PCORI FEE Guide
PCORI Fee: The Complete Guide for Employers (2026)
What is PCORI Fee?
The PCORI fee is a charge that helps fund the Patient-Centered Outcomes Research Institute (PCORI)—an independent, non-profit organization that conducts research to improve healthcare decisions and outcomes.
This fee is paid to the IRS by:
- Health insurance companies (for fully insured plans), and
- Employers who offer self-funded health plans.
Originally, the PCORI fee only applied to plans or policy years ending on or before September 30, 2019. However, the Further Consolidated Appropriations Act of 2020 extended the fee for 10 more years. So now, it applies to any plan or policy year that ends before October 1, 2029.
Which Health Plans Are Subject to the PCORI Fee?
The PCORI fee applies to certain types of health coverage, particularly major medical plans and similar comprehensive benefits. It is assessed differently depending on whether a plan is fully insured or self-insured.
Health Plans Subject to the PCORI Fee:
1. Fully Insured Plans:
- For employer-sponsored plans purchased through a health insurance company, the insurer is responsible for paying the PCORI fee.
- However, if an employer offers a Health Reimbursement Arrangement (HRA) alongside a fully insured plan, the employer must pay the fee for the HRA portion.
2. Self-Insured Plans:
Employers that fund their own health plans must pay the PCORI fee directly. This includes:
- Major medical self-funded plans
- COBRA continuation coverage
- Retiree-only major medical plans
- Stand-alone HRAs
- Short year plans (less than 12 months of coverage)
3. Health Reimbursement Arrangements (HRAs):
- Subject to the PCORI fee if they are not integrated with a self-funded plan.
- If integrated with a fully insured plan, the HRA is still subject to the fee, paid by the employer.
- If integrated with a self-funded plan, the combined plan is counted once.
Which Health Plans Are Exempt from the PCORI Fee?
Not all health plans are subject to the PCORI fee. Certain types of coverage are specifically excluded, particularly those that are limited in scope or do not provide comprehensive medical care.
The following plans and programs are exempt from the PCORI fee:
- Government health programs such as Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). These are publicly funded and not considered applicable for PCORI fee purposes.
- Insurance policies that offer only excepted benefits, like standalone vision or dental plans. These do not fall under the definition of applicable health coverage.
- Wellness programs, provided they do not offer significant medical care or treatment. If a wellness program is purely preventive or educational, it is not subject to the fee.
- Coverage for international employees only, where the policy does not extend to U.S.-based individuals.
- Archer Medical Savings Accounts (MSAs), which are individual-based accounts and not group health plans.
- Stop-loss coverage, indemnity reinsurance, hospital indemnity coverage, and specified illness benefits are not subject to the PCORI fee.
- Accident-only policies, since they provide limited, event-specific benefits.
- Workers’ compensation plans, which are designed solely for job-related injuries and illnesses.
- Health Savings Accounts (HSAs), which are not considered applicable health coverage and are not subject to the PCORI fee.
- Disability income policies, which are excluded from the PCORI fee because they do not provide medical care coverage.
- Automobile medical payment insurance, which is not subject to the PCORI fee.
- Certain employer-provided on-site medical clinics, which are not subject to the PCORI fee.
These exclusions are important to consider when determining whether a specific plan requires PCORI fee reporting and payment.
What PCORI Fee Amount Should I Report on the July 2026 Form 720?
This fee must be reported and paid using the IRS Form 720 (Quarterly Federal Excise Tax Return). Even though Form 720 is filed quarterly, PCORI fees are only reported once a year, and it is always done with the second-quarter filing of Form 720.
| Plan Year Ending Period | PCORI Fee Amount (Per Covered Life) |
|---|---|
| January 1, 2025 – September 30, 2025 | $3.47 per covered life |
| October 1, 2025 – September 30, 2026 | $3.84 per covered life |
Note: The PCORI fee amount is adjusted annually for inflation. The applicable rate is determined based on the plan year ending date.
When are PCORI Fees Due?
The PCORI fee must be reported and paid annually using Form 720, Quarterly Federal Excise Tax Return. For 2026, the deadline to report and pay the PCORI fee is July 31, 2026, for plan years ending during 2025.
This PCORI Fee due date should not be missed if your health plan or coverage ended at any time in 2025.
The 3 PCORI Fee Calculating Methods
The IRS allows plan sponsors of self-insured health plans to choose from three approved methods to calculate the average number of lives covered under the plan:
1. Actual Count Method - Counts the actual number of covered lives on each day of the plan year and divides by the number of days.
2. Snapshot Method - Averages the number of lives covered on a set date (or dates) in each quarter of the plan year. There are two sub-methods:
- Snapshot Count : Counts the actual number of covered lives on each day of the plan year and divides by the number of days.
- Snapshot Factor : Counts employees with self-only coverage plus a factor of 2.35 for those with other tiers.
3. Form 5500 Method - Uses participant counts from a filed Form 5500. The calculation varies based on whether the plan offers individual or family coverage.
Employers must choose one method per plan year and retain records to support their calculation
The above calculation appears to be very difficult and prone to errors. Utilize our PCORI fee calculator to determine your PCORI fee within seconds.
How Are Covered Lives Counted for the PCORI Fee (by Plan Type)?
Covered lives include employees, spouses, dependents, retirees, and COBRA participants. The count method depends on the plan type and the IRS-approved calculation method used.
Self-Insured Health Plans
| Calculation Method | Covered Lives Counting Method |
|---|---|
| Actual Count Method |
Both participants and dependents are included in the calculation. Calculation: Total lives each day ÷ Number of days in the plan year |
| Snapshot Method |
Both participants and dependents are included in the calculation. Snapshot Count: Lives on selected dates per quarter. Snapshot Factor: Self-only participants + 2.35 × non-self-only participants |
| Form 5500 Method |
Both participants and dependents are included in the calculation using two different methods: Self-only: (Participants at start + end of year) ÷ 2 (Only participant) Family coverage: Add both start and end counts (no division) (Participant and dependent) |
Other Health Plan types
| Plan Type | Covered Lives Counting Method |
|---|---|
| Fully Insured Plan with HRA |
|
| Standalone HRA |
|
| Retiree-Only Plans |
|
| COBRA Participants | Both participants and dependents are included in the count. |
NOTE:
- Only one method can be used per plan year.
- Keep documentation for IRS records.
PCORI Fee Checklist for Plan Sponsors/Health insurance companies
Employers, HRs, CPAs, TPAs, Health Insurance providers and plan sponsors play an important role in ensuring accurate PCORI fee compliance. The plan sponsor is generally responsible for managing the PCORI fee process, including determining plan applicability, calculating covered lives, completing Form 720, submitting payment, and maintaining supporting records.
| Action Item | Description |
|---|---|
| Confirm Plan Applicability | Determine whether the organization sponsors a health plan that is subject to the PCORI fee, such as a self-insured health plan, HRA, or retiree-only plan. |
| Select a Calculation Method | Choose an IRS-approved method to calculate the average number of covered lives, such as the Actual Count Method, Snapshot Method, or Form 5500 Method (when applicable). |
| Determine the Fee Amount | Apply the IRS-published PCORI fee rate that corresponds to the applicable plan year ending date and calculate the total fee based on the number of covered lives. |
| Prepare Form 720 | Complete Form 720, Quarterly Federal Excise Tax Return, including the section used to report the PCORI fee. |
| File and Pay by Deadline | Submit Form 720 and pay the PCORI fee to the IRS by July 31 of the year following the end of the applicable plan year. |
| Maintain Supporting Records | Retain documentation supporting plan eligibility, covered lives calculations, fee computation, and payment records for compliance and audit purposes. |
PCORI Fee Reporting: Filing Methods
There are two methods for filing Form 720 to report and pay the PCORI fee:
Manual Method
In the manual filing method, HR or the plan sponsor must fill out Form 720 by hand and mail it to the IRS along with the payment.
- This method involves printing and physically submitting the form via postal mail.
- Payment is usually made via check or money order.
- Manual filing is a traditional approach, but it can be slower and more error-prone compared to electronic options.
Online Method
In the online filing method, you can submit Form 720 through an IRS-authorized PCORI e-filing provider like Simple720.
- This method is faster, more efficient, and IRS-recommended.
- You receive immediate confirmation of submission.
- It reduces the chances of calculation or data entry errors.
- Online portals guide you through each step of the process, making it easier for HR teams.
How to Fill Form 720 for Manual Filing?
- Always Download the latest version of Form 720 from the IRS website.
- Complete the general information at the top of the form (name, address, EIN)
- Scroll to Part II of the form. Under IRS No. 133, enter the relevant details
- You need to clearly mention the number of lives covered. The fee is calculated by multiplying the number of lives with the applicable PCORI rate. The PCORI rate for 2026 is $3.84.
- Leave the rest of the sections blank unless you're reporting other excise taxes.
- Calculate the Total Tax in Part III, sign and date the form.
- Prepare a check or money order payable to the IRS Department of the Treasury
- Mail the completed Form 720 and payment to the official IRS mailing address
How to Report PCORI Online (via Simple720)?
Step 1 – Create an Account
Sign up for a free Simple720 account. Existing users can log in.
Step 2 – Enter Business Details
New users: Click “Add New Filings” → “Add New Business” and enter:
- Business Name
- EIN
- Business Type
- Contact Info
Returning users: Select a saved business profile.
Step 3 – Choose Form Type
Select Form 720 (Quarterly Federal Excise Tax). Choose the correct tax year and quarter, then click “Proceed.”
Step 4 – Select PCORI Category
From the left menu, expand Part 2 and choose IRS No. 133 (PCORI Fee).
Step 5 – Enter Tax Details
- Select policy type
- Enter average number of covered lives
The system will auto-calculate the tax (e.g., $3.84 per life for 2026).
Step 6 – Choose Payment Method
Select a payment option:
- Direct Debit (E-Withdrawal)
- EFTPS (Electronic Federal Tax Payment System)
Step 7 – Submit Filing
After payment, your PCORI filing is submitted electronically within minutes. A timestamped confirmation is available for download.
PCORI Online vs Paper filing
| Feature | Manual Filing | Online Filing |
|---|---|---|
| Speed | Requires more time for printouts, postage, and manual effort. | Fast and efficient – file in minutes without leaving your desk. |
| Complexity | High complexity, downloading correct version of form, filling out by hand and mailing to correct IRS mailing address | Easy-to-navigate, no paper handling or postage required. |
| Accuracy | Manual calculations lead to higher chances of errors. | Automated calculations with no risk of manual error. |
| Accessibility | Must store documents physically and retrieve manually. | Access all your documents instantly from the online portal. |
| Cost | Costs for paper, printing, postage, and handling. | File directly online with a nominal processing fee. |
| Customer Support | Typically involves waiting for assistance. | Dedicated customer support available immediately online. |
| Confirmation | No immediate acknowledgment of filing submission. | Instant acknowledgment and receipt of filed documents. |
| Security | Risk of loss or damage to documents. | Secure, IRS-authorized portal for safe and encrypted filing. |
| Record Keeping | Requires careful physical storage of documents. | Automatic digital record keeping with easy retrieval anytime. |
Choose Electronic PCORI Filing method with Simple720 for your 2026 PCORI Fee payment
How do I amend a PCORI fee that has already been filed?
Corrections to a previously filed Form 720 can generally be made by submitting Form 720-X, Amended Quarterly Federal Excise Tax Return. You can complete the amendment process using either of the following methods:
Form 720-X Filing Steps: Manual Filing vs Online Filing
| Manual Filing Steps (Paper Filing) | Online Filing Steps (Simple720) |
|---|---|
| Obtain Form 720-X and prepare the amendment based on the previously filed Form 720. | Log in to your Simple720 account and start Form 720-X filing by selecting the amended return option. |
| Enter taxpayer information including name, address, EIN, and the quarter being amended. Ensure the information matches the original Form 720 filing. | Enter Original Filing Details such as tax year, quarter ending date, IRS number, original tax amount, and corrected tax amount. |
| Provide original return details including the quarter ending date, IRS number, and tax category being corrected. | Provide Adjustment Details and let the system calculate the adjustment difference between the original and corrected amounts. |
| Complete adjustments to liability reported on Form 720 by entering the originally reported amount, corrected amount, and adjustment difference. | Add Schedule C Credit Details (if applicable) and provide the required adjustment information. |
| Complete Schedule C adjustment details (if applicable) by entering credit reference number, credit details, original credit amount, corrected credit amount, and adjustment difference. | Review Filing Summary and verify the calculated adjustment details before submission |
| Prepare the Statement in Support of Adjustment by selecting the applicable explanation based on the IRS number and adjustment type. | Complete Payment or Refund Option based on whether the amendment results in additional tax due or an overpayment. |
| Calculate total adjustments by combining the adjustment amounts and determine whether there is a balance due or overpayment. | Submit Form 720-X Electronically and receive IRS acknowledgment after successful submission. |
| Complete payment details if additional tax is due and submit payment along with Form 720-X. | |
| Complete refund or credit request details if the amendment results in an overpayment. | |
| Provide a detailed explanation of adjustments nd attach additional supporting documents if required. | |
| Mail the completed Form 720-X with payment or supporting documents to the IRS address provided in the instructions. | |
| Maintain copies of the amended return, payment details, and supporting documents for records. |
What Happens If You Don't Pay the PCORI Fee?
Filing and paying the PCORI fee on time is a critical compliance responsibility for employers offering self-insured health plans or HRAs. Missing the deadline or submitting incorrect information can lead to costly consequences.
Penalties for Late or Missed Filing
If you fail to file Form 720 or pay the PCORI fee by the IRS deadline (typically July 31), the following penalties may apply:
- Late Filing Penalty : 5% of the unpaid tax per month, up to a maximum of 25% of the total due.
- Interest Charges : The IRS may also apply interest on the unpaid balance until it is fully paid.
- 2013 : $1.00 for plans ending after Sept 30, 2012 and before Oct 1, 2013
- 2014 : $2.00 for plans ending after Sept 30, 2013 and before Oct 1, 2014
- 2015 : $2.08 for plans ending after Sept 30, 2014 and before Oct 1, 2015
- 2016 : $2.17 for plans ending after Sept 30, 2015 and before Oct 1, 2016
- 2017 : $2.26 for plans ending after Sept 30, 2016 and before Oct 1, 2017
- 2018 : $2.39 for plans ending after Sept 30, 2017 and before Oct 1, 2018
- 2019 : $2.45 for plans ending after Sept 30, 2018 and before Oct 1, 2019
- 2020 : $2.54 for plans ending after Sept 30, 2019 and before Oct 1, 2020
- 2021 : $2.66 for plans ending after Sept 30, 2020 and before Oct 1, 2021
- 2022 : $2.79 for plans ending after Sept 30, 2021 and before Oct 1, 2022
- 2023 : $3.00 for plans ending after Sept 30, 2022 and before Oct 1, 2023
- 2024 : $3.22 for plans ending after Sept 30, 2023 and before Oct 1, 2024
- 2025 : $3.47 for plans ending after Sept 30, 2024 and before Oct 1, 2025
- 2026 : $3.84 for plans ending after Sept 30, 2025 and before Oct 1, 2026
Yes, fully insured plans are subject to the PCORI Fee, but the insurance carrier is responsible for paying it—not the employer. Employers do not need to file or pay the fee for fully insured plans.
However, if the employer offers a self-insured plan (like an HRA), they must pay the fee themselves. So, responsibility depends on whether the plan is fully insured or self-insured.
Self‑funded (self‑insured) plans are subject to the PCORI fee, and the plan sponsor (usually the employer) must file IRS Form 720 and pay it annually by July 31. The fee is calculated based on the average number of covered lives during the plan year, using one of three IRS‑approved methods: Actual Count, Snapshot, or Form 5500 methods.
If you sponsor multiple self‑insured plans, you may treat them as a single plan for fee calculation. Also, short plan years and HRAs are included and must be reported separately if integrated with fully insured plans
The PCORI fee funds the Patient-Centered Outcomes Research Trust Fund, created under the ACA. This trust supports research that compares the effectiveness of medical treatments. About 80% goes to PCORI for conducting studies, and 20% to HHS for research dissemination. The fee is reported using IRS Form 720. It ultimately helps improve healthcare decisions and outcomes.
The PCORI fee is paid using IRS Form 720, the Quarterly Federal Excise Tax Return. It can be filed either manually (paper filing) or electronically through the IRS-approved e-file system.
The IRS strongly recommends electronic filing due to its speed, accuracy, and instant confirmation. Manual filing is still accepted but may involve longer processing times. Employers must submit the form and payment annually by July 31 for the previous plan year.
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