What the PCORI Fee Is and Who Actually Pays It
The Patient-Centered Outcomes Research Institute fee is a small annual excise tax charged per covered life. It is easy to overlook because it is small, it is filed on a form most employers never otherwise touch, and for many plans someone else pays it. The employers who get caught are almost always the ones who assumed it did not apply to them.
The rule is simple to state. If your medical plan is fully insured, the carrier pays the fee and you do nothing. If any part of your health coverage is self-insured — including a level-funded plan or a health reimbursement arrangement — you file and pay it yourself on IRS Form 720.
The Rate Depends on When Your Plan Year Ends
This is the part that causes confusion: the rate is not set by the year you file, but by the date your plan year ends. Two employers filing on the same July deadline can owe different amounts.
| Plan Year Ending | Fee Per Covered Life |
|---|---|
| On or after Oct 1, 2025 and before Oct 1, 2026 | $3.84 |
| On or after Oct 1, 2024 and before Oct 1, 2025 | $3.47 |
| On or after Oct 1, 2023 and before Oct 1, 2024 | $3.22 |
| On or after Oct 1, 2022 and before Oct 1, 2023 | $3.00 |
The rate for each new window is announced by IRS notice, generally in the fall before the filing deadline — the $3.84 rate was published in late 2025. A calendar-year 2026 plan ends December 31, 2026, so it falls in the next window and is filed by July 31, 2027 at the rate set by the next notice. Check the current notice rather than carrying forward last year’s figure.
A worked example. A calendar-year 2025 level-funded plan that averaged 120 covered lives — employees plus enrolled spouses and children — owes 120 × $3.84 = $460.80, reported on the second-quarter Form 720 due July 31, 2026. A fully insured plan paired with an HRA splits the bill: the carrier pays on the insured plan, and the employer pays on the HRA, counting one life per participating employee.
The Filing Most Employers Miss: The HRA
If there is one thing worth taking from this page, it is this. An HRA is a self-insured arrangement in its own right. An employer with a fully insured medical plan and an integrated HRA still owes a PCORI filing on the HRA, even though the carrier is handling the medical side.
The same logic reaches level-funded arrangements, which are self-insured underneath the fixed monthly payment. Employers who move from fully insured to level funding often inherit a Form 720 obligation without anyone flagging it, because the monthly invoice looks much the same as a premium.
Excepted benefits are outside it: standalone dental and vision plans do not count, nor do health FSAs, HSAs, or employee assistance programs that provide no significant medical care.
Form 720 and the July 31 Deadline
The fee is reported on the second-quarter Form 720, due July 31 of the year following the end of your plan year. A calendar-year plan ending December 31 files the following July 31. There is no extension, and because most employers file Form 720 only for this one purpose, the return is easy to forget entirely.
Counting Covered Lives: Three Permitted Methods
The fee is per covered life, which includes dependents — not per employee. Self-insured sponsors may choose among three methods, and they do not produce the same answer:
- Actual count — add the covered lives for each day of the plan year and divide by the number of days. The most accurate and the most work.
- Snapshot — count on one date in each quarter and average them. Snapshot dates must be consistent, and a plan with seasonal enrollment swings can land well above or below its true average.
- Form 5500 — derive the count from participant figures already reported on your Form 5500. Simplest when you file one, though it treats dependents by formula rather than by count.
You may pick whichever method gives the lowest defensible number, provided you apply it consistently across the plan year. For a plan with a seasonal workforce the difference between methods is worth calculating rather than assuming.
When It Goes Away
The fee applies to plan years ending before October 1, 2029, so the final filings come due in 2029 and 2030. Until then it is an annual obligation, and one that follows the funding structure of your plan rather than its size — there is no participant-count exemption.
If you are unsure whether your arrangement creates a filing, our compliance support covers it, and the question is usually settled by looking at how your plan is funded and whether an HRA sits alongside it.
Questions We Get
What is the PCORI fee?
The Patient-Centered Outcomes Research Institute fee is an annual excise tax funding comparative effectiveness research. It is charged per covered life on self-insured health plans and on the insurers of fully insured policies, and it is reported on IRS Form 720.
How much is the PCORI fee?
The rate is set annually by IRS notice. For plan years ending on or after October 1, 2025 and before October 1, 2026 it is $3.84 per covered life, up from $3.47 for the prior window. Because the rate is tied to the date your plan year ends, two employers filing in the same year can owe different rates.
Who has to pay the PCORI fee?
Sponsors of self-insured health plans file and pay it themselves. For fully insured medical plans the carrier pays it and the employer does nothing. Level-funded plans count as self-insured for this purpose, so the employer files.
Does an HRA trigger a PCORI fee?
Yes, and this is the most commonly missed filing. An HRA is a self-insured arrangement, so an employer with a fully insured medical plan alongside an HRA still has to file Form 720 and pay on the HRA — even though the carrier handles the medical plan.
When is the PCORI fee due?
July 31 of the calendar year following the end of the plan year, using the second-quarter Form 720. A calendar-year plan ending December 31 is therefore due the following July 31.
How do you count covered lives for the PCORI fee?
Self-insured sponsors may use the actual count method, the snapshot method, or the Form 5500 method. The three can produce meaningfully different totals, and you may choose whichever is most favorable, provided you apply it consistently across the plan year.
When does the PCORI fee end?
It applies to plan years ending before October 1, 2029. Filings for the final plan years in that window fall due in 2029 and 2030.
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