How Do I Calculate my PCORI Fee? | PCORI Fee Calculator

The Patient-Centered Outcomes Research Instute (PCORI) Fee has three approved methods of calculation Actual Count Method, Snapshot Method, and Form 5500 Method. This Fee is imposed by the IRS and was recently extended to October 1, 2029. Itis required to be reported only once a year on the second quarter Form 720, Quarterly Federal Excise Tax Return and paid by its due date July 31. The fee is based on the average number of lives covered under the policy or plan. You are required to maintain the same calculation method for the entirety of your policy year.

The PCORI fee is only required on self funded & level self funded health or accident plan options. No matter you group size if you have any of these plan options you are required to pay calculate and pay your fee. If the Plan Sponsor has multiple self funded Health and/or Accident Plan options then they may treat their plans as a single plan for calculation purposes.

Fully Insured Plan issuers (carriers) are also required to pay PCORI FEE's but use different calculation methods. Companies that have a fully insured health plan in place for their employees are not required to pay PCORI Fees unless they have an HRA in place. If they have an HRA with their fully insured option they are allowed to treat each employee account as one participant even if they have dependent/spouse coverage.

Each approved methods of calculation for plan sponsors are detailed below.


Why Calculate the PCORI Fee?

The PCORI Fee is mandated by the IRS and is applicable to self-insured health plans. It supports the Patient-Centered Outcomes Research Trust Fund, which funds research aimed at providing evidence-based information to help patients and healthcare providers make more informed decisions.

PCORI Methods of Calculation

There are three approved methods for calculating the PCORI Fee: the Actual Count Method, the Snapshot Method, and the Form 5500 Method. Each method has its intricacies, but all aim to determine the average number of lives covered under the plan for a given year.

  • Actual Count Method:
    This method involves determining the total number of lives covered under the plan for each day of the plan year, then dividing this total by the number of days in the plan year.

    Formula:
    ((Sum of Lives Covered Each Day of Policy Year) / 365) × Current PCORI Fee per Life = Total Fee
  • Snapshot Method:
    With this method, the plan sponsor counts the number of lives covered on specific dates during each quarter of the plan year. The total is then divided by the number of dates on which a count was made.

    Formula:
    ((Sum of Participant Count from Designated Dates in Each Quarter) / Number of Dates Used) × Current PCORI Fee per Covered Life = Total Fee
  • Form 5500 Method:
    This method uses the participant count reported on the Form 5500 filed for the applicable self-insured health plan. The total number of participants at the beginning and end of the plan year is averaged.

    Formula:
    ((Total Participants at Beginning of Year + Total Participants at End of Year) / 2) × Current PCORI Fee per Participant = Total Fee

Ensuring PCORI Compliance

It's crucial to use accurate participant counts and the current PCORI Fee rate to calculate the fee correctly. The fee is reported annually on the second quarter Form 720 and must be paid by July 31st of each year.



Depending on when your plan ended the fee changes. Please use the dropdown below to set the date for your PCORI fees due July 31st.



Actual Count Method

A plan sponsor may determine the average number of lives covered under a plan for a plan year by adding the total of lives covered for each day of the plan year and dividing that total by the number of days in the plan year. This includes dependents.

Actual Count Method Formula

((Sum of Lives Covered Each Day of Policy Year) / 365) × Current PCORI Fee per Life = Total Fee

Actual Count Method Calculator

/ 365 ×
Current PCORI Fee
=


Snapshot Method

A plan sponsor may determine the average number of lives covered under an applicable self-insured health plan for a plan year by adding the totals of lives covered on a date during the first, second, or third month of each quarter of the plan year (or more dates in each quarter if an equal number of dates is used in each quarter), and dividing that total by the number of dates on which a count was made.

Each date used for the second, third, and fourth quarter must be within three days of the date in that quarter that corresponds to the date used for the first quarter. All dates used must fall within the same plan year. If multiple dates are used in Q1, corresponding dates (or those within three days) must be used in Q2, Q3, and Q4.

The 30th and 31st are both treated as the last day of the month for purposes of the calculation. Once you have your dates, calculate the participant count by adding the number of participants with self-only coverage and the number of participants with non-self-only coverage multiplied by 2.35.

After calculating participant totals for each designated date of the quarter, sum them and divide by 4* to determine the average.

Snapshot Count Formula

Formula for Calculating Number of Participants on Each Designated Date

Self-Only Participant Count + (Non-Self-Only Participants × 2.35) = Total Participants for Date

Formula for Calculating Total Fee (Snapshot Method)

((Sum of Participant Count from Designated Dates in Each Quarter) / 4) × Current PCORI Fee = Total Fee

Snapshot Method Calculator

/ 4 ×
Current PCORI Fee
=



Form 5500 Method

A plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of participants reported on the Form 5500, filed for the applicable self-insured health plan for that year.

If you are currently on a level-funded option, this method may not apply to you, since you are not required to file a Form 5500 unless you have over 100 employees. In that case, filing a Form 5500 is mandatory regardless of your health plan’s funding method.

To calculate using this method, take the sum of the total participants covered at the beginning and end of the plan year (as reported on the Form 5500) and divide by 2.

Form 5500 Formula

((Participants at Beginning of Year + Participants at End of Year) / 2) × PCORI Fee = Total Fee

Form 5500 Method Calculator

/ 2 ×
Current PCORI Fee
=



Where Do I Pay the PCORI Fee?


Companies are required to pay their PCORI FEE on their second quarter FORM 720 filing. While the PCORI fee generally is not a substantial amount, the amount of non compliance is. If your broker is not educating you on this subject or does not make you aware of the fee each year picture what else you may be missing out on. Your broker/consultant should be saving you money not forcing you to spend more on PCORI fee non compliance or any other non compliance penalties.

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