720 by July 31 following the end of the calendar year in which the health plan year ends. For example, if the plan year end date is December 31, 2020, the fee is $2.66 and the payment and Form 720 are due by July 31, 2021.

Certain types of health plans are exempt from the fee, such as:

  • Stand-alone dental and/or vision plans;
  • Employee assistance, disease management, and wellness programs that do not provide significant medical care benefits;
  • Stop-loss insurance policies; and
  • Health savings accounts (HSAs).

Health Reimbursement Arrangements

A traditional health reimbursement arrangement (HRA) is exempt from the PCORI fee, provided it is integrated with another self-funded health plan sponsored by the same employer. In that case, the employer pays the PCORI fee with respect to its self-funded plan, but does not pay it again just for the HRA component. If, however, the HRA is integrated with a group insurance health plan, the insurer will pay the PCORI fee with respect to the insured coverage and the employer pays the fee for the HRA component.

A qualified small employer health reimbursement arrangement (QSEHRA) works a little differently. A QSEHRA is a special type of tax-preferred arrangement that can only be offered by small employers (generally those with fewer than 50 employees) that do not offer any other health plan to their workers. Since the QSEHRA is not integrated with another plan, the PCORI fee applies to the QSEHRA. Small employers that sponsor a QSEHRA are responsible for reporting and paying the PCORI fee.

Another type of arrangement is an individual coverage health reimbursement arrangement (ICHRA), which is a new option that only become available starting in 2020. It appears the PCORI fee applies to ICHRAs, but the IRS has not specifically commented on it. We expect the IRS will provide guidance on the matter before July 2021 when the first payment, if applicable, would be due.


The IRS provides the following guidance to help plan sponsors calculate, report, and pay the PCORI fee:


Author: Kathleen A. Berger, CEBS
Kathy Berger is a Certified Employee Benefits Specialist (CEBS) with over 25 years of experience working with brokers and employers.