The annual deadline to report and pay the Patient-Centered Outcomes Research Institute (PCORI) fee is approaching. Employers sponsoring certain self-insured health plans must generally file and pay the fee by July 31, 2026.
The PCORI fee was established under the Affordable Care Act (ACA) to help fund research evaluating the effectiveness of medical treatments, services, and health care outcomes. While the fee often receives less attention than other ACA compliance obligations, employers with self-insured arrangements should review their responsibilities carefully each year.
The fee generally applies to:
- Self-insured group health plans
- Level-funded health plans
- Certain Health Reimbursement Arrangements (HRAs), including some stand-alone HRAs
Fully insured medical plans are generally excluded because the insurance carrier is responsible for reporting and paying the fee. However, employers with self-insured components or applicable HRAs may still have separate filing obligations.
Employers subject to the fee must:
- Calculate the fee based on the average number of covered lives under the plan
- File IRS Form 720
- Submit payment by July 31, 2025
Although Form 720 is a quarterly excise tax form, many employers file it only once each year for PCORI fee reporting purposes.
The applicable fee amount depends on the plan year ending date:
- Plan years ending on or after October 1, 2023, and before October 1, 2024: $3.22 per covered life
- Plan years ending on or after October 1, 2024, and before October 1, 2025: $3.47 per covered life
- Plan years ending on or after October 1, 2025, and before October 1, 2026: $3.84 per covered life
The IRS allows several methods for determining the average number of covered lives under the plan, including:
Actual Count Method
Count covered lives for each day of the plan year and divide by the total number of days.
Snapshot Method
Count covered lives on designated dates during each quarter or month and average those totals.
Form 5500 Method
Use participant counts reported on the employer’s Form 5500 filing, applying IRS rules regarding dependent counts.
Employers may choose the method that works best for their organization, but the method should be applied consistently and supported with appropriate documentation.
Common compliance issues include overlooking level-funded arrangements, forgetting about stand-alone HRAs, miscalculating covered lives, or assuming a carrier or third-party administrator is filing on the employer’s behalf.
HR and benefits teams should confirm:
- Whether the organization sponsors a self-insured or level-funded plan
- Which entity is responsible for filing
- The applicable covered life count methodology
- Whether any HRAs create additional filing obligations
Organizations should work closely with their broker, third-party administrator, payroll provider, or compliance partner to ensure timely and accurate reporting.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
