You set up your Health Reimbursement Arrangement (HRA) to help your employees cover their medical costs. It’s a great move, it gives you tax advantages, controls your costs, and offers your team flexibility. But there is a small detail that often catches small business owners off guard: the PCORI fee.
If you’ve never heard of it, you aren't alone. Many employers assume their insurance carrier handles all the ACA-related fees. While that’s true for traditional "fully insured" plans, HRAs are considered "self-insured" by the IRS. This means the responsibility to file and pay falls squarely on you, the employer.
At Total Benefit Solutions Inc, we spend our days navigating these technicalities so you don't have to. We believe in being your advocate, which means making sure you stay compliant without the stress. Let’s break down exactly what this fee is, how much you owe, and how to stay on the right side of the IRS this year.
What Exactly is the PCORI Fee?
The Patient-Centered Outcomes Research Institute (PCORI) fee was established as part of the Affordable Care Act (ACA). Its purpose is to fund research that evaluates and compares health outcomes and the clinical effectiveness of various medical treatments.
While the fee itself is relatively small per person, the penalties for missing the filing deadline are not. Because an HRA (Health Reimbursement Arrangement) is technically a self-insured health plan, the IRS requires the plan sponsor (that’s you, the business owner) to report and pay the fee once a year.
It doesn't matter if you have two employees or two hundred; if you offer an HRA, you likely have a filing requirement.
The $3.84 Question: How Much Do You Owe?
The IRS adjusts the PCORI fee annually based on national health spending trends. The amount you pay depends on when your specific plan year ended. For the upcoming filings, here are the numbers you need to know:
- For plan years ending on or after October 1, 2024, and before October 1, 2025: The fee is $3.47 per employee or covered life.
- For plan years ending on or after October 1, 2025, and before October 1, 2026: The fee increases to $3.84 per employee or covered life.
Most small businesses operate on a calendar year (January to December). If your HRA plan year ended on December 31, 2025, you will be paying the $3.84 rate for each covered employee.
Marking Your Calendar: The July 31 Deadline
The PCORI fee is reported and paid using IRS Form 720 (the Quarterly Federal Excise Tax Return). Even though Form 720 is usually a quarterly form, for PCORI purposes, you only file it once a year.
The deadline is July 31, 2026, for all plan years that ended in 2025.
It is important to note that even if your business doesn't normally file excise taxes or use Form 720 for anything else, you still must use this specific form to pay your HRA's PCORI fee. There are no "extensions" for this payment, so getting it right the first time is crucial.
HRA-Specific Counting Rules: You Might Owe Less Than You Think
One of the most common questions we get at Total Benefit Solutions Inc is: "Do I have to pay for the employees' kids and spouses, too?"
The answer depends on how your HRA is structured. The IRS offers some "special counting rules" for HRAs that can save you a bit of money and a lot of paperwork.
1. HRA Combined with an Insured Plan
If you offer a traditional fully insured medical plan (like a Blue Cross or Aetna plan) alongside an HRA, there is a "split" in responsibility.
- The Insurance Carrier pays the PCORI fee for the medical plan.
- You (the Employer) pay the PCORI fee for the HRA.
The good news? For the HRA portion, you only have to count the employees. You can completely disregard spouses and dependents. This is a significant relief for your bookkeeping.
2. Multiple HRAs with an Insured Plan
Some employers offer multiple types of HRAs or a mix of self-insured options. If these are treated as a single plan for administrative purposes, you don't have to double-pay.
- The carrier still handles the insured plan.
- The HRAs are treated as one plan for the fee calculation.
- Each participant is only counted once, and again, you can disregard dependents.
3. ICHRAs (Individual Coverage HRAs)
If you have moved to an ICHRA, where you provide employees with a monthly allowance to buy their own individual health insurance, you are still responsible for the PCORI fee.
- As the sponsor of the ICHRA, you pay the fee directly to the IRS.
- Similar to other HRAs, you may count just the employees as covered lives and ignore their family members when calculating the total.
Why We Fight for the "Small Stuff"
You might wonder why a professional advocacy firm like ours cares so much about a $3.84 fee. The reason is simple: compliance is the foundation of a healthy benefit plan. When the "small stuff" is handled correctly, it prevents the IRS from digging into your business and finding larger issues.
We act as the helpful intermediary between you and the complex web of government regulations. Whether it’s navigating a denied claim with an insurance giant or making sure your HRA filing is accurate, our commitment is the same. We never accept "no" as an answer when it comes to protecting our clients' rights and benefits.
As an independent broker, we can shop around and compare options for you (ensuring you have the most cost-effective plan), but our job doesn't end when the policy is signed. We stay by your side to handle the bureaucracy so you can focus on running your business.
Next Steps for Plan Sponsors
If you have an HRA and haven't started your Form 720 yet, don't panic. You still have time before the July 31 deadline. Here is your quick checklist:
- Identify your plan year end date: Was it in 2025? If so, you owe a filing.
- Determine your count: Use the "one life per employee" rule if your HRA is integrated with an insured plan.
- Check the rate: Most of you will be looking at $3.84 per employee.
- Download Form 720: Look for Part II, IRS No. 133.
If the thought of IRS forms makes your head spin, or if you aren't sure if your HRA is being managed correctly, reach out to us. We’ve spent years mastering these rules so that our clients never have to feel overwhelmed by the bureaucracy of healthcare.
Need an Advocate on Your Side?
Navigating health insurance shouldn't feel like a full-time job. At Total Benefit Solutions Inc, we specialize in taking the weight off your shoulders. From HRAs and ICHRAs to complex Medicare questions and small business group plans, we are here to fight for you.
Contact us today to ensure your benefits are working for you, not against you.
Total Benefit Solutions Inc
(215) 355-2121
www.totalbenefits.net
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