Who Owes It, How Much It Is, and How to Pay on Time
If you sponsor a health plan, you’ve probably seen “PCORI fee” show up on a compliance calendar and wondered whether it applies to you. Here’s some relief up front. For many employers it takes very little work, and some don’t have to do anything at all. Let’s walk through what the fee is, who actually owes it, and what to do before July 31.
What the PCORI Fee Is
The PCORI fee was created under the Affordable Care Act. It helps fund the Patient-Centered Outcomes Research Institute, which studies how well different medical treatments and care options work. Insurers and certain employers pay it once a year to support that research. The fee is currently scheduled to stay in place for plan years ending before October 2029.
Who Owes It
This is the part worth getting right, because it splits employers into two groups.
If you have only
fully insured health plans, your insurance carrier handles the fee. You don’t file anything. The cost is built into your premium, so there’s nothing more for you to do.
If you sponsor a
self-insured health plan, the responsibility is yours. That includes level-funded plans and most health reimbursement arrangements (HRAs), such as ICHRAs and QSEHRAs. You file and pay the fee directly to the IRS.
A few things are not subject to the fee, including standalone dental and vision coverage, most health FSAs, and HSAs.
How Much It Is
The fee is your average number of covered lives multiplied by a per-person rate that the IRS adjusts each year. For the filing due July 31, 2026, which covers plan years that ended in 2025, the rate depends on your plan year end date:
- Plan years ending January through September 2025: $3.47 per covered life
- Plan years ending October through December 2025: $3.84 per covered life
So a calendar-year plan that ended December 31, 2025, uses the $3.84 rate.
How to Count Covered Lives
The IRS allows a few methods to find your average covered lives, including the actual count method, the snapshot method, and the Form 5500 method. For an HRA, you generally count only covered employees, not their dependents.
Your third-party administrator can usually pull these numbers for you, though the fee itself stays your responsibility as the plan sponsor.
How to File
You report and pay the fee on IRS Form 720, the Quarterly Federal Excise Tax Return. A few details to keep straight:
- File it on the second-quarter Form 720, even though PCORI is an annual fee
- Use the most current version of the form, which the IRS updates each spring
- If PCORI is your only excise tax, you file Form 720 just once for the year
One more note: The fee comes out of your company’s general assets. This means you can’t pay it from plan assets or employee contributions.
If the Deadline Sneaks Up on You
Unlike Form 5500, there’s no extension available for the PCORI fee, so July 31 is the date to circle. If you do file late, the IRS can apply failure-to-file and failure-to-pay penalties plus interest, though you may be able to request relief if you had reasonable cause.
The bottom line is simple. If your plan is fully insured, you can likely relax and let your carrier take care of it. If you’re self-insured or you offer an HRA, set aside a little time before the end of July to run your numbers and file. And if you’re not sure which group you fall into, that’s exactly the kind of question we’re glad to help you sort out.
This article is for general informational purposes only and is not legal or tax advice. The rules and rates can change, and your situation may differ. Confirm your obligations with a qualified benefits advisor, third-party administrator, or tax professional, and check the latest guidance at IRS.gov.
