Last Updated on June 24, 2026 by MyHRConcierge

The Patient-Centered Outcomes Research Institute (PCORI) fee is an essential component of the Affordable Care Act (ACA) compliance structure. Understanding what PCORI fees are, who needs to file, when it needs to be filed, the rate at which it needs to be paid and the form on which it is filed is integral to maintaining compliance and avoiding potential penalties.

What are PCORI Fees?

The Patient-Centered Outcomes Research Institute (PCORI) fee is a fee imposed under the Affordable Care Act (ACA) that applies to certain health insurance issuers and sponsors of applicable self-insured health plans. The fee helps fund PCORI’s research efforts focused on improving healthcare quality, effectiveness, and patient outcomes.

Many level-funded health plans are structured as self-insured arrangements. As a result, employers sponsoring these plans may be responsible for calculating, reporting, and paying PCORI fees, depending on the structure of the plan.

The purpose of the PCORI fee is to support research that evaluates the effectiveness of different healthcare treatments, services, and strategies. PCORI’s comparative clinical effectiveness research provides information that helps patients, healthcare providers, and policymakers make more informed healthcare decisions.

Who is Required to Pay PCORI Fees?

PCORI fees are generally paid by issuers of fully insured health plans and sponsors of self-insured health plans, including certain health reimbursement arrangements (HRAs) and applicable flexible spending arrangements (FSAs). For fully insured health plans, the insurance carrier is responsible for reporting and paying the fee. For self-insured health plans, including applicable HRAs and certain FSAs, the plan sponsor or plan administrator is responsible for calculating, reporting and paying.

Certain types of plans are exempt, including plans that provide only excepted benefits, such as limited-scope dental and vision plans. In addition, employee assistance programs (EAPs) that do not provide significant benefits in the nature of medical care and plans that primarily cover employees who are working and residing outside of the United States are generally not subject to PCORI fees.

When are the Fees Due?

PCORI fees are due annually on July 31 of the year following the last day of the plan year. This means that if your plan year ended in 2025, the corresponding PCORI fee would be due by July 31, 2026.

What is the Fee Rate?

The fee rate is subject to change each fiscal year and is calculated based on the average number of lives covered under the applicable health plan or policy. Originally, the fee was established at $2.00 per covered life for plan years ending after September 30, 2013, and has been adjusted annually for inflation.

The fee rate is determined by the Internal Revenue Service (IRS) and published each year through IRS guidance. For plan years ending on or after October 1, 2024 and before October 1, 2025, the PCORI fee is $3.47 multiplied by the average number of lives covered under the plan. The fee varies depending on when the plan year ends.

• For plan years ending between January 1, 2025 and September 30, 2025, the fee is $3.47 per covered life, due by July 31, 2026.
• For plan years ending between October 1, 2025 and December 31, 2025, the fee is $3.84 per covered life, due by July 31, 2026.

How are PCORI Fees Filed?

To report and pay, plan sponsors and issuers must use IRS Form 720, Quarterly Federal Excise Tax Return. Although Form 720 is titled as a quarterly return, PCORI fees are reported and paid annually. The payment should be submitted with Form 720-V, Payment Voucher, when applicable.

Form 720 and the PCORI fee are due on the same filing date and must be submitted together. The IRS also offers an electronic filing option for added convenience, and no separate deposit is required for payment.

As mentioned, Form 720 is used to report and pay PCORI fees, which are based on all covered lives under a plan, including employees, dependents and COBRA participants. Employers or issuers can calculate covered lives using several IRS-approved methods, including actual count, snapshot, Form 5500, or approved HRA/plan combinations. Corrections may be made using Form 720-X.

• Actual Count Method: Counts all covered lives (employees + dependents) for each day of the plan year, then divides by total days in the year.
• Snapshot Method: Uses set dates (monthly or quarterly) to count covered lives, then averages the results.
  • Snapshot Actual Method: Counts all covered lives on each selected snapshot date and averages across those dates.
  • Snapshot Factor Method: Uses employees with self-only coverage plus 2.35 × employees with other-than-self-only coverage (not allowed for HRAs/FSAs).
• Form 5500 Method: Uses participant counts reported on Form 5500 to calculate an annual average (must be filed on time; not allowed for HRAs/FSAs).
  • For plans with self-only coverage only, the average covered lives are calculated by adding the number of participants at the beginning and end of the plan year (as reported on Form 5500) and dividing by two.
  • For plans with both self-only and family coverage, the calculation uses employee participant counts at the beginning and end of the plan year. This approach estimates total covered lives by averaging enrollment, assuming higher and lower family sizes balance out over time.
• Multiple Plan Rules:
  • HRA + insured plan: treated separately; carrier pays insured plan, employer pays HRA.
  • HRA + self-insured plan: treated as one plan; each covered life counted once.
  • Multiple HRAs + insured plan: HRAs may be combined; dependents not double-counted.

Need Help with ACA Compliance?

Maintaining compliance with the ACA requires employers, plan sponsors and insurers to stay current with a variety of reporting and payment obligations, including PCORI fees. Whether sponsoring a self-insured health plan or offering a fully insured health plan, understanding these requirements helps ensure timely compliance and avoids potential penalties.

For more information on how to enhance your organization’s compliance efforts, or help with ACA reporting, contact MyHRConcierge at 855-538-6947, sales@myhrconcierge.com. Or, schedule a convenient consultation below: