PCORI fees

Every summer, a quiet but important compliance deadline sneaks up on many HR teams: PCORI fees. If your company sponsors a self-insured or level-funded health plan, you may be required to pay this annual fee to the IRS by July 31. But what exactly are PCORI fees, and how do you calculate, file, and pay them?

Let’s break it down.

What are PCORI fees?

PCORI stands for the Patient-Centered Outcomes Research Institute. It was created as part of the Affordable Care Act (ACA), and supports research designed to enhance healthcare decisions. Its focus is on comparing treatment outcomes to ensure patients and providers can make informed, personalized care choices.

To fund this work, the ACA requires certain employers and insurers to pay an annual fee to the IRS—commonly known as the PCORI fee—using IRS Form 720.

Why this matters for HR leaders

You might be thinking, “This sounds like a small line item. Why should it be on my radar?”

Here’s why:

1. It’s a compliance requirement.

Failure to file or pay by the July 31 deadline can result in penalties or interest. HR leaders (especially those newer to self-funding or level-funding) often aren’t aware of this obligation.

Even if you're working with a TPA or vendor, you are ultimately responsible for submitting Form 720 unless you’ve contracted them to do so on your behalf.

2. It affects budgeting.

While the fee may seem modest on a per-person basis, it can add up—especially for companies with larger headcounts or multiple plans. It's important to build it into your annual budgeting process to avoid surprises.

3. It reflects strategic plan design.

If you owe this fee, it likely means you’re using a self-funded, level-funded, or HRA-based plan—choices that signal a more modern, cost-managed benefits approach. Knowing how to manage compliance is part of being an informed decision-maker.

Who needs to pay PCORI fees?

You are responsible for PCORI fees if:

• You sponsor a self-funded, level-funded, or HRA-based group health plan
• Your plan year ended in the previous calendar year
• Your plan is not fully insured (fully insured plans have the fee paid by the carrier)

Examples:

• A level-funded plan ending December 31, 2024 → PCORI fee due by July 31, 2025
• An HRA paired with a fully insured medical plan → The employer must file and pay PCORI for the HRA
• A fully insured plan with no HRA → The insurer handles the filing and payment

Want to double-check whether your plan requires a PCORI fee? You can find the full list on the IRS page about PCORI fees.

How much are PCORI fees?

The PCORI fee amount varies based on your plan year-end date.

The IRS just released Notice 2024-83, announcing an increase in the PCORI fee for certain health plans. For plan years ending between October 1, 2024, and September 30, 2025, the new fee is $3.47 per covered life.

Covered lives include employees, spouses, and dependents enrolled in your plan.

For additional details on fee amounts and deadlines, refer to the IRS page on filing due dates and applicable rates.

How to file and pay PCORI fees

Step 1: Determine your plan details

Confirm:

• The end date of your plan year
• The type of plan (self-insured, level-funded, HRA)
• The number of covered lives

You can calculate covered lives using one of the IRS’s three methods:

• Actual Count Method: average daily count of covered lives
• Snapshot Method: count of covered lives on designated days per quarter
• Form 5500 Method: based on data reported on your Form 5500

Full instructions on each method are included in the IRS Form 720 instructions.

Step 2: Complete IRS Form 720

Form 720 is the Quarterly Federal Excise Tax Return, but you only need to fill out the section titled “Patient-Centered Outcomes Research Fee.”

You’ll find it on the second page of the form, in Part II, line 133.

• Input the average number of covered lives.
• Multiply by the applicable PCORI rate (e.g., $3.47).
• Report the total fee in the appropriate column.

Even if you don’t owe any other excise taxes, you must complete and file the entire form.

Step 3: Submit the form

You have two options:

• Mail a printed, signed Form 720 and payment check to the IRS
• E-file the form using an IRS-authorized e-file provider

Step 4: Retain documentation

Keep a copy of your submitted Form 720 and proof of payment with your benefits compliance records.

Quick checklist for HR leaders

• Confirm your plan year-end date
• Determine your covered lives and PCORI rate
• Complete and sign Form 720
• File with the IRS and submit payment by July 31
• Retain copies of your submission

First time hearing about PCORI fees? You’re not alone.

With more businesses adopting level-funded or self-funded plans to curb rising healthcare costs, many HR teams are encountering PCORI fees for the first time. If you're navigating this shift, you're not alone.

That’s why having a broker who provides year-round compliance support is essential.

How Nava helps

At Nava, we don’t just help you select your plan—we help you manage the whole picture. That includes:

• Tracking key compliance dates like PCORI
• Helping calculate covered lives
• Offering guidance on Form 720 filing
• Reducing risk and saving time for your team

Whether you’re new to self-funding or a seasoned pro, we’re here to support your strategy every step of the way.

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