If you’ve ever stared at IRS Form 720 and wondered what the “PCORI fee” line is all about, you’re not alone. Every year, thousands of employers and their administrators quietly owe this tax without fully understanding where it comes from, why it exists, or whether they’re calculating it correctly.
This post breaks it down in plain English: what the PCORI tax is, its legal basis, who is required to pay it, and some of the most common misconceptions that lead to missed filings and unexpected IRS notices.
What Is the PCORI Tax?
PCORI stands for the Patient-Centered Outcomes Research Institute which is a nonprofit created under the Affordable Care Act (ACA). It funds research that helps patients, doctors, and policymakers make better healthcare decisions based on real-world evidence.
To fund PCORI, Congress established an excise tax on health insurance plans under ACA Section 6301, codified at Internal Revenue Code Sections 4375 and 4376. The tax is commonly called the “PCORI fee” or “PCORI tax,” though you may also see it referred to as the Comparative Effectiveness Research Fee (CERF) which are two names for the same thing.
The fee is modest on a per-person basis (currently $3.22 per covered life for plan years ending on or after October 1, 2023, and before October 1, 2024), but when multiplied across hundreds or thousands of covered employees and dependents, it adds up quickly and it must be reported and paid annually using IRS Form 720, Part II, Schedule B.
The Legal Basis: ACA Section 6301
The PCORI fee was created by the ACA in 2010 and originally set to sunset after 2019. Congress extended it through fiscal year 2029 as part of the Further Consolidated Appropriations Act of 2020, meaning the obligation is here to stay for the foreseeable future.
The IRS issues updated fee amounts each September via IRS Notice, reflecting adjustments based on the projected per-capita amount of national health expenditures. Staying current on the applicable rate for your plan year is essential and using the wrong rate is one of the most common (and easily avoidable) filing errors.
Who Triggers the PCORI Filing Obligation?
Here’s where many organizations get tripped up. The PCORI fee applies differently depending on how the health plan is structured and who is administering it.
Self-Insured Health Plans
If your organization sponsors a self-insured health plan, meaning the company bears the financial risk of employee healthcare claims rather than purchasing a fully insured policy from a commercial carrier, you’re responsible for filing and paying the PCORI fee.
This includes:
–Self-insured group health plans covering employees (and their dependents)
–Health Reimbursement Arrangements (HRAs), including integrated HRAs and, in most cases, stand-alone HRAs. Even if the HRA is the only self-insured plan component
–Multiple Employer Welfare Arrangements (MEWAs) that are self-funded
Self-insured status is more common than many HR teams realize. If your company pays claims directly, even through a stop-loss insurance policy, you are self-insured for PCORI purposes.
Third-Party Administrators (TPAs)
TPAs occupy a unique and important position in the PCORI landscape. While the legal obligation to file and pay the PCORI fee rests with the plan sponsor (the employer), many plan sponsors delegate this responsibility contractually to their TPA.
In practice, this means:
–TPAs that administer self-insured plans are often responsible for calculating covered lives, completing Form 720, and submitting payment on behalf of their employer clients
–A TPA filing for multiple employer clients must maintain a separate, accurate covered-lives count for each client plan and must file under the employer’s EIN, not the TPA’s
–TPAs who manage this process manually, using spreadsheets, calendar reminders, and manual IRS EFTPS payments, face real risk of errors and missed deadlines across a large client base
For TPAs managing 20, 50, or 100+ self-insured clients, purpose-built e-filing software is not a luxury, it’s a risk management tool.
What About Fully Insured Plans?
If your organization offers a fully insured health plan purchased from a licensed insurance carrier, you generally do not owe the PCORI fee. The insurance carrier bears the filing and payment obligation. This is one of the biggest sources of confusion: employers who switched from fully insured to self-insured mid-year, or who have a mix of both, may not realize they now have a direct filing obligation.
Common Misconceptions About PCORI Exemptions
“We have fewer than 50 employees, we don’t have to file.”
There is no small-employer exemption for the PCORI fee. If you sponsor a self-insured health plan or HRA, you file, regardless of company size.
“Our stop-loss carrier handles this.”
Stop-loss insurance does not make a plan fully insured for PCORI purposes. Stop-loss reimburses the employer for catastrophic claims. The plan is still self-insured and the employer (or its TPA) still owes the PCORI fee.
“We already paid our health insurance premiums, isn’t that enough?”
No. Fully insured premium payments go to your carrier, who then files their own PCORI obligation. Self-insured plans require a separate filing and payment directly to the IRS via Form 720.
“It’s a small fee, the IRS won’t notice if we miss it.”
The IRS does notice. Failure to file Form 720 and deposit the excise tax can result in failure-to-deposit penalties, failure-to-file penalties, and interest. These can dwarf the original fee owed, especially for larger plans.
The Filing Deadline: July 31 Every Year
The PCORI fee is reported once per year on IRS Form 720 and the deadline is always July 31, regardless of your plan year end date. (The fee applies to the plan year that ends during the previous calendar year, so for a calendar-year plan ending December 31, 2024, you would file by July 31, 2025.)
Payment is made via the Electronic Federal Tax Payment System (EFTPS) and Form 720 can be filed electronically through an IRS-authorized e-file provider.
File in Minutes with Akore Federal
Calculating your covered lives, completing Schedule B, and submitting Form 720 to the IRS doesn’t have to take hours. Akore Federal’s PCORI e-filing platform guides you through the entire process, fee calculation, covered lives input, signature, and IRS submission, in under 10 minutes.
Whether you’re a self-insured employer filing for your own plan or a TPA managing filings for dozens of clients, Akore Federal is built for accuracy, speed, and compliance confidence.
Start your PCORI e-filing at AkoreFederal.com
