Patient Centered Outcomes Research Institute (PCOR)

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Under health care reform, Patient Protection and Affordable Care Act (PPACA), a new nonprofit corporation was established, the Patient Centered Outcomes Research Institute (PCOR). This corporation will be funded in part by PCOR/CER (Comparative Effectiveness Research) fees paid by certain health insurance issuers or plan sponsors of applicable self-insured health plans. Please note that Health Reimbursement Arrangements (HRAs) are categorized as self-insured health plans and are therefore subject to this fee unless, in rare occasions, it is determined to be an excepted benefit (i.e. for vision and dental expenses only).

The annual research fee is to be applied to policy plan years ending on or after October 1, 2012 and before October 1, 2019. The proposed regulations governing the payment and methodology of calculating PCOR/CER fees were finalized in November 2012.

How much is the fee? The annual amount of the fee for applicable self-insured health plan is generally calculated as the product of the average number of lives covered under the plan times the applicable dollar amount indicated below: 

  • For plan years ending prior to October 1, 2013 the dollar amount is $1.00 per applicable life;
  • For plan years ending on, or after October 1 2013 it is $2.00 per applicable life.
  • For plan years ending on or after October 1, 2014 the fee rate will be subject to cost-of-living increases based on the projected per capita increase in National Health Expenditures (a statistic maintained by the Secretary of the Treasury).

Who is responsible to pay the fee?
The plan sponsor (employer or the employee organization that established or maintains the plan) is responsible to pay the fee.

How is the fee reported and paid for?
To report the fee, plan sponsors (employers) must file IRS Form 720 and make payments for that plan by July 31, 2013.

The Following benefits are not subject to the fee:

  • Excepted benefits, including limited-scope dental and vision plans, and Flexible Spending Accounts (FSAs)
    • Health Savings Accounts (HSAs)
    • Employee assistance, disease management, and wellness programs that do not provide significant benefits for medical care or treatment
      • Expatriate plans that primarily cover employees living and working outside of the United States
      • Stop-loss coverage

Are HRAs subject to the fee? 
As stated in the introduction, HRAs are defined as self-funded health plans and as such almost all HRAs are subject to the PCOR fees (with the very limited exception of excepted HRAs –HRAs that cover only vision and dental benefits). 

HRA’s have a special rule when it comes to the calculation of the number of lives to be reported and paid for and will depend on:

  • Whether the HRA is linked/integrated with a fully insured group health plan or a self-insured group health plan
  • If the HRA is stand-alone, with no other available self-insured health plans

The special rule that applies to some HRAs—known  as the “one life per participant rule”  states that if a plan sponsor (employer) has no other applicable self-insured medical plans, the sponsor can treat each participant’s HRA account as covering only one life, this means that the employer would not have to include spouses, dependents, and any other beneficiaries in the calculation of reportable lives—all dependents  can be ignored for purposes of the fee calculation when the Health Reimbursement Arrangement is the only self-insured medical plan offered by the employer.

Your HRA fees will be calculated and reported based on which of the following categories your plan falls into:

Your HRA is linked/integrated with a fully insured group health plan

In this case the policy issuer of the group health plan is responsible to pay for the fees associated with the insured group health plan, and the plan sponsor (the employer) is responsible to pay for and report the fees for the linked/integrated group health plan—the HRA.  Because the HRA is integrated with a fully insured health plan the fees will be calculated on a “one Life per Participant rule” basis and ABG will provide you with the count for reporting purposes.

Your HRA is linked/integrated with a self- insured group health plan

In this case, because there is more than one self-insured health plan, the calculation of fees allows the application of a special rule whereby the two plans can be treated as one plan for PCOR fee purposes.  The individuals covered by both plans are counted once, but the “one life per participant” rule does not apply, and all spouses, dependents, and beneficiaries must be included in the count.  If your HRA meets this description the PCOR fees will be calculated based on participant count for the self-insured group health plan.  ABG will not provide you with the HRA CER/PCOR count for reporting purposes.

Your HRA is a stand-alone plan that is not integrated with any other health plans

Stand-alone HRA.  If your HRA is not linked/integrated with a health plan, and you do not offer any other self-insured health plan then the plan sponsor (employer) is responsible to pay the fee based on the number of lives covered by the HRA—In this calculation the “one life per participant” rule applies and ABG will provide you with the CER/PCOR  count for reporting purposes. However if you have a self-insured medical plan in addition to the HRA, even though this plan is not linked to/integrated with the HRA then your HRA calculation for the HRA would have to include all dependents, spouses covered by the HRA.

There are three suggested methods for calculating the total number of covered lives:

Actual Lives Approach: Add up the total number of covered lives each day during the plan year and divide that number by 365

Snapshot Approach: Select one day during each quarter of the plan year and calculate the total number of covered lives. Take the sum of the quarters and divide that number by 4.

Approximate Approach: Take the total number of employee with self-only coverage and add to that the number of employees with at least 1 dependent multiplied by 2.35


Please let us know if:

The health plan that your HRA is integrated with is fully insured or self-insured.

You offer a stand-alone HRA and if you offer any other self-insured medical plans.

This article is for overview purposes only. For the official and full text of the IRS proposed regulations, go to

For more information about the Patient-Centered Outcomes Research Institute, go to

Please contact us directly for more information or with any questions you have about the PCOR fee or any benefits-related issues.  

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