PCORI fees are small annual fees tied to certain health insurance plans. They help fund the Patient-Centered Outcomes Research Institute, which runs studies to improve healthcare decisions. The fee’s part of the Affordable Care Act and is based on how many people a plan covers.
Who is required to pay the PCORI fee?
Usually, it’s employers with self-insured health plans. If you offer a health reimbursement arrangement (HRA), you’re likely responsible too. For fully insured plans, the insurance company pays it. But if you offer both—like a fully insured plan with an HRA—you’re still on the hook for the HRA part.
What type of insurance coverage does the PCORI fee apply to?
Mostly major medical plans. That includes self-funded plans, HRAs, and some retiree plans. It doesn’t apply to limited plans like dental, vision, HSAs, or employee assistance programs. Bottom line: if the plan offers real medical benefits, the PCORI fee probably applies.
How is the PCORI fee calculated?
The fee is based on the average number of covered lives during the plan year. It changes a little each year and is adjusted for inflation. You can calculate it using one of three methods: the actual count method, the snapshot method, or the Form 5500 method. You’ll just need to stick with the same method consistently. For the current year’s fee, check the IRS website—they publish updated rates annually.
When are PCORI fees due each year?
The PCORI fee is due July 31 of the year following the end of your plan year. So, if your plan year ended on December 31, 2024, your PCORI payment would be due July 31, 2025. It’s a once-a-year thing, but easy to miss if you’re not tracking it.
How do employers report and pay PCORI fees to the IRS?
Employers pay the PCORI fee using IRS Form 720, the Quarterly Federal Excise Tax Return. Even though it’s a quarterly form, the PCORI section only needs to be filled out once a year—right before the July deadline. You can mail it in or file electronically. Just make sure to use the correct tax period on the form and send the payment in on time.
Need help calculating it? There are PCORI fee calculators online or you can ask your benefits broker or accountant for guidance. It’s not a huge cost, but skipping it can lead to IRS penalties—so it’s worth handling right.
