What Are PCORI Fees, and How to Pay Them

Hey there, neighbors! If you are running a business here in the Kansas City area, whether you are serving up world-class BBQ, managing a growing tech startup, or running a family-owned manufacturing shop, you know that keeping your business compliant is just part of the daily grind. Between taking care of your team and keeping the office running smoothly, tax and insurance compliance rules can sometimes feel like they are written in a completely different language. One of those rules that sneaks up on folks every summer is the PCORI fee. If you offer self-funded or level-funded health insurance plans to your team, this is an annual obligation you can't afford to miss. Grab a cup of coffee, and let's break down everything you need to know about the PCORI fee 2026 requirements, how to calculate what you owe, and how to file it without giving yourself a headache.

What is the PCORI Fee?

“PCORI" stands for the Patient-Centered Outcomes Research Institute. Established as part of the Affordable Care Act (ACA), this institute was set up to fund clinical research. This research is designed to help everyday patients and their families compare different medical treatments and find out what actually works best. The ultimate goal is to give people the clear information they need to make better, more confident decisions about their own healthcare. To fund this research, the federal government requires medical plans to pay a small annual fee per person covered under the plan.

Who is Responsible for Paying the Fee?

If you have a traditional fully insured medical plan, your insurance carrier actually handles this behind the scenes and builds the cost into your premiums. However, if your business utilizes a self-funded plan or a level-funded plan (which is incredibly common for small businesses looking to save on healthcare costs), you are responsible for calculating and paying this fee directly to the IRS.

PCORI Fee Due Date for 2026

Mark your calendars! The PCORI fee due date for all level-funded and self-funded plans is July 31, 2026. Unlike normal payroll taxes or quarterly filings, this is a once-a-year event. It covers plan years that ended during the preceding calendar year (2025). Missing the July 31 deadline can result in late fees and interest penalties from the IRS, so it is best to get this checked off your summer to-do list early.

PCORI Fee Calculator

Figuring out how to calculate PCORI fees does not require an advanced accounting degree. It all boils down to two numbers: your plan year end date and your average covered lives (which means employees plus any enrolled spouses and children).

Step 1: Find Your Rate

Because the IRS adjusts the fee annually for inflation, the rate you pay depends on when your specific medical plan year ended:

• For plan years ending between January 1, 2025, and September 30, 2025: The rate is $3.47 per covered life.
• For plan years ending after September 30, 2025: The rate is $3.84 per covered life.

Example: If your plan runs on a standard calendar year (January 1 to December 31), your plan year ended on December 31, 2025. This means you will use the $3.84 rate for a July 31, 2026 filing.

Step 2: Count Your Average Covered Lives

Remember, you aren't just counting employees. Under the IRS Snapshot Method (the most popular choice for small businesses), you simply count the number of active participants on a single representative day in each quarter, then average those quarterly counts together. When taking your quarterly snapshots, you must count every single individual (not just employees, but count spouses and children as well) covered under the plan. Let's look at how this works in practice:

Example: If you look at your plan on your chosen Q1 snapshot date and there is a family enrolled with an employee, spouse, and two children, this family will count as 4 covered lives for that quarter's headcount.

In our industry, we sometimes call this the "belly button tax" because you have to count every single physical person on the plan on that snapshot day, not just the primary policyholders.

Step 3: Run the Numbers

To make this easy, use our quick PCORI fee calculator logic below to estimate your payment:

How to Make Your PCORI Fee Payment

The IRS collects this money using IRS Form 720 (the Quarterly Federal Excise Tax Return). Even though Form 720 is technically a quarterly form, you will only use it once a year to report and pay this fee.

Here are your step-by-step PCORI fee instructions to fill out the form accurately:

1. Complete the Header
   • Fill in your company Name, Address, and Employer Identification Number (EIN).
   • Check the box for the quarter ending June 30. Even though the fee is due in July, the IRS tracks it under the second quarter of the calendar year.
2. Complete Part II (Patient-Centered Outcomes Research Fee)
   • Locate IRS Form 720, Part II, line 133.
   • Self-Insured Plans: Use row (c) labeled Specified health insurance policies.
   • No. of Covered Lives: Enter your calculated average covered lives in the first column.
   • Rate: Enter $3.47 in the middle column (or $3.84 if your plan year ended after September 30, 2025).
   • Tax: Multiply the covered lives by $3.47 (or $3.84) like we showed you earlier and enter the total in the right column.
3. Complete Part III (Totals)
   • Line 3: Enter the same total fee amount here.
   • Line 10: Enter the total amount you are paying.
4. Complete the Payment Voucher (Form 720-V)
   • Fill out the voucher if you are paying by check.
   • Ensure you select the 2nd Quarter tax period on the voucher.
5. Sign, Submit, and Pay (Mail or EFTPS)
   • Sign and date the bottom of the form.
   • Alternatively, you can also use the Electronic Federal Tax Payment System (EFTPS) to make your payment online.
   • Check Method: If paying by physical check, mail the signed form, payment voucher, and check to the official IRS address listed in the Form 720 Instructions.

PCORI Fee Filing Tips

To make sure your filing is completely accurate and headache-free, here are a few quick tips from our desk to yours:

• Don't Forget the Quarter Checkbox: The most common administrative mistake employers make is checking the wrong box on Form 720. Even though you are filing in July, you must check the box for the second quarter (ending June 30).
• Keep Your Records: The IRS likes to see its math. Keep a copy of the counting method you used to determine your average covered lives for at least four years.
• Watch Out for Short Plan Years: If you transitioned from fully insured to self-funded mid-year, or changed your plan's renewal date, you might have a "short plan year" (less than 12 months). You still have to file and pay a fee for that short plan year, though the counting math can get a bit unique.
• EFTPS is Safer than Mail: If you can, use the Electronic Federal Tax Payment System (EFTPS) to make your payment online. It gives you an instant receipt and peace of mind that your payment didn't get lost in transit.

Let's Make Sure Your Compliance is Covered!

To make sure your filing is completely accurate, let me know:

1. Your total number of covered lives so I can calculate your exact tax obligation.
2. If you plan to pay online via EFTPS or by mailing a physical check.

We are always here to help. Drop by and visit us at Benefits Made Great to schedule a chat with our friendly local team!