Patient Centered Outcomes Research Institute (PCOR)

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Under health care reform (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 (HRA) are categorized as a self-insured health plans unless, in rare occasions, it is determined to be an excepted benefit (i.e. for vision and dental expenses only) and are therefore subject to this fee.  

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.  Plan assets cannot be used to pay the fee since ERISA’s prohibited transaction rules prohibit plan assets from being used to offset employer obligations.

How is the fee reported and paid for?—To report the fee, plan sponsors (employers) must file IRS Form 720 by July 31 of the year following the calendar year in which the applicable plan year ended.  If your HRA plan year ended between October 1, 2012 and December 31, 2012 you must file and make payments for that plan by July 31, 2013.  If your plan ended after the October 1-December 31, 2012 period your first HRA PCOR/CER filing will be due no later than July 31, 2014 for that applicable plan year.

In all cases, payment of fees must be made with the filing.

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?  Because HRAs are defined as self-funded health plans, almost all HRAs are subject to the PCOR fees (with the exception of “excepted”benefit HRAs, that is, HRAs that cover vision and dental benefits only). 

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 one of the two categories below:


  1. Your HRA Plan 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.
  2. Your HRA plan 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 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.


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


  1. Actual Lives Approach
    Add up the total number of covered lives each day during the plan year and divide that number by 365
  2. 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.
  3. 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

If ABG has been administering your plan for the plan year that is being reported, we will provide you the numbers per the “Actual Lives Approach,” based on the enrollments and terminations that have been provided to us over the course of the plan year.

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