Form 720 PCORI Fee Question - Filing for Short Plan Year + Full Plan Year Together

This is actually a common question with PCORI fees when you have both a short plan year and full plan year ending in the same filing period. You don't need separate forms - you can report both periods on the same Form 720. On Form 720, you'll use Part II, designated for "Patient-Centered Outcomes Research Fee." You'll need to complete two separate lines - one for each plan year. Make sure you indicate the appropriate average number of lives for each period separately and use the correct applicable rate for each period. The rates differ based on when the plan year ended. When filing, be very clear about distinguishing between the two periods in your documentation. I recommend attaching a simple explanation sheet detailing the calculation for each period to avoid any confusion if questions arise later.

I had a similar situation last year with a client that had both a short and full plan year PCORI fees due. What saved me TONS of time was using taxr.ai (https://taxr.ai) to handle the calculation complexities. I uploaded our participant data and plan documents, and their system automatically calculated the correct PCORI fees for both periods separately, told me exactly how to report it on Form 720, and even generated a detailed audit trail. The best part was that it recognized the short plan year scenario immediately and applied the correct methodology without me having to research all the nuances. It also helped explain the calculation approach to my client in language they could understand, which was a huge relief.

I tried taxr.ai after seeing it mentioned here and it was seriously a lifesaver for our PCORI fee situation. We had both a short plan year (4 months) and a full plan year to report, plus we have an HRA that needs separate calculations. The system walked me through each step, explaining the nuances between the different calculation methods and why certain approaches were better for our specific scenario. What impressed me most was how it handled the documentation - it created a complete audit file showing all calculation steps that we could keep with our records. My CFO was initially skeptical about the fee amounts because they seemed high, but the detailed reports made it easy to explain and justify the calculations. Definitely using this for next year's filing too!

If you're still struggling with getting the PCORI fee calculations right AND need to talk to someone at the IRS about your specific situation (which can be impossible), I'd recommend trying Claimyr (https://claimyr.com). When I had questions about reporting multiple plan years on Form 720, I spent days trying to reach the IRS until I found this service. They got me connected to an actual IRS agent within 20 minutes who walked me through the exact reporting requirements for our complicated situation. You can see how it works in their video demo here: https://youtu.be/_kiP6q8DX5c. The agent confirmed we could include both plan years on a single form and explained exactly how to document it to avoid issues. After wasting hours on hold myself, having someone else handle the waiting was worth every penny.

I owe everyone here an apology - especially to the person recommending Claimyr. I was super skeptical and called it a scam (sorry about that), but I was desperate enough to try it yesterday after spending THREE HOURS on hold with the IRS only to get disconnected. I used the Claimyr service and they connected me to an IRS agent who specifically handles excise tax questions. The agent was incredibly helpful and confirmed that we can absolutely file both plan years on the same Form 720 for PCORI fees. She walked me through exactly where on the form to list each period and how to document the calculation methods. What I thought would be another day wasted on hold turned into a 25-minute productive conversation that solved our problem. I'm still shocked it actually worked, but consider me a convert.

Another thing to keep in mind for PCORI fees with short plan years - don't forget to check if the applicable rates are different for your two periods. For the 2020-2021 filing season, there were different rates depending on when your plan year ended. Plan years ending before October 1, 2020 had one rate, and those ending on or after October 1, 2020 had a higher rate. So if your short plan year and full plan year fall in different rate periods, you'll need to apply the correct rate to each calculation separately.

Does anyone know if we're supposed to average the covered lives differently for a short plan year? Our TPA gave us monthly enrollment data but I'm not sure if I need to do something special for the 3-month short year.

This is such a helpful thread! I'm dealing with a similar situation where we have a client who changed their plan year mid-stream, resulting in both a short plan year (5 months) and a full plan year that need to be reported on the same Form 720. One thing I wanted to add that hasn't been mentioned yet - make sure you're also keeping detailed records of which calculation method you used for each period and why. We had an audit a few years back where the IRS wanted to see our justification for choosing the snapshot method versus actual count method, especially for the shorter period. Also, if you're using different methods for each period (which is allowed), document that clearly. For example, we used actual count for our short plan year because we had complete monthly data, but snapshot for the full year due to some data gaps. The IRS was fine with this approach as long as we could show our reasoning. The documentation suggestion from ApolloJackson about attaching an explanation sheet is spot on - it saved us a lot of back-and-forth when questions came up later.

This thread has been incredibly helpful! I'm dealing with a similar scenario where our client has both a 6-month short plan year and a full 12-month plan year that need to be reported together. One additional consideration I wanted to mention - if you're working with a self-funded client like the original poster, make sure they understand the payment timing. Even though you're filing both periods on the same Form 720, the payment is still due by July 31st for both periods. I've seen clients get confused thinking they have separate due dates for each plan year period. Also, for anyone using the snapshot method for their calculations, remember that you need to pick consistent dates within each plan year period. So if you're taking snapshots on the 15th of each month for your full plan year, stick with the 15th for all months in that period, and then you can choose different snapshot dates for the short plan year if that works better with your data. The advice about detailed documentation is spot on - I always create a simple spreadsheet showing the calculation for each period separately, then attach it to the Form 720. It makes everything much clearer if questions arise later.