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 PCORI Fee Deadline Just Around the Corner


The Affordable Care Act requires health insurers and sponsors of self-funded group health plans (including health reimbursement arrangements) to pay a Patient-Centered Outcomes Research Institute (PCORI) fee.  Originally, the law provided that the PCORI fee would not be assessed for plan years ending after September 30, 2019.  However, legislation passed in December of 2019 extended the PCORI fee for an additional 10 years, until 2029.


What is the Patient-Centered Outcomes Research Institute Fee

Under the ACA, all medical plans are responsible for paying the PCORI fee to the IRS, based on the number of plan participants. If the plan is insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured (including level-funded and HRA plans), the employer/plan sponsor must file the Form 720 and pay the fee to the IRS directly.


How Much is the PCORI Fee?

In IRS Notice 2020-44, the IRS announced that the PCORI fee is $2.54 per covered life for plan years that ended on or after October 1, 2019 (including calendar year plans). For plan years that ended on or after January 1, 2019 through September 30, 2019, the fee is $2.45 per covered life.


PCORI fees are based on the average number of covered lives under the plan or policy. Covered lives generally include employees (and retirees) and their enrolled spouses and dependents.  Individuals who are receiving COBRA or other continuation coverage must be included in calculating the PCORI fee.


IRS regulations provide three permissible methods for calculating the number of covered lives under the plan:


In addition, due to the expected expiration of the fee, the IRS recognizes that employers may not have anticipated the need to identify the number of covered lives for policy years ending on or after October 1, 2019 and before October 1, 2020.  Thus, the guidance provides transition relief by allowing plan sponsors to use any reasonable method for calculating the number of covered lives for plan years during that timeframe.


Who is Responsible for Paying the PCORI Fee?

For fully-insured health plans, the insurer is responsible for reporting and paying the fee.  For self-funded group health plans (which include health reimbursement arrangements — HRAs), the employer/plan sponsor is responsible for reporting and paying the fee.


How are PCORI Fees Reported and Paid?

PCORI fees are reported on IRS Form 720 Quarterly Federal Excise Tax Return, which includes a section to report the PCORI fee.  There is a payment voucher at the bottom of Form 720, which should be completed to show the amount of the payment.  It is essential to check the “Second Quarter” box on the payment voucher when submitting the IRS Form 720 and PCORI fee payment to the IRS.


How are Corrections and Amendments Filed?

The final regulations do not specifically address whether plan sponsors may correct or amend a previously filed Form 720 if errors were made or a filing was missed. However, the regulations note that the penalties associated with the late filing of Form 720 or late payment of the fee may be waived or abated if the issuer or plan sponsor has reasonable cause and the failure was not due to willful neglect.


According to the FAQ page on the IRS website, “A plan sponsor or policy issuer should make corrections to a previously filed Form 720 by filing a Form 720X, Amended Quarterly Federal Excise Tax Return, including adjustments that result in an overpayment. Form 720X may be filed anytime within the applicable limitation period.  Form 720X is available on”  Line six of the Form 720X allows plan sponsors to draft an explanation of the adjustments included in the filing.





This Benefits Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.


Posted by in Blog, Health & Benefits, Human Resources

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