A 40-employee company that switched from a fully insured plan to a level-funded medical plan in January 2025 has a PCORI fee filing due this July, and most HR teams making that switch have never heard of the requirement. The Patient-Centered Outcomes Research Institute fee, created under the Affordable Care Act, funds clinical effectiveness research and applies to nearly every self-insured arrangement, including HRAs many employers do not think of as a plan that owes its own fee. Here is exactly who owes the PCORI fee, how much, and how to file it correctly.
What Is the PCORI Fee?
The PCORI fee is an annual excise tax under Internal Revenue Code Sections 4375 and 4376 that funds the Patient-Centered Outcomes Research Institute, a nonprofit created by the Affordable Care Act to research the comparative effectiveness of medical treatments. Congress originally scheduled the fee to expire for plan years ending after September 2019, but the Further Consolidated Appropriations Act of 2020 extended it for another decade. The fee now applies to every specified health insurance policy and applicable self-insured health plan with a plan year ending before October 1, 2029, per the Internal Revenue Service.
Who Has to Pay the PCORI Fee in 2026?
The employer pays the PCORI fee directly only if it sponsors a self-insured or level-funded medical plan or a health reimbursement arrangement. A fully insured medical plan's PCORI fee is paid by the insurance carrier and built into the premium, so an employer with only a fully insured plan owes nothing and files nothing. Employers frequently miss this rule the year they switch from fully insured to level-funded coverage, since a level-funded plan is legally a self-insured plan for PCORI purposes even though it functions day to day much like a fully insured one.
How Much Is the 2026 PCORI Fee?
The IRS set the PCORI fee at $3.84 per covered life for plan years ending on or after October 1, 2025 and before October 1, 2026, an increase of 37 cents from the prior year's $3.47 rate, per IRS Notice 2025-61. A calendar-year plan that ran from January 1, 2025 through December 31, 2025 pays the $3.84 rate on its July 2026 filing. A non-calendar-year plan that ended between January and September 2025 pays the lower $3.47 rate instead. The rate is fixed for the plan year regardless of when during that window the plan actually ended.
When Is the PCORI Fee Due?
The PCORI fee is always due by July 31 of the year following the end of the plan year, reported on the second-quarter IRS Form 720, regardless of the employer's actual plan year. For a plan year ending anywhere in 2025, the fee is due July 31, 2026. An employer adopting a new self-insured or level-funded plan effective January 1, 2026 will not owe its first PCORI filing until July 2027, since that plan year does not end until December 31, 2026.
How Do Employers Count Covered Lives?
The IRS allows three methods to count average covered lives for the year: the actual count method, which averages the total number of lives covered on each day of the plan year; the snapshot method, which averages counts taken on one date per quarter; and the Form 5500 method, which uses the participant count already reported on the plan's Form 5500 filing. An employer can choose any of the three methods each year and does not need to use the same one every year, though the actual count and snapshot methods generally produce a more precise number for a plan with significant enrollment turnover during the year.
Does the PCORI Fee Apply to an HRA?
Yes, a health reimbursement arrangement is a self-insured health plan and owes its own PCORI fee, including an ICHRA, a QSEHRA, and a specialty HRA that reimburses a narrow expense category such as GLP-1 medications or infertility treatment. An HRA is counted differently than a major medical plan, however. Only the employee is counted, not any covered spouse or dependent, since the special HRA counting rule looks at participating employees rather than total covered lives. An employer with a fully insured medical plan paired with an HRA still owes the PCORI fee itself, since the carrier's fee only covers the insured medical policy, not the HRA sitting alongside it.
Does an Employer Owe the Fee Twice if It Has Both a Self-Insured Medical Plan and an HRA?
No, as long as both arrangements share the same plan year. The IRS applies a nonduplication rule: when a self-insured medical plan and an HRA have the same plan year and the same plan sponsor, the employer pays the PCORI fee once, based on the medical plan's covered-life count, and does not pay a separate fee for the HRA. This relief does not apply if the HRA runs on a different plan year than the medical plan, or if the HRA sits alongside a fully insured medical plan instead of a self-insured one.
What Does Not Owe a PCORI Fee?
Dental and vision coverage sold as a stand-alone insurance policy, or structured to meet the excepted-benefit test when self-insured, owes no PCORI fee. A health FSA is excluded because it must qualify as an excepted benefit to comply with the Affordable Care Act, and an HSA is excluded because it is not a group health plan at all, just a savings account an employee owns individually. An employer that offers only these benefit types alongside a fully insured medical plan has no PCORI filing obligation in any given year.
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Frequently Asked Questions
What is the PCORI fee due date for 2026?
How much is the PCORI fee for 2026?
Does a fully insured health plan owe the PCORI fee?
Does a level-funded health plan owe the PCORI fee?
Does an HRA owe its own PCORI fee?
How are covered lives counted for an HRA under the PCORI fee?
How long will the PCORI fee continue to apply?
Does an FSA or HSA owe the PCORI fee?
Sources
This article cites Internal Revenue Code Sections 4375 and 4376, IRS Notice 2025-61, the Further Consolidated Appropriations Act of 2020, and IRS guidance on IRS Form 720 and the Patient-Centered Outcomes Research Trust Fund fee.
See Employer Benefit Options