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PCORI fee calculation gets transition relief

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Tax Hot Topics newsletterThe IRS issued Notice 2020-46 to provide transition relief for calculating the Patient-Centered Outcomes Research Institute (PCORI) fees assessed on health insurance policies and self-insured health plans.

The PCORI fee program was set to expire for policy and plan years ending after Sept. 30, 2019, but recent legislation extended the expiration date by 10 years. As such, many plan sponsors and policy issuers may not have anticipated the need to continue tracking certain plan participant data in order to calculate the PCORI fees for policy and plan years ending after Sept. 30, 2019.

In light of this, Notice 2020-44 provides transition relief that permits plan sponsors and policy issuers to continue to use one of the applicable methods specified in the current regulations or use any other reasonable method to calculate their PCORI fees for policy years and plan years that end on or after Oct. 1, 2019, and before Oct. 1, 2020. If a reasonable method is used, it must be applied consistently for the duration of the year and issuers of specified health insurance policies must use the same method for all policies for which a liability is reported on Form 720 for that year.

The notice also provides that the applicable dollar amount that must be used to calculate the PCORI fee for years that end on or after Oct. 1, 2019, and before Oct. 1, 2020, is $2.54 (an increase from the $2.45 amount that applied for the prior fiscal year).

Contacts:
Jeff Martin
Partner
Washington National Tax Office
T +1 202 521 1526

Keith Mong
Managing Director
Washington National Tax Office
T +1 202 521 1554

James Sanchez
Senior Associate
Washington National Tax Office
T +1 202 861 4107

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