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Health Care Reform News

Final Rules - Patient-Centered Outcome Research Institute Fees

December 31, 2012


The IRS has released a final rule which provides direction on calculating the Patient-centered Outcomes Research Institute (PCORI) fee, established by the Affordable Care Act (ACA). The PCORI fee, formerly effects plan sponsors and issuers of individual and group policies.


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's indexed to national health expenditures thereafter until it ends in 2019.


Under the IRS final rule, issuers and plan sponsors are responsible for paying the fee, which is treated like an excise tax by the IRS. A federal excise tax return (Form 720) reporting liability for the fee must be filed by July 31 of the calendar year immediately following the last day of the plan year.


As the issuer of specified health insurance policies, Wellmark is responsible for filing Form 720 and paying the required PCORI fee in the case of fully-insured coverage. As the plan sponsor, self-funded customers must complete Form 720 and pay the fee directly to the IRS. Self-funded customers with questions about the filing of excise tax returns should consult with their tax advisor.

  • The amount of the fee for a policy year is calculated using the average number of lives covered under the policy for the policy year and the applicable dollar amount.
  • To determine the average number of lives covered under a specified health insurance policy during a policy year, an issuer must use one of the following methods:
    • The actual count method
    • The snapshot method
    • The member months method
    • The state form method

Consult with your tax advisor to help you determine the method you should use.


To learn more about this Final Rule, see this document. Additional information on health care reform can be found on


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