If you are a small business owner offering health benefits, you likely feel like you’ve finally mastered the basics. You’ve picked a plan, you’re managing premiums, and your team is covered. But then, a cryptic acronym like "PCORI" pops up on your radar, accompanied by an IRS deadline.
The Patient-Centered Outcomes Research Institute (PCORI) fee is one of those "hidden" requirements from the Affordable Care Act (ACA). While it might seem like a small administrative hurdle, missing the July 31 deadline can lead to unnecessary headaches with the IRS. If you manage a Health Reimbursement Arrangement (HRA) or an Individual Coverage HRA (ICHRA), the responsibility for this fee falls squarely on your shoulders.
At Total Benefit Solutions Inc, we specialize in helping you navigate these complex regulations. We believe that no business owner should feel overwhelmed by insurance bureaucracy. This guide will walk you through exactly what you need to pay, how to count your participants, and how to stay compliant for the 2026 filing season.
What is the PCORI Fee?
The PCORI fee was established to fund research that evaluates and compares health outcomes and clinical effectiveness. Essentially, it’s a small fee per person covered under your medical plan. While the fee itself isn't a massive financial burden, the "gotcha" lies in who is responsible for paying it.
If you have a standard "fully insured" medical plan, you can breathe a partial sigh of relief. In that scenario, your insurance carrier handles the calculation and pays the fee directly to the IRS. However, if you offer any form of self-insured plan, including the increasingly popular HRAs and ICHRAs, you are considered the "plan sponsor," and the IRS expects a check from you.
The 2026 Deadlines and Dollar Amounts
Compliance is all about the dates. For the upcoming filing due on July 31, 2026, you are reporting on plan years that ended during the 2025 calendar year. The amount you owe depends on exactly when your plan year ended.
Here are the specific rates you need to know for your 2026 filing:
- $3.47 per employee or covered life: This rate applies to plan years ending on or after October 1, 2024, and before October 1, 2025.
- $3.84 per employee or covered life: This rate applies to plan years ending on or after October 1, 2025, and before October 1, 2026.
Wait, why are we talking about 2025 dates for a 2026 filing? Because PCORI fees are paid in the summer following the end of the plan year. If your medical plan year ended at any point in 2025, your Form 720 and payment are due by July 31, 2026.
Who is Responsible for the Filing?
As we mentioned, the "who pays" question depends on how your benefits are structured. At Total Benefit Solutions Inc, we often see small businesses confused by the interaction between their HRA and their main insurance plan.
Insured Plans
If your plan is "fully insured" (meaning you pay premiums to a carrier like Blue Cross, Aetna, or UnitedHealthcare), the carrier pays the fee. You don't need to do anything for that specific policy.
Self-Insured Plans & HRAs
If you have an applicable self-insured plan, including Health Reimbursement Arrangements (HRAs) or ICHRAs, you (the employer/sponsor) are responsible. You must file IRS Form 720 and pay the fees directly. This applies even if the HRA is paired with a fully insured plan.
Mastering the Counting Rules: How Much Do You Owe?
Calculating your fee isn't always as simple as counting your current employees. The IRS has specific rules for how you count "covered lives" (participants), especially when you have multiple plans running at once.
1. HRA and Insured Plans
If you offer a standard fully insured medical plan but also provide an HRA to help employees with deductibles, the rules are split. The insurance carrier pays for the insured plan. However, you still have to pay for the HRA.
- The Math: For the HRA, you only need to count the employees as covered lives. You can disregard covered spouses and dependents.
2. HRA and Other Self-Insured Plans
If you are entirely self-insured and have both a main medical plan and an HRA, the IRS treats them as a single plan for PCORI purposes.
- The Math: Each participant, including spouses and dependents, is counted exactly once.
3. Multiple HRAs and Insured Plans
Some businesses offer multiple HRAs (for example, one for general medical and another for a specific benefit) alongside an insured plan.
- The Math: The carrier pays for the insured plan. You can treat the multiple HRAs as a single plan. Like the first scenario, you only need to count employees and can disregard dependents.
4. ICHRA Plans
Individual Coverage HRAs (ICHRAs) have become a favorite for small businesses. Because an ICHRA is a self-insured arrangement, you are the sponsor.
- The Math: You pay the fee for the ICHRA. You only need to count the employees as covered lives and can disregard their dependents.
How Do You Actually Pay the Fee?
The PCORI fee is reported on IRS Form 720 (Quarterly Federal Excise Tax Return). While Form 720 is usually a quarterly form, the PCORI fee is only reported once a year, on the second-quarter return.
Even if you don't normally file excise taxes, you’ll need to download Form 720 for the quarter ending June 30. You’ll navigate to Part II, find the section for the Patient-Centered Outcomes Research fee, and enter your participant counts and the calculated total.
Remember, this is due by July 31, 2026. If you miss the deadline, the IRS can assess interest and penalties, which quickly turns a $3.84 fee into a much more expensive mistake.
Why You Need an Advocate in Your Corner
Navigating the Affordable Care Act's rules, like PCORI fees, Form 1095-C reporting, and compliance audits, can feel like a full-time job. Most small business owners want to focus on growing their company, not refreshing their knowledge of IRS Form 720.
That’s where we come in. At Total Benefit Solutions Inc, we act as your dedicated advocates. We don't just "sell insurance", we consult, we troubleshoot, and we fight for your rights. Our team has deep expertise in insurance regulations, and we take a personalized approach to every client.
When an insurance carrier says "no," or when a government regulation seems like a brick wall, we are the ones who find the path forward. We believe in never accepting "no" as an answer when it comes to securing the benefits and protections you and your employees deserve.
Next Steps for Small Business Owners
If you aren't sure how many covered lives you had in 2025, or if you're confused about whether your ICHRA requires a filing this year, don't guess. The "actual count" method, "snapshot" method, and "Form 5500" method are all valid ways to determine your averages, but you need to choose the one that works best for your data.
Don't let July 31 sneak up on you. Take a moment this week to review your plan documents or reach out to a professional who can run the numbers for you.
Need help navigating your health insurance compliance?
Total Benefit Solutions Inc is here to help you shop for the best options and ensure you stay on the right side of the rules.
Contact us today:
Website: www.totalbenefits.net
Phone: (215) 355-2121
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