IRS Form for PCORI Fee Now Available

The IRS has revised its Form 720 to allow for filing and payment of the Patient-Centered Outcomes Research Institute (PCORI) fee required under the health care reform law. (The fee is also sometimes called the Comparative Effectiveness Research or CER fee.) The first filing deadline for the fee is July 31, 2013, and many employers that sponsor self-insured health plans have been waiting for the revised Form 720 to be issued so that they can prepare their filings. (Health insurers are responsible for calculating and paying the PCORI fee for fully insured coverage, so employers that do not provide any self-insured coverage need not file.)


The PCORI was created under the health care reform law to promote research that evaluates and compares the health outcomes obtained from, and the clinical effectiveness, risks and benefits of, medical treatments, services, procedures, drugs and other strategies that treat, manage, diagnose or prevent illness or injury. The funding source for the PCORI is a trust financed by PCORI fees paid by health insurers and sponsors of self-insured health plans. Regulations finalized late last year confirm that the fee is to be reported and paid annually using Form 720, “Quarterly Federal Excise Tax Return.” Although it is called a “quarterly” return, Form 720 for PCORI fee purposes is only filed once a year.

For an employer sponsoring a self-insured health plan, the first PCORI fee applies to the first plan year ending on or after October 1, 2012, and the deadline for filing and payment of the fee is July 31 of the calendar year immediately following the last day of the plan year. This means that an employer sponsoring a self-insured calendar year plan (with a plan year ending on December 31, 2012) must report and pay its first PCORI fee by July 31, 2013. In contrast, for a self-insured plan with a plan year ending on January 31, 2013, the deadline is July 31, 2014.

For plan years ending before October 1, 2013 the PCORI fee is $1 multiplied by the average number of lives covered under the plan. For plan years with later ending dates, the fee increases to $2 multiplied by the average number of lives covered under the plan. That $2 amount may be increase for inflation with respect to plan years ending on or after October 1, 2014.

IRS Form 720

Form 720 and instructions on how to complete and file it are posted on the IRS website. The IRS has also posted questions and answers about the PCORI fee and a chart that outlines which types of plans are subject to the PCORI fee. Although the IRS encourages electronic filing of Form 720, it may also be filed via hard copy. Filing electronically requires a plan sponsor to submit the form through an approved transmitter software developer.

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