ACA Reporting
ACA Compliance Lessons Learned From Recent Reporting Seasons
Common themes emerge when reflecting on recent ACA reporting seasons that can help employers reduce administrative burdens and improve accuracy.
ACA Reporting
PCORI Fee Deadline
The annual deadline to report and pay the Patient-Centered Outcomes Research Institute (PCORI) fee is fast approaching.
The annual deadline to report and pay the Patient-Centered Outcomes Research Institute (PCORI) fee is fast approaching. Employers sponsoring certain self-funded health plans must take action by July 31, 2025, to comply with this IRS requirement.
What is the PCORI Fee?
The PCORI fee helps fund research that evaluates the effectiveness of medical treatments and services. It applies to most health plans, including:
- Self-insured group health plans
- Level-funded health plans
- Health Reimbursement Arrangements (HRAs) not integrated with fully insured plans
Fully insured plans are generally excluded from the fee since insurance carriers handle payment, but employers with self-insured components or stand-alone HRAs may still have reporting obligations.
What HR Teams Must Do:
If your organization sponsors a self-insured or level-funded health plan, you must:
- Calculate the fee based on covered lives
- File IRS Form 720 (Quarterly Federal Excise Tax Return)
- Pay the amount due by July 31, 2025
Fee Amount (Based on Plan Year Ending Dates)
- For plan years ending on or after October 1, 2023, and before October 1, 2024: $3.22 per covered life
- For plan years ending on or after October 1, 2024, and before October 1, 2025: $3.47 per covered life
How to Calculate the Fee
You can choose one of these IRS-approved methods to determine the average number of covered lives for your plan:
- Actual Count Method
Count covered lives (employees, spouses, dependents) on each day of the plan year and divide by the total number of days.
- Snapshot Method
Count covered lives on designated days (e.g., first day of each quarter or month) and average those numbers.
- Form 5500 Method
Use participant counts from your most recent Form 5500 filing, adding dependents as specified.
Employers can select the method that is most practical for their circumstances, but consistent application is required.
How to Report and Pay
- File IRS Form 720, even if this is your only excise tax obligation.
- Submit payment using EFTPS (Electronic Federal Tax Payment System) or as directed on the form.
- Penalties may apply for late filings or underpayment.
Next Steps for HR
- Confirm whether your organization sponsors a self-insured, level-funded, or applicable HRA plan.
- Work with your broker, third-party administrator, or payroll team to calculate the fee.
- Complete and file IRS Form 720 by July 31, 2025.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
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