The Patient Protection and Affordable Care Act (PPACA) imposes a new Patient-Centered Outcomes Research Institute (PCORI) fee, on plan sponsors and issuers of individual and group policies.  All plans that provide medical coverage to employees owe this fee.  Medical coverage includes PPOs, HMOs, POS, HDHPs, and HRAs.


The health insurance issuer is responsible for paying the fee.  However, the plan sponsor is responsible if the plan is self insurance.  A federal excise tax return (Form 720) reporting liability for the fee must be filed by July 31, 2013.  The first year of the fee is $1 per covered life per year, the second year the fee adjusts to $2 per covered life and then it is indexed to national health expenditures thereafter until it ends in 2019.


PPACA states that the “plan sponsor” responsible for paying this fee is:

  • ·         A plan established or maintained by a single employer:  the employer
  • ·         A plan established or maintained by an employee organization:  the employee organization
  • ·         A plan established or maintained by 2+ employers or jointly by employers/employee organizations (i.e., a multiemployer plan, a MEWA or VEBA):  the association, committee, joint board of trustees or other similar group of representatives of the parties who establish or maintain the plan
  • ·         A plan established or maintained by a cooperative or association:  the cooperative or association


The IRS has stated that the PCORI Fee will be tax deductible by employer groups (i.e., sponsors of self-insured group health plans) as ordinary and necessary business expenses, subject to any applicable disallowances or limitations under the Code.


The purpose of these fees is to provide monies to the Patient-Centered Outcomes Research Trust Fund that will conduct comparative effectiveness research.  The research will evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of two or more medical treatments and/or services.


If you have questions, please do not hesitate to contact us at 239-433-5554.




The team at Markham Norton Mosteller Wright & Company