he 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 2019 but before October 1, 2019, the fee is $2.45 multiplied by the average number of lives covered under the plan. For plan years that ended between October 1, 2019, and October 1, 2020, the fee is $2.54 multiplied by the average number of lives covered under the plan.
Here’s a list to help illustrate the fee based on plan year:
Plan Years ending in 2019: Fee Owed as of July 31, 2020
Feb 2018 – Jan 2019 $2.45
Mar 2018 – Feb 2019 $2.45
Apr 2018 – Mar 2019 $2.45
May 2018 – Apr 2019 $2.45
Jun 2018 – May 2019 $2.45
July 2018 – Jun 2019 $2.45
Aug 2018 – July 2019 $2.45
Sept 2018 – Aug 2019 $2.45
Oct 2018 – Sept 2019 $2.45
Nov 2018 – Oct 2019 $2.54
Dec 2018 – Nov 2019 $2.54
Jan 2019 – Dec 2019 $2.54
These fees initially applied to policy and plan years ending after October 1, 2012, and before October 1, 2019. For calendar-year policies/plans, the fees initially applied for calendar policy/plan years 2012 through 2018, so the 2018 plan or policy year was to be the last year for which PCOR fees would apply. However, budget legislation passed in December 2019 reinstated the PCOR fee and continued the fee through plan years ending before October 1, 2029.
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. Employers may use the actual count method, snapshot method (and snapshot factor sub-method) or Form 5500 method to determine the average number of covered lives. In addition, transition relief starting in 2019 allows employers to use any reasonable method for calculating the average number of covered lives, as long as it is applied consistently for the full year.
Needless to say, calculation of the PCOR fee is complex. 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.
Here is the IRS webpage which provides helpful information on calculating and paying the required PCOR fee: https://www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers