Seyfarth Synopsis: The IRS has announced an increase to the applicable dollar amount for determining the Patient-Centered Outcomes Research Institute (“PCORI”) Fee for 2023 as well as other health and welfare limits.
The Affordable Care Act (ACA) established the PCORI to support research on clinical effectiveness. The PCORI is funded in part by fees paid by certain health insurers and sponsors of self-insured health plans (referred to as “PCORI fees”). The PCORI fee is determined by multiplying the average number of covered lives for the plan year times the applicable dollar amount, and is paid annually to the IRS using Form 720. The applicable dollar amount as set by the IRS for plan years ending on or after October 1, 2021 and before October 1, 2022 was $2.79 per enrollee.
The IRS has issued Notice 2022-59 announcing that the applicable dollar amount that must be used to calculate the fee for plan years that end on or after October 1, 2022 and before October 1, 2023. The 2023 PCORI fee is $3.00 per enrollee, an increase of $0.21 per enrollee from 2022. The $3.00 PCORI fee is due July 31, 2023 for 2022 calendar year plans.
For more information on paying the PCORI fee, see our prior posts here and here, and the IRS website here.
Additionally, the IRS previously announced other 2023 cost-of-living adjustments for employer-sponsored health and welfare plans. The changes in the 2023 cost-of-living adjustments for employer-sponsored health and welfare plans are summarized in the table below:
| Health and Welfare Program Limits (Rev. Proc. 2022-24 & Rev. Proc. 2022-38) | 2022 | 2023 | Change |
|---|---|---|---|
| Qualified Transportation Fringe Benefit and Qualified Parking (Monthly Limit) | $280 | $300 | +$20 |
| Health Flexible Spending Account (Health FSA) Maximum Salary Reduction Limit | $2,850 | $3,050 | +$200 |
| Health FSA Carryover Limit | $570 | $610 | +$40 |
| Maximum Amount Excluded from Employee’s Gross Income for the Adoption of a Child with Special Needs Through an Adoption Assistance Program (AAP) | $14,890 | $15,950 | +$1,060 |
| Maximum Amount Excluded from an Employee’s Gross Income for Amounts Paid by an Employer for Qualified Adoption Expenses Through an AAP* | $14,890 | $15,950 | +$1,060 |
| Health Savings Account (HSA) Annual Contribution Limit • Self-only Coverage • Family Coverage | $3,650 $7,300 | $3,850 $7,750 | +$200 +$450 |
| HSA Catch-up Contribution Limit** | $1,000 | $1,000 | No change |
| Dependent Care Flexible Spending Account (Dependent Care FSA)*** Annual Contribution Limit for Employee’s Who Are Married and Filing a Joint Return or if the Employee Is a Single Parent | $5,000 | $5,000 | No change |
| Dependent Care FSA Annual Contribution Limit if Employee Is Married But Filing Separately | $2,500 | $2,500 | No change |
| High Deductible Health Plan (HDHP) Minimum Annual Deductible • Self-only Coverage • Family Coverage | $1,400 $2,800 | $1,500 $3,000 | +$100 +$200 |
| HDHP Maximum Annual Out-of-pocket Limit (Deductibles, Co-payments and Other Amounts, but not Premiums) • Self-only Coverage • Family Coverage | $7,050 $14,100 | $7,500 $15,000 | +$450 +$900 |
| Maximum Amount that May Be Made Newly Available for an Excepted-Benefit Health Reimbursement Arrangements (EBHRA) | $1,800 | $1,950 | +$150 |
* The amount excludable from an employee’s gross income for amounts paid by an employer for qualified adoption expenses through an AAP begins to phase out in 2023 for taxpayers with modified adjusted gross income in excess of $239,230 and is completely phased out in 2023 for taxpayers with modified adjusted gross income of $279,230 or more.
** The HSA Catch-up Contribution limit is set by statute.
***Dependent FSA limits are set by statute and do not adjust for inflation, but the Dependent FSA limits were temporarily increased for 2021 only by the American Rescue Plan Act of 2021 due to the COVID-19 pandemic.
Please contact the employee benefits attorney at Seyfarth Shaw LLP with whom you usually work if you have any questions regarding the PCORI fee or the 2023 limits on health and welfare plans.