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Many plan sponsors and employers often wonder whether they are required to pay the PCORI fee. Regarding the Patient-Centered Outcomes Research Institute (PCORI) fee, many employers, health insurance issuers, and plan sponsors are unsure of their role. One of the components of the Affordable Care Act (ACA) that aims to fund research to improve health outcomes is this levy. In this instance, the type of health coverage you offer and the layout of your plan are the determining factors. 

Employers who sponsor self-insured health plans and the insurers of a specific type of health plan are both subject to the PCORI fee, which is a fixed annual amount. It is a way to finance research on health outcomes, as well as the efficacy and comparison of medical treatments. The average number of lives covered by the policy or plan during the relevant plan year serves as the basis for charging the cost. Form 720 is the IRS's way of receiving this fee, and it must be submitted by July 31st each year. 

Employers typically cover the costs of self-insured health plans, whereas insurance companies typically cover the costs of fully insured plans. Therefore, if an employer decides to go with the second option, which is self-insuring an HRA (Health Reimbursement Arrangements), he must pay a PCORI cost. If you are a small business with group health insurance that is fully insured via the carrier, you probably won't have to pay the charge yourself because the insurance company will handle this payment. However, if you sponsor an HRA or any other self-funded component, you may still be required to pay the fee if you sponsor a self-funded component like an HRA. 

Certain forms of coverage are exempt from the PCORI cost. These could include only dental or only vision coverage, as well as plans that offer coverage for a set amount of time (such as COBRA continuous coverage in some circumstances). Furthermore, some government programs and church plans may not be considered either. Review the structure of your health coverage to determine if it qualifies as self-insured or fully insured under IRS guidelines. Additionally, it is advisable to confirm compliance by speaking with a tax expert or benefits consultant if one is unsure. 

IRS Form 720 (Quarterly Federal Excise Tax Return) is the form you will need to submit the PCORI charge. Select "PCORI Fee," which is located in Part II of the form, if you are using paper and pen. After that, you must compare the different lifetimes that are covered and select one of the IRS-approved techniques, which include the Form 5500 approach, the snapshot method, and the actual count method. Since the required fee amount changes annually, remember to visit the IRS website on a regular basis to stay informed about the most recent rate and instructions. 

The IRS may impose fines if the PCORI charge is not paid under the specified circumstances. You may still be obligated to the IRS even if you solely provide an HRA or a self-insured plan. It's a good idea to be extremely watchful and to approach your PCORI obligations methodically, although this does not guarantee that you won't suffer fines or penalties. To prevent any problems with the tax regulations, it is highly recommended to double-check with an expert and file before July 31st.