If you are an employer providing health benefits to your team, you likely already know that the summer months bring more than just heatwaves and vacation requests. For many business owners and HR managers, the end of July marks a critical compliance deadline that often flies under the radar: the Patient-Centered Outcomes Research Institute (PCORI) fee.
While it might sound like just another acronym in the alphabet soup of the Affordable Care Act (ACA), the PCORI fee is a mandatory federal excise tax that requires your attention. If you are handling a self-insured plan or a Health Reimbursement Arrangement (HRA), missing this deadline isn't just a minor oversight, it’s a compliance risk that can lead to unnecessary stress and potential penalties.
At Total Benefit Solutions Inc, we believe that navigating insurance regulations shouldn't feel like a full-time job for you. We act as your advocate, ensuring you never have to face the IRS or insurance carriers alone. In this guide, we will break down exactly what you need to know about paying the PCORI fee in 2026.
What is the PCORI Fee, and Why Do You Pay It?
The PCORI fee was established as part of the Affordable Care Act (ACA) to fund the Patient-Centered Outcomes Research Institute. This institute conducts research to help patients, clinicians, and policymakers make informed health decisions. While the fee was originally intended to be temporary, it has been extended and continues to be a standard part of health plan compliance.
The fee is based on the number of "covered lives" (participants) in your health plan. It’s important to understand that this isn’t a tax on the business profits, but rather a fee on the existence of the health plan itself. Because the fee amount is indexed to national health expenditures, the cost per employee tends to creep up every year.
Who is Responsible for the Payment?
One of the most common questions we get at Total Benefit Solutions Inc is: "Doesn't my insurance company just handle this for me?"
The answer depends entirely on how your plan is structured.
1. Fully Insured Plans
If you have a traditional fully insured medical plan, you can breathe a small sigh of relief. In this scenario, the insurance carrier (the company you pay your premiums to) is responsible for calculating and paying the PCORI fee. They typically build this cost into your premiums, so you’ve likely already paid it without seeing a separate line item.
2. Self-Insured Plans (Including HRAs and ICHRAs)
If you provide a self-insured plan, the responsibility shifts directly to you, the employer (or plan sponsor). This includes:
- Traditional self-funded medical plans.
- Health Reimbursement Arrangements (HRAs): Even if you have an insured medical plan, if you offer an HRA alongside it, the HRA is considered a self-insured "plan" by the IRS.
- Individual Coverage HRAs (ICHRAs): These are increasingly popular but carry the same PCORI filing requirements.
In these cases, you must file IRS Form 720 and pay the fee directly to the government. (Don't worry, we'll explain how to do that in a moment.)
The PCORI Fee Rates for 2026
The IRS updates the "applicable dollar amount" annually. For the filings due in 2026, there are two distinct rates you need to be aware of, depending on when your plan year ended in 2025.
- For plan years ending on or after October 1, 2024, and before October 1, 2025: The rate is $3.47 per employee or covered life.
- For plan years ending on or after October 1, 2025, and before October 1, 2026: The rate is $3.84 per employee or covered life.
For most employers running a standard calendar-year plan (January 1 to December 31), you will be looking at the 2025 plan year ending on December 31, 2025. This means your 2026 filing will likely use the $3.84 rate.
The Looming Deadline: July 31, 2026
The PCORI fee is reported annually on the second-quarter IRS Form 720. Regardless of when your plan year ends, the deadline for filing and paying the fee is always July 31 of the year following the last day of the plan year.
For plan years that ended in 2025, your Form 720 and the accompanying payment are due by July 31, 2026.
The "Counting Lives" Complexity: How to Calculate Your Fee
Calculating how many people are in your plan might sound simple, but the IRS has specific rules for different types of plan combinations. This is where many employers get tripped up, and where we often step in to provide clarity.
HRA and Insured Plans
If you offer a standard insured medical plan through a carrier (like Anthem or UnitedHealthcare) and supplement it with an HRA, you have a "dual" responsibility. The carrier pays the fee for the insured plan. However, as the employer, you still owe a fee for the HRA.
- The Pro Tip: In this specific scenario, you are allowed to count only the employees covered by the HRA and disregard their spouses or dependents. This can save you a significant amount in fees.
HRA and Other Self-Insured Plans
If both your medical plan and your HRA are self-insured and provided by the same employer, the IRS treats them as a single plan. In this case, you only count each participant (including dependents) once.
Multiple HRAs and Insured Plans
If you have multiple HRAs alongside an insured plan, the carrier continues to pay for the insured portion. You can treat the multiple HRAs as a single plan for counting purposes. Again, you only need to count the employees, not the dependents, for the HRA portion.
ICHRA Plans
For Individual Coverage HRAs (ICHRAs), the employer/plan sponsor is responsible for the fee. Just like a standard HRA paired with an insured plan, you are permitted to count only the employees as covered lives and disregard dependents.
How to File Form 720
Filing Form 720 for PCORI fees is a bit unique because Form 720 is normally a quarterly excise tax return for things like fuel or communications taxes. However, for the PCORI fee, it is only filed once a year.
- Download the Form: Get the most recent version of IRS Form 720 (specifically the one revised for the second quarter).
- Part II, Line 133: This is where the magic happens. You will see a section labeled "Patient-Centered Outcomes Research Fee."
- Enter Your Count: Enter the average number of covered lives in the column provided.
- Calculate: Multiply that count by the applicable rate ($3.47 or $3.84) to get your total tax.
- Submit Payment: You can pay via the Electronic Federal Tax Payment System (EFTPS) or by mailing a check with Form 720-V (Payment Voucher).
Why You Need an Advocate in Your Corner
Navigating the IRS and healthcare regulations is exhausting. Whether it's determining the "snapshot method" for counting lives or ensuring your ICHRA is compliant, the details matter. At Total Benefit Solutions Inc, we don't just give you the forms, we give you peace of mind.
We specialize in health insurance advocacy and consulting. If you feel overwhelmed by the bureaucracy of the ACA or the complexities of self-insured reporting, we are here to fight for you. Our commitment is to never accept "no" as an answer when it comes to protecting our clients' interests.
If you have questions about your PCORI filing or want to ensure your business is fully compliant before the July 31 deadline, don't wait until the last minute. Reach out to our team of experts today.
Total Benefit Solutions Inc
(215) 355-2121
www.totalbenefits.net
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