PCORI Fee Is Deductible Under Sec. 162: IRS

The Patient-Centered Outcomes Research Institute (PCORI) fee imposed on self-insured health plans and specified health insurance issuers can be considered a “normal, usual, or customary” business expense, and therefore, can be deducted under Sec. 162, according to a recent memo issued by the Office of Chief Counsel at the Internal Revenue Service.

The Patient Protection and Affordable Care Act (ACA) includes provisions that promote research to evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs, and other strategies or items that treat, manage, diagnose, or prevent illness or injury. One such provision relates to the establishment of a private, nonprofit corporation—the PCORI, which will concentrate on comparative effectiveness research. To help fund the PCORI, a fee is imposed on specified health insurance policies and self-insured health plans. The fee applies for policy or plan years ending on or after Oct. 1, 2012, and before Oct. 1, 2019.

Because issuers of specified health insurance policies and sponsors of applicable self-insured health plans are required to pay the PCORI fee yearly in connection with carrying on their trade or business, the IRS believes this qualifies the PCORI fee as a normal, usual, or customary expense. Thus, the PCORI fee can be deducted under Sec. 162(a) as a business expense.

The memo is available at http://www.irs.gov/pub/irs-utl/AM2013-002.pdf. For more information, contact Erika Reigle at (202) 622-4950.

Visit our News Library to read more news stories.