The PCOR fee must be reported each year on IRS Form 720 for the second quarter of the calendar year and can be paid electronically or mailed to the IRS using the Form 720-V payment voucher. Employers that are subject to PCOR fees but no other types of excise taxes should file Form 720 only for the second quarter. In other words, no filings are needed for the other quarters, only the second quarter. For plan years that ended in 2018 but before October 1, 2018, the fee is $2.39 multiplied by the average number of lives covered under the plan. For plan years that ended between October 1, 2018, and October 1, 2019, the fee is $2.45 multiplied by the average number of lives covered under the plan. Here’s a chart to help illustrate the fee based on plan year. Plan Years ending in 2018 | Fee Owed as of July 31, 2019 Feb 2017 – Jan 2018 $2.39 Mar 2017 – Feb 2018 $2.39 Apr 2017 – Mar 2018 $2.39 May 2017 – Apr 2018 $2.39 Jun 2017 – May 2018 $2.39 July 2017 – Jun 2018 $2.39 Aug 2017 – July 2018 $2.39 Sept 2017 – Aug 2018 $2.39 Oct 2017 – Sept 2018 $2.39 Nov 2017 – Oct 2018 $2.45 Dec 2017 – Nov 2018 $2.45 Jan 2018 – Dec 2018 $2.45 There is a common misconception that 2019 is the last year PCOR fees are due. However, the fee actually ends for plan years ending in 2019, so plans will have to pay it for the last time July 31, 2020.** **Special edit - this rule was changed in December 2019, and the PCOR fee was extended for another 10 years. For details on the update, see my blog: https://www.benefitscompliancesolutions.com/post/december-2019-aca-updates-what-do-they-mean-for-me** For fully-insured plans, the carrier is responsible for filing and paying the fee, but self-insured plans are responsible for filing. Self-insured plans also include HRAs. However, a stand-alone dental or vision HRA or a health FSA is excepted and wouldn’t be subject to the PCOR fee. The PCOR fee is based on the number of employees, spouses, and dependents that are covered by the plan. They can use the actual count method, snapshot method (and snapshot factor sub-method) or Form 5500 method to determine the average number of covered lives: 1. Actual count method – this method calculates the average of covered lives by adding the number of lives covered each day of the plan year divided by the number of days in the plan year. For example, a plan that starts on Jan 1 calculates the sum of covered lives (including spouses and dependents) as 3,285,000 divided by 365, which is 9,000. Thus, the PCOR fee for plan year 2018 is 9,000 times $2.45, or $22,050. 2. Snapshot method – this method calculates the average by adding the total number of lives covered on a date during the first, second or third month in each quarter, or equal number of dates during each quarter, and dividing by the number of dates. For instance, on Jan 4, 2018, the plan covers 2,000 lives; on April 5, 2018, 2,100 lives; on July 5, 2018, 2,050 lives; and on October 4, 2018, 2,050 lives, which totals 8,200. Since the plan ends on Dec 31, 2018, the employer multiplies $2.45 by 2,050 (8,200/4), which equals $5,022.50. Snapshot factor method – this sub-method uses the number of participants with self-only coverage plus the number of participants with coverage other than self-only coverage (e.g., family, EE + spouse, EE + child, etc.) on the designated dates multiplied by 2.35, covered on a certain date each quarter. As another example, on January 10, 2018, the plan has 600 employees with self-only and 800 with coverage other than self-only. On April 11, 2018, 608 with self-only and 800 with other. On July 11, 2018 and October 10, 2018, there were 610 with self-only and 809 with other. Since the plan ends Dec 31, 2018, the total is 9,988 [(600 + (800 × 2.35)) + (608 + (800 × 2.35)) + (610 + (809 × 2.35)) + (610 + (809 × 2.35))] divided by 4, which is 2,497. Thus, the PCOR fee for the 2018 plan year is $2.45 multiplied by 2,497, which equals $6,117.65. 3. Form 5500 method – this is based on the average number of covered lives reported on Form 5500 for the plan year. This can only be used if the Form 5500 is filed no later than the due date for the fee imposed for that plan year. In other words, if the plan files a Form 5500 extension, this method might not be usable. Under this method, the total number of lives is calculated by adding the total participant counts at the beginning and end of the year and dividing by 2 for a plan that only offers single coverage. If a plan offers single coverage along with other coverage (e.g., family coverage), the total number of lives is determined by adding the total participant counts at the beginning and end of the year (without dividing by 2). For instance, a plan year ending on July 31, 2018 files a Form 5500 for the plan year ending July 31, 2018 (the 2017 Form 5500), which reports 4,000 plan participants on the first day of the plan year and 4,200 plan participants on the last day of the 2017 plan year. This group must treat the number of lives covered for the plan year ending July 31, 2018, as equal to the sum of 4,000 and 4,200, or 8,200. To calculate the PCOR fee, they would multiply $2.39 by 8,200, which equals $19,598. Needless to say, calculation of the PCOR fee is complicated. Even if you use a TPA or a vendor to assist with the calculation, the PCOR fee is the responsibility of the employer. Failure to file likely carries the same penalty for failure to pay other taxes due on Form 720.