PCORI Fee Zombie, Part II
As mentioned in our blog post last week, while the PCORI fee has been resurrected by the IRS, the amount of the fee for plan years ending after October, 2019 had not been updated. Today, the IRS released Notice 2020-44 which updates the fee amount and provides some limited transition relief.
The new amount used to calculate the PCORI fee for policy years and plan years that end on or after October 1, 2019, and before October 1, 2020, is $2.54 per person. The fee for plan years ending prior to October 1, 2019 was $2.45 per person.
In addition to the fee update, the IRS also provided some welcome transition relief for those that may have been caught unaware of the PCORI fee’s survival. As in years past, insurers and self-insured plan sponsors may use one the several specified methods to calculate the fee. However, acknowledging that many may not have counted their employees during 2019 when the PCORI fee was supposed to sunset, the IRS is permitting the use of any “reasonable method” to calculate the fee due. The transition relief applies to policy years and plan years ending on or after October 1, 2019, and before October 1, 2020. If an a reasonable method is used to calculate the average number of covered lives then that reasonable method must be applied consistently for the duration of the year.
As a reminder, in addition to the “reasonable method” available under the transition relief, self-insured plans are permitted to use one of three methods to calculate the PCORI fee: the actual count method, the snapshot method, and the Form 5500 method. See the IRS website for more details on each of these methods. If you have any questions about the PCORI fee or about any employee benefits related issue, please contact any of Graydon’s employee benefits team.