Mistakes to avoid while filing PCORI Fee(Manually)
- Incorrect data entry and misreporting of required information
- Missing or incomplete fields during manual form submission
- Failure to include Form 720-V when making PCORI payments
- Overlooking updated PCORI fee rates issued by the IRS
- Mathematical miscalculations while determining the total fee
Filing the Patient-Centered Outcomes Research Institute (PCORI) fee is a non-negotiable requirement for employers that are sponsors of self-insured health plans, as well as for health insurance issuers. The fee needs to be reported each year to the IRS with the help of the Form 720 and even very small mistakes can result in penalties, interest or rejected submissions. A solid grasp of the mistakes to avoid while filing PCORI can be a great assistance in keeping the organization up-to-date with the regulations and free of unnecessary issues.
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Understanding the PCORI Fee and Form 720
The PCORI (Patient-Centered Outcomes Research Institute) fee is being used to finance research that will allow patients, their families and medical providers to better understand and compare treatment options. Employers that have self-insured health plans and insurance companies who are selling fully insured health plans have to pay this fee each year and file IRS Form 720 for this purpose.
Since Form 720 is mainly associated with quarterly excise taxes, filers who are only dealing with PCORI often get lost in the process.
Common Mistakes To Avoid While Filing PCORI
Inaccurate Reporting of Plan and Business Information
Apart from misspellings of words and syntax inaccuracies, wrong figures on a PCORI filing are among the top three most common errors. Taxpayers quite frequently enter incorrect Employer Identification Numbers (EINs), reporting periods or plan year details.
It cannot be overstated how crucial precise information is because the PCORI fee is, in fact, a person-based tax. Facing even a very slight discrepancy, the IRS will first send out a notice regarding a balance due or refund.
Submitting an Incomplete Form 720
Failure to provide the complete information on the form is the second most frequently occurring mistake. Manual submission inevitably has the drawback of being prone to human error. Therefore, it is more reckless to go in blind on excise forms that you are not familiar with.
Doing a double check of whether all the necessary parts of the paper have been filled out will ensure getting inspections, fines and troublesome phone calls at bay. This is one of the common mistakes to avoid while filing PCORI, which can be completely avoided through a thorough revision of the document.
Ignoring Form 720-V (Payment Voucher)
The official payment voucher when submitting PCORI fees manually is Form 720-V. Not including the voucher with your check or money order may cause your payment to be recorded incorrectly.
This error is frequently the cause when the IRS requests payment confirmation despite the fact that the funds were sent. Form 720-V is a must for smooth processing. Forgetting this simple step is very unfortunate and happens to be one of the mistakes to avoid while filing PCORI.
Not Staying Updated on PCORI Fee Rates
PCORI fee rates vary each year as they are linked to the health expenditure trends in the country. An error that is committed quite often is that of using the previous year's rate figures, especially by those who only refer to the data of the year before.
- For SADs (Plan years) ending in 2024, the PCORI assessment will be of $3.22 per covered life
- PCORI fees were $3.00 per covered life for plan years ending in 2023
Incorrect application of the rate means payment at either excessively higher or lower amounts. Learning about current IRS updates is the key to avoiding the common mistakes to avoid while filing PCORI that stem from fee calculation errors.
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Calculation Errors in Total Fee Amount
A calculation error may take place while computing the average number of covered lives or when multiplying by the fee rate that is to be used.
Big companies have a higher chance of making errors because of the amount and complexity of the work. They can significantly reduce the possibility of such a situation occurring by either double-checking calculations or using a computer-assisted tool.
Why Manual PCORI Filing Continues to Be Risky
Manual filing entails sticking to IRS instructions meticulously, entering correct data and making proper calculations. At any point, a mistake means returning to the point of non-compliance or even facing penalties. This is the reason why the common mistakes to avoid while filing PCORI are still widely made by employers and insurers.
Conclusion
Without the experience in excise tax reporting, a business that decides to hand-file PCORI fees will not only spend a lot of time on the task but will quite likely make a lot of mistakes. Mistakes may range from inaccurate reporting to using outdated fees and lead to financial and administrative penalties.
So as to avoid such risks, an increasing number of companies have been going to safe online filing solutions such as eFile720, which not only make tasks easier but also guarantee accuracy and compliance with confidence. You can learn more about our services on our blog.
FAQs
- What are the most common mistakes to avoid while filing PCORI?
- Most frequently encountered errors include wrong data input, incomplete Form 720 postings, lack of payment vouchers, use of outdated fee rates and blunders in calculations.
- What are the frequent mistakes to avoid while filing PCORI in case of manual filing?
- The manual uploading of information increases the chance of human error, leads to skipping fields and results in incorrect calculations due to the difficulty of Form 720.
- What are the consequences of submitting Form 720 without Form 720-V?
- Likely, the payment will not receive proper credits and one may get notices from the IRS, fines or interest charges as a result.
- How can I ensure I am using the correct PCORI fee rate?
- Always verify the latest IRS-published PCORI fee for the applicable plan year before filing.
- Can online filing help reduce mistakes to avoid while filing PCORI?
- Yes, electronic filing solutions provide built-in validations and automated calculations, significantly reducing errors associated with manual filing.