PCORI Fee 2026: Self-Insured Plans, HRAs, and Form 720 by July 31

Most employers find out about the PCORI fee the same way: a benefits broker mentions it in passing, or a CFO sees a line item in the budget and asks what it is. The fee is small per person — $3.84 for plan years ending after September 30, 2025, and before October 1, 2026 — but the filing mechanics are unusual enough that even sophisticated HR teams trip over them. The form is an excise tax return. It is due once a year, not quarterly, even though the form itself is "quarterly." And if you sponsor an HRA on top of a fully insured medical plan, congratulations: you owe the fee twice, in a sense, because the HRA itself is treated as a separate self-insured plan.

The Patient-Centered Outcomes Research Institute (PCORI) trust fund fee was created by the Affordable Care Act in 2010 to fund comparative clinical effectiveness research. It applies to health insurance issuers and to sponsors of self-insured health plans, including the surprisingly large universe of employers who run a stand-alone HRA, an ICHRA, a QSEHRA, or a level-funded medical plan. The fee was originally scheduled to sunset in 2019, was extended to 2029 by the SECURE Act, and is now an annual rite of summer for benefits compliance teams. If you sponsor anything that looks remotely like a self-insured medical plan, July 31 is a deadline you cannot afford to miss.

What the Fee Is, in Plain English

The PCORI fee is an excise tax — not a tax on income and not a tax on premiums, but a tax on the number of people covered under a health plan during the plan year. Multiply the average number of covered lives by an inflation-adjusted dollar amount, and you have the fee. The IRS publishes the dollar amount each fall.

The two amounts you need to know for 2026 filings are:

$3.47 per covered life for plan years that ended on or after October 1, 2024, and before October 1, 2025.
$3.84 per covered life for plan years that ended on or after October 1, 2025, and before October 1, 2026.

For a calendar-year plan, the plan year ends on December 31, so the 2025 calendar plan year uses the $3.84 rate, and that fee is reported and paid by July 31, 2026. Non-calendar plan years use whichever rate corresponds to the date the plan year ended.

Who actually pays the fee depends on who insures the risk. For fully insured medical, dental, and vision coverage that meets the "specified health insurance policy" definition, the insurance carrier files and pays — the employer does nothing. For self-insured arrangements — including a stand-alone HRA layered on top of a fully insured medical plan — the plan sponsor (typically the employer) files and pays.

Who Has to File and Pay

The fee reaches further than most employers expect. You owe the fee if you sponsor any "applicable self-insured health plan," including:

Self-funded major medical plans, including level-funded plans where the employer technically bears the claims risk.
Health Reimbursement Arrangements (HRAs), including stand-alone HRAs, integrated HRAs, retiree-only HRAs, Individual Coverage HRAs (ICHRAs), and Qualified Small Employer HRAs (QSEHRAs).
Multiple-employer welfare arrangements (MEWAs) that are self-insured.
Some governmental and church plans, with limited exceptions.

A few common arrangements are exempt, and getting this wrong is one of the biggest sources of mistaken filings:

Health FSAs that qualify as "excepted benefits" are not subject to the fee. Most FSAs do qualify, but a generously designed FSA can fall outside the safe harbor.
HSAs are individual accounts, not group health plans, so they are not subject to the fee.
Plans covering only excepted benefits, such as stand-alone dental and vision or accident-only coverage, are not subject to the fee.
Plans that cover only employees working and residing outside the United States are exempt.
Government insurance programs like Medicare, Medicaid, CHIP, and military health benefits are exempt.

The HRA piece is where employers most often get caught. If you offer a fully insured medical plan and you layer an HRA over the top — even one that only reimburses copays and deductibles — that HRA is a separate self-insured plan. The carrier pays the PCORI fee for the medical plan, and you pay the PCORI fee for the HRA.

The "Quarterly" Form That Is Really Annual

The PCORI fee is reported on Form 720, Quarterly Federal Excise Tax Return, line 133 in Part II. Form 720 is genuinely quarterly for other excise taxes, but the PCORI fee is reported only once a year — on the Form 720 for the second quarter of the calendar year in which the plan year ended, which is filed by July 31.

In practice, that means:

A plan year ending December 31, 2025 → Reported on Form 720 for the quarter ending June 30, 2026 → Filed by July 31, 2026.
A plan year ending June 30, 2025 → Reported on Form 720 for the quarter ending June 30, 2026 → Filed by July 31, 2026.
A plan year ending July 31, 2025 → Same July 31, 2026 deadline; uses the $3.47 rate because the plan year ended before October 1, 2025.

A frequent mistake is to file Form 720 for the wrong quarter. If your plan year ended December 31, 2025, do not file the Form 720 listing the quarter ending December 31, 2025 — file the Form 720 listing the quarter ending June 30, 2026. The IRS does not chase you for amended returns over this, but it muddles the paper trail and can trigger correspondence.

If you have never filed a Form 720 before, you generally do not need to register in advance and you do not file zero-balance Form 720s in the other three quarters of the year solely because of the PCORI fee. File only when there is a fee due. You can pay by check with a Form 720-V payment voucher or, more cleanly, through the Electronic Federal Tax Payment System (EFTPS) by selecting the second-quarter tax period.

Calculating Average Covered Lives — Methods for Self-Insured Plans

The IRS gives self-insured plan sponsors three approved methods to calculate the average number of lives covered during the plan year. You pick one method per plan, but you may use different methods in different years. Whichever method you choose, every individual covered during the year counts: employees, spouses, dependents, retirees, and COBRA participants.

Actual Count Method

Add up the number of covered lives on each day of the plan year, then divide by the number of days in the plan year.

Example. A self-funded medical plan had 412 covered lives on January 1, grew to 438 by mid-year, and dropped back to 421 by year-end as a few people aged off. The plan sponsor uses HR information system reports to sum daily covered-life counts: 153,720 person-days. 153,720 ÷ 365 = 421.15 average covered lives. Fee: 421.15 × $3.84 = $1,617.22.

The actual count method is the most accurate but the most data-intensive. It works well if your benefits administrator or TPA can hand you daily enrollment snapshots.

Snapshot Method

Pick one date per quarter (the same month each quarter, plus or minus three days), count covered lives on that date, and average the four counts.

Example. A plan sponsor uses the first day of February, May, August, and November as snapshot dates. Counts: 415, 432, 438, 421. Average: (415 + 432 + 438 + 421) ÷ 4 = 426.5. Fee: 426.5 × $3.84 = $1,637.76.

There is also a snapshot factor variant that uses tier-based counting: take the number of employees with self-only coverage on each snapshot date, add it to the number of employees with non-self-only coverage multiplied by 2.35, and average across the four dates. This factor is the IRS proxy for the average household size in a family plan. The factor method is useful when your enrollment system tracks only employees and tiers, not actual dependent counts.

Form 5500 Method

If you file a Form 5500 for the plan, the IRS lets you use the participant counts already reported on that form — specifically, line 5 (beginning-of-year participants) plus line 6d or 6e (end-of-year participants), divided by 2 for self-only plans, or added together (not averaged) for plans that cover dependents.

Example. A 5500 for a self-funded medical plan reports 415 participants at the start of the year and 438 at the end. Because the plan covers dependents, the formula is 415 + 438 = 853. Fee: 853 × $3.84 = $3,275.52.

The most common mistake with the 5500 method is taking the average of the beginning and ending counts when the plan covers dependents, which roughly halves the fee. Another common mistake is using TPA enrollment reports rather than the figures actually filed on Form 5500. The 5500 method can be used only if the Form 5500 has been filed by the date the PCORI fee is paid, so do not adopt this method if your 5500 is on extension past July 31.

HRAs Are Special: Count Only Employees

HRAs deserve their own paragraph because the counting rule is different. For an HRA — and only for an HRA — you count the employee only, not spouses and dependents. The IRS treats every person covered by an HRA as a single covered life, regardless of how many family members the HRA may reimburse.

That means if you have 200 employees enrolled in an HRA that also reimburses spouse and child expenses, you count 200 covered lives — not 500 or 600. This rule applies whether the HRA is integrated with a fully insured medical plan, layered over a self-funded medical plan, or stand-alone (ICHRA, QSEHRA, or retiree-only HRA).

If your HRA is integrated with your own self-insured medical plan, you avoid double-counting: the IRS allows you to treat the HRA and the major-medical plan as a single self-insured plan and pay one fee based on the medical plan's covered lives (which already includes dependents). The HRA is "absorbed" for PCORI purposes. But if the HRA is layered over a fully insured medical plan, the HRA stands alone and you owe a separate fee on the employee count.

Example. Acme Corp offers a fully insured medical plan (carrier pays the PCORI fee directly) and a generous integrated HRA covering 150 employees. Acme owes a PCORI fee on the HRA only. Using the actual count method on monthly snapshots, the average is 148 employees. Fee: 148 × $3.84 = $568.32, due July 31, 2026.

Common Mistakes That Cost Real Money

Most PCORI mistakes are unforced errors. Watch for these:

Filing the wrong quarter on Form 720. The PCORI fee always goes on the second-quarter return, even if your plan year ended in a different quarter.
Using TPA enrollment numbers when you intended to use the 5500 method. The IRS rule references the actual filed Form 5500, not your administrator's enrollment report.
Averaging the 5500 beginning and ending counts on a plan that covers dependents. When dependents are covered, you add the two numbers, not average them.
Forgetting the HRA. If you sponsor an HRA over a fully insured medical plan, the HRA is a separate self-insured plan and owes its own fee.
Counting dependents in an HRA-only calculation. HRAs count employees only.
Using a method that requires data you do not have. If your TPA cannot produce daily enrollment counts, the actual count method is impractical. The snapshot factor variant is easier when you only have tier counts.
Missing the July 31 deadline. The failure-to-file penalty starts at 5% of the unpaid tax per month and tops out at 25%, plus interest. The fee may be small per person, but the late penalty compounds fast on a large workforce.
Forgetting to pay through EFTPS or include Form 720-V. A return without payment is an open obligation; the IRS will send notices.

Building a Repeatable PCORI Workflow

The fee is small. The penalty for mistakes is small. The reputational hit of getting an IRS letter about your benefits compliance is not. A clean repeatable workflow looks like this:

In December or January, identify every health plan you sponsor and classify each one as fully insured, self-insured, or HRA. Confirm whether the carrier or you owe the PCORI fee for each.
By April, pull enrollment data for each self-insured plan and choose a calculation method. Document the choice and the underlying data in a single working file. Whichever method you pick, you must apply it consistently across all plan years for that plan unless you have a defensible reason to switch.
By June, run the calculation. Validate against the prior year's fee — a swing of more than 10% per covered life means the rate changed or the headcount changed materially, and you should be able to explain which.
By mid-July, prepare Form 720 (second-quarter version), with the PCORI fee on Part II, line 133. Use the correct applicable dollar amount for the year the plan year ended.
By July 31, file Form 720 and pay through EFTPS (select the Q2 tax period) or mail with a Form 720-V voucher.
Keep records for at least four years, including how you calculated covered lives, which method you used, and any worksheets your benefits broker provided.

Accurate bookkeeping makes this dramatically easier. The PCORI fee should be coded to an employee benefits or compliance expense account, not to general payroll taxes, so your year-over-year trend is visible. If you track HRA reimbursements in a dedicated liability account, the underlying enrollment data you need for the PCORI calculation is right there in your books.

Key Dates to Put on the Calendar

July 31, 2026 — Form 720 due for plan years that ended between October 1, 2024 and September 30, 2025 ($3.47 rate), and for plan years that ended between October 1, 2025 and December 31, 2025 ($3.84 rate, including calendar-year 2025 plans).
July 31, 2027 — Form 720 due for plan years ending January 1, 2026 through September 30, 2026 ($3.84 rate, with an updated rate likely announced in fall 2026 for later-ending plan years).
September 30, 2029 — Last plan-year end date subject to the PCORI fee under current law, after the 2019 sunset extension. Anything ending after that date owes no fee.

Keep Your Benefits and Compliance Records Organized

PCORI compliance is a small example of a bigger truth: the cost of getting employee benefits right is mostly the cost of keeping clean records. When enrollment, plan election, and payroll data live in different systems, even a $1,600 fee turns into a multi-hour scramble each July. Beancount.io gives you plain-text accounting that's transparent, version-controlled, and AI-ready — perfect for tracking benefit expenses, PCORI fees, and other compliance items alongside the rest of your financials. Get started for free and turn your books into a single source of truth for tax season and beyond.