PCORI Fees: What Employers Owe and How to Pay

If your Long Island business offers health insurance to employees, you may owe PCORI fees—a federal requirement that many business owners don't even know exists. Missing these payments can result in penalties, making it crucial to understand your obligations.

What Are PCORI Fees?

PCORI fees fund the Patient-Centered Outcomes Research Institute, which conducts medical research comparing treatment effectiveness. Think of it as a small tax on health insurance coverage that helps improve medical care for everyone.

The fee applies to most employer-sponsored health plans, including traditional insurance, self-funded plans, and Health Reimbursement Arrangements (HRAs). It's separate from your insurance premiums—this is an additional government requirement.

How PCORI Fees Work

The mechanics are straightforward but easy to overlook. You pay a flat fee per covered life in your health plan. A "covered life" means each person covered—both employees and their dependents count separately.

For example, if you have an employee with family coverage, you'd pay the fee for the employee plus each family member covered under the plan. An employee with a spouse and two children would generate four separate fees.

The fee amount is adjusted annually based on medical inflation, so the exact dollar amount changes each year. You can find current rates on the IRS website or by consulting with your benefits administrator.

Why Employers Must Pay These Fees

This isn't optional—it's a federal requirement. The research funded by PCORI fees helps determine which medical treatments work best, potentially reducing healthcare costs for everyone over time. While the immediate benefit to your business may not be obvious, the long-term goal is better, more cost-effective healthcare.

From a compliance standpoint, failing to pay PCORI fees can result in penalties and interest charges. The IRS treats these like any other tax obligation, so staying current protects your business from unnecessary costs and complications.

What This Means for Your Employees

Employees typically don't see PCORI fees directly—they're paid by the employer, not deducted from paychecks. However, the research these fees fund can lead to better treatment options and potentially lower healthcare costs in the future.

The fee doesn't affect employee benefits or coverage. It's simply a cost of offering health insurance that operates behind the scenes.

Key Considerations for Business Owners

Calculating PCORI fees requires accurate headcount tracking. You need to know exactly how many people are covered under your plan throughout the year, including employees who join or leave mid-year.

The payment deadline typically falls in July following the plan year, but the exact date can vary. Missing this deadline triggers penalties, so mark your calendar and plan ahead.

If you offer multiple health plans or have employees in different coverage tiers, you'll need to track covered lives separately for each arrangement. This can get complex quickly, especially for growing businesses.

Some business owners try to handle this themselves, but the record-keeping requirements and calculation complexity often make professional administration worthwhile. The cost of getting it wrong usually exceeds the cost of getting help.

How Benton Oakfield Simplifies PCORI Compliance

At Benton Oakfield, we handle PCORI fee calculations and filings as part of our comprehensive plan administration services. We track your covered lives throughout the year, calculate your exact fees, and ensure timely filing to avoid penalties.

Our Long Island business owners appreciate having one less compliance requirement to worry about. We stay current on fee changes and deadline updates, so you can focus on running your business instead of deciphering IRS requirements.

We also help you understand how PCORI fees fit into your overall benefits costs, making it easier to budget accurately and make informed decisions about your employee benefits package.

Ready to simplify your benefits administration and ensure PCORI compliance? Contact our team to learn how we can handle these requirements for your business.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This guide is for educational purposes only. Please contact your Benton Oakfield representative to discuss how this applies to your specific situation.

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