New Fee Requiring Self-Funded Plan Action

Written by Warren Averett on May 10, 2013

The Patient Protection and Affordable Care Act mandates a new fee from all plan sponsors and issuers of individual and group health policies.  The purpose of the fee is to assist patients, clinicians, purchasers and policy-makers in making informed health decisions by advancing clinical effectiveness research.  It is referred to as the Patient-Centered Outcomes Research Institute (PCORI) fee.

Generally for health plans that are fully insured, the service provider will be taking care of the fee and the filing of Form 720 with the IRS.  If a plan is self-funded then the plan sponsor will most likely be responsible for the IRS filing and paying the fee.

The fee begins in 2012 and will continue each year until it is phased out in 2019.  The amount of the fee is $1 per participant in the first year, $2 per participant in the second year, and then it is indexed to national health expenditures for each year thereafter.  It is effective for all plan years ending after September 30, 2012.  The amount of the fee is reported and filed using IRS Form 720 and it is due no later than July 31st of the year following the last day of the policy or plan year.


The PCORI fee will generally apply to most health plans and policies.  However, these plan types, among others, are exempt from the fee:

  • Accident-only and disability income insurance
  • General liability insurance
  • Workmen’s compensation policies
  • FSA  and HRA plans that meet the excepted benefits test
  • Medicare
  • Medicaid
  • Employee Assistance Programs (EAP) or wellness programs
  • Certain health insurance policies that stand alone such as vision or dental plans

If you have any questions on whether or not the PCORI fees are applicable to any of your health policies or plans, please call your Warren Averett advisor.  Our professionals are also available to assist you with any questions related to the employer mandate effective 2014.  Please contact your Warren Averett advisor or visit for more information.

Back to Resources