Legal Alert: PCORI Fees Due By July 31, 2025
Carrier Updates
Thursday, June 19 2025
Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2025 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI) via Form 720, which was recently updated and released by the IRS. As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury. Under the ACA, most employer sponsors and insurers are required to pay PCORI fees until 2029, as it only applies to plan years ending on or before September 30, 2029 (unless extended).
The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date. This year, employers will pay the fee for plan years ending in 2024.
The fee is due by July 31, 2025 and varies based on the applicable plan year as follows:
• For plan years that ended between January 1, 2024 and September 30, 2024, the fee is $3.22 per covered life.
• For plan years that ended between October 1, 2024 and December 31, 2024, the fee is $3.47 per covered life.
For example, for a plan year that ran from July 1, 2023 through June 30, 2024 the fee is $3.22 per covered life. The fee for calendar year 2024 plans is $3.47 per covered life. The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
Employers that sponsor self-insured group health plans must report and pay PCORI fees using the newly released (Rev. June 2025) IRS Form 720, Quarterly Federal Excise Tax Return. Employers indicate on Form 720 and Form 720-V (the payment voucher) that the form and payment are for the 2nd quarter of 2025. If this is an employer’s last PCORI payment and they do not expect to owe excise taxes that are reportable on Form 720 in future quarters (e.g., because the plan is terminating), they may check the “final return” box above Part I of Form 720.
Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions. However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense.
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The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date. This year, employers will pay the fee for plan years ending in 2024.
The fee is due by July 31, 2025 and varies based on the applicable plan year as follows:
• For plan years that ended between January 1, 2024 and September 30, 2024, the fee is $3.22 per covered life.
• For plan years that ended between October 1, 2024 and December 31, 2024, the fee is $3.47 per covered life.
For example, for a plan year that ran from July 1, 2023 through June 30, 2024 the fee is $3.22 per covered life. The fee for calendar year 2024 plans is $3.47 per covered life. The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
Employers that sponsor self-insured group health plans must report and pay PCORI fees using the newly released (Rev. June 2025) IRS Form 720, Quarterly Federal Excise Tax Return. Employers indicate on Form 720 and Form 720-V (the payment voucher) that the form and payment are for the 2nd quarter of 2025. If this is an employer’s last PCORI payment and they do not expect to owe excise taxes that are reportable on Form 720 in future quarters (e.g., because the plan is terminating), they may check the “final return” box above Part I of Form 720.
Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions. However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense.
To Read The Full Alert Click Here