qualifies as an excepted benefit).
In Notice 2020-84, the IRS adjusted the applicable dollar amount to be multiplied by the average number of covered lives for purposes of calculating the fee for policy years and plan years that end on or after October 1, 2020, and before October 1, 2021. The fee for the forgoing period is $2.66. Although the PCORI fee is based on the plan year, the reporting and fee due date is always July 31st. However, for 2021 the deadline will be August 2nd, instead of the usual July 31st deadline because the 31st falls on a Saturday. The Affordable Care Act (ACA) requires health insurers and sponsors of self-funded group health plans to pay the fee using IRS form 720.
The PCORI fee is based on covered lives. Accordingly, both employees and retirees and their covered spouses and children generally must be counted. The PCORI fee is based on a plan year, with the count determined based on the entire plan year, allowing for a few alternative calculations to determine the average number of covered lives.
The PCORI fee is small and was initially in effect from 2012 through 2019. However, in December 2019, the Further Consolidated Appropriations Act, 2020 extended the fee to plan/policy years ending before October 1, 2029. It was $1 the first year, $2 the second year, $2.08 the third year, $2.17 the fourth year, $2.26 the fifth year, $2.39 the sixth year, $2.45 the seventh year, $2.54 the eighth year, and $2.66 the ninth year. It is designed to fund research into the most effective ways of treating various diseases. The IRS has not announced the fee for subsequent plan years.
Sullivan Benefits clients will receive PCORI fee calculation options and filing instructions by June 30th. In the interim, feel free to reach out to any member of the team with any questions or requests for additional information.