The Patient-Centered Outcomes Research Institute (PCORI) is an independent, non-profit organization established under the Affordable Care Act (ACA) to fund research aimed at providing patients, caregivers, and healthcare providers with evidence-based information to make more informed healthcare decisions. Its focus is on comparative clinical effectiveness research (CER), which compares different medical treatments and approaches to determine what works best for specific conditions. As an employer offering ICHRA, the PCORI fee is an important requirement.
What is PCORI and when is the fee due?
The PCORI fee is a charge imposed by the Affordable Care Act (ACA) on health insurance issuers and employers who sponsor self-insured health plans, including ICHRAs. The fee is used to fund the Patient-Centered Outcomes Research Institute, which supports research aimed at improving healthcare outcomes.
As an employer offering an ICHRA plan, you are responsible for paying the PCORI fee since ICHRAs are considered self-insured health plans. The fee applies to the average number of lives (employees and covered family members) enrolled in the ICHRA plan and is due annually by July 31st for the prior plan year.
If you just started your ICHRA plan with Zorro, this calendar year, you will not be required to file until the next year!
How is the PCORI fee calculated?
The fee is calculated based on the average number of lives covered by your ICHRA.
The fee amount is adjusted annually for inflation. For the most recent year, it ranges from a few dollars per covered life.
You will need to count all participants in your ICHRA plan, including employees and any dependents who are covered.
How to pay the PCORI fee?
Employers must report and pay the PCORI fee by filing IRS Form 720, which is used for excise taxes.
The form and the fee are due by July 31st following the plan year.
The fee can be calculated using one of the approved methods for determining the number of covered lives in the ICHRA plan.
How is the average number of lives calculated?
You can use one of the following methods to calculate the average number of covered lives for your ICHRA:
Actual count method: Count the number of participants covered on each day of the plan year and then divide by the number of days in the plan year.
Snapshot method: Choose one day per quarter (or more) to count participants and average these counts over the plan year.
Form 5500 method: If your ICHRA requires the filing of Form 5500, you can use the participant counts from that form.
Zorro and PCORI
You will be able to see your PCORI data report from Zorro in your employer-admin portal, in the Compliance section.
Note: The PCORI fee is filed retroactively for the prior calendar year. If your ICHRA plan with Zorro started this year, Zorro will not generate PCORI data for your group until next year’s filing cycle. For this year’s filing, please contact your previous benefits provider to obtain the necessary data.
Zorro is providing the data you need to complete the PCORI IRS Form 720.
We provide data starting from the month your group joined ICHRA with Zorro. Months prior to your start date will show “0” as your group was not yet with Zorro. If your group joined mid-year, any data for earlier months must be obtained from your previous benefits partner.
What’s in Your Report
Your file includes two tables, be sure to scroll to the right to view the second table:
First Table: All Members (Employees + Dependents)
Shows the number of total covered individuals for each month. We have included all the employee and dependent information.
Note: For members of the same family unit, Last name will only appear for the first family member.
Second Table: Employees Only
Scroll to the right to display the monthly count of ONLY employees with active coverage per month.
What You Need to Do
Download the report from the Compliance Section of the Zorro Platform.
Scroll to the right in the spreadsheet to view both tables.
Use the data to complete IRS Form 720 for your PCORI fee submission.
Reach out to our team if you need help interpreting the file.