PCORI FEES
The Patient‑Centered Outcomes Research Institute (PCORI) fee is a tax imposed by the Affordable Care Act to fund research into clinical effectiveness. It applies to certain health insurance policies and self‑insured plans and must be reported on IRS Form 720. The fee is due annually by July 31 of the year following the end of the plan year.
Who Pays the PCORI Fee?
- Fully Insured Plans – The insurance carrier usually includes this fee in your premiums. However, if you also sponsor an HRA or a non‑excepted FSA, you may owe a separate fee.
- Self‑Funded Plans – Employers or plan sponsors must file Form 720 and pay the fee directly. This includes level‑funded plans.
- ICHRA/Stand‑Alone HRAs – Individual Coverage HRAs and most traditional HRAs are treated as self‑insured plans. If the HRA integrates with a fully insured plan, count one life per participant. If the HRA shares the same plan year and sponsor as a self‑funded plan, a single PCORI fee covers both.
- FSAs – Health FSAs are usually exempt. But if your contributions exceed $500 or match employees’ contributions dollar‑for‑dollar, each enrolled employee counts as one life for fee purposes.
- HSAs, Stand‑Alone Dental/Vision Plans – These are exempt because HSAs are individual accounts and most dental/vision plans are “excepted benefits”.
Fee Amounts for 2024 Plan Years (Due July 31st, 2025)
- Plan years ending between October 1 2023 and September 30th, 2024: $3.22 per covered life.
- Plan years ending between October 1 2024 and September 30th, 2025 (including calendar years ending December 31 2024): $3.47 per covered life.
To calculate your fee, multiply the applicable rate by the average number of covered lives using one of the IRS‑approved methods (actual count, snapshot, or Form 5500 method).
Filing and Payment Instructions
1. Identify Applicable Plans
Determine if your organization offers a self‑funded plan, HRA, ICHRA, or funded FSA that triggers the fee.
2. Count Covered Lives
Use the IRS‑approved method to calculate the average number of covered lives.
3. Calculate the Fee
Multiply the covered lives by the applicable rate (e.g., $3.22 or $3.47).
4. File Form 720
Complete Part II, line 133, for the second quarter and file by July 31. Payment is submitted via the Electronic Federal Tax Payment System (EFTPS).
5. Retain Records
Keep documentation of your calculations and a copy of the Form 720 filed in case of IRS inquiries.
PCORI fees may be deducted as an ordinary business expense. If you have questions or need assistance determining your obligations, consult a tax advisor or benefits professional.
Key Takeaways
- PCORI fees fund research and are mandatory through plan years ending before October 1 2029.
- Employers with self‑funded plans and certain HRAs must file and pay by July 31 each year.
- HSAs and most standalone dental/vision plans are exempt.
By understanding these requirements and deadlines, businesses can remain compliant while supporting vital healthcare research.
