What are POCRI Fees?
Some small business owners might be curious about what these fees are and how they work. If you’re one of those business owners, this is the article for you.
As health care costs increase, group health insurance premiums increase with them. POCRI Fees apply to self-insured health plans and group health policies.
Let’s learn more about what they are, how to calculate them, and other things you need to know about them.
What Are POCRI Fees?
POCRI Fees (Patient-Centered Outcomes Research Institute Fees) are federally mandated charges applied to certain self-insured health plans and fully insured group health policies. These fees help fund comparative clinical effectiveness research, allowing healthcare providers and patients to make data-driven medical decisions.
The IRS requires employers, health insurers, and plan sponsors to calculate and report POCRI Fees annually using IRS Form 720, with payments due by July 31st each year. Proper compliance and fee management can prevent penalties and unnecessary expenses.
What Contributes to POCRI Fees?
Several factors determine POCRI Fees, impacting how much businesses, insurers, and self-funded plans must pay. Here are some of the key components that contribute to these fees.
Type of Health Plan
Self-Insured Health Plans—Employers that self-fund their employees’ healthcare instead of using an insurance provider must pay POCRI Fees.
Fully Insured Health Plans—Insurers that provide group health insurance coverage must also pay the fee, though they may pass the cost to employers.
Number of Covered Lives
POCRI Fees are calculated based on the number of individuals covered under a health plan, including:
• Employees
• Spouses
• Dependents
• Retirees
The more covered lives in a plan, the higher the total fee.
Industries that deal with POCRI Fees include:
• Self-Insured Employees
• Health Insurance Companies
• Third-Party Administrators (TPAs) for Health Plans
• Hospitals & Healthcare Systems
• Nonprofit Organizations
• Trade Unions
Why Do POCRI Fees Matter?
Financial Burdens of Mismanaged POCRI Fees
Miscalculating POCRI Fees can result in overpayments, unnecessarily increasing healthcare costs, or underpayments, which can lead to IRS fines. Late payments may accrue interest charges, while compliance mistakes might require hiring financial or legal experts to resolve errors. Additionally, failing to document payments correctly could lead to the loss of valuable tax deductions.
Legal and Regulatory Considerations
The IRS requires annual reporting and payment of PORCI Fees via Form 720, due July 31st each year. Employers and insurers must stay updated on annual rate changes and ensure accurate calculations using approved IRS methods. Fully insured plans typically have the fee built into premiums, while self-funded employers are directly responsible for compliance.
How to Reduce and Manage Your POCRI Fees
Track and Monitor Fees
We recommend using financial software to keep track of POCRI Fees. It allows you to avoid costly mistakes.
Negotiate with Payers
Understand your contractors and dispute unnecessary charges.
Leverage Tax Deductions
Check if any portions of PCORI Fees are deductible. And if they are, implement them.
Stay Updated on Policy Changes
Regulations around POCRI Fees may evolve.
Tools and Resources to Help with POCRI Fees
Software Solutions
• QuickBooks
• Workday Financial Management
• ADP Workforce Now
• Avalara
Key Government Resources
• IRS.gov PCORI Fees
• U.S. Department of Labor (DOL) – Health Plan Compliance
Compliance Management Checklist
Determine if you are subject to POCRI Fees
• Confirm whether your organization provides a self-funded health plan or a fully insured plan.
• If fully insured, verify whether the insurer handles POCRI Fee payments or if you are responsible.
• Check IRS guidelines for a fee applicability to your organization.
Accurately Calculate POCRI Fees
• Determine the total number of covered lives (employees, dependents, retirees).
• Choose an IRS-approved calculation method
-Actual Count Method
-Snapshot Method
-Form 5500 Method
• Verify the current IRS fee rate for the plan year.
Track & Document Fee Payments
• Maintain detailed records of POCRI Fee calculations and payments.
• Using accounting or tax software
• Keep documentation of previous IRS Form 720 Fillings for audit purposes.
File & Pay POCRI Fees on Time
• Deadline: Ensure IRS Form 720 is filed and POCRI Fees are paid by July 31st each year.
• Submit payments via IRS-approved payment methods.
• Double-check filing accuracy to avoid underpayment or overpayment.
Stay Updated on Regulatory Changes
• Monitor IRS updates for POCRI Fee rate changes and reporting requirements.
• Subscribe to industry newsletters, IRS updates, or POCRI announcements.
• Consult a tax professional or compliance expert if uncertain about changes.
Common Mistakes to Avoid When Handling POCRI Fees
Mistake #1. Incorrect information.
It’s common for business owners with group health insurance in Houston to enter the wrong EIN, incorrect business name, or address.
Mistake #2. Entering the wrong year.
When selecting the quarter under the Tax Year field, choose April-June. Double-check the tax year, as well, as the POCRI fee changes every year.
Mistake #3. Not paying attention to the payment.
Your Payment Voucher Form 720 V has to be attached along with the form. Your filing will be rejected otherwise.
Mistake #4. Calculation errors.
As we mentioned earlier, it’s critical that you do the correct calculations to ensure your fees are handled correctly.
Mistake #5. Failing to dispute inaccurate POCRI Fees.
Make sure you double-check the fee amounts to ensure that it is accurate. If not, it’s time to dispute it.
Frequently Asked Questions
1. What are POCRI Fees, and who has to pay them?
POCRI Fees are imposed on certain health insurance policies and self-insured health plans to fund comparative clinical effectiveness research. Employers offering self-funded insurance and certain health insurers must pay these fees annually.
2. Can POCRI Fees be deducted as a business expense?
Yes, in most cases, businesses can deduct POCRI Fees as an ordinary and necessary business expense under Section 162(a) of the Internal Revenue Code. Be sure to speak with a tax professional to confirm this.
3. Are there any late fees for POCRI Fee payments?
Yes. Failure to file or pay the PORCI Fee on time could cause you IRS penalties and other compliance measures. File on time to avoid fees.
4. How do I minimize my POCRI Fee liability?
While POCRI Fees are mandatory, you can reduce your fees by following the steps above.
5. Do small businesses with a group health insurance plan need to pay POCRI Fees?
If a small business offers self-funded health insurance, they are subject to POCRI Fees.
Conclusion—Mastering POCRI Fees for Long-Term Success
Small business owners in Houston and Texas with a group health insurance policy should be aware of POCRI Fees, their deadlines, and the correct calculation for them.
Stay proactive with your PORCI Fees to avoid costly penalties and interest on those penalties.
Contact a consultant or use the recommended tools that we outlined above to optimize POCRI Fees.
Need more help or have a question that wasn’t answered here? Reach out to the PCI Solutions team to learn more about POCRI Fees and how they might affect your business.
EN 
ES