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PCORI Fees for Self-Funded, Level Funded and HRA plans Due August 1, 2022
By Burnham Compliance
Burnham Legislative Updates PCORI Fees

The Patient-Centered Outcomes Research Institute (“PCORI”) fee initially applied from 2012 to 2019. However, in December 2019, the Further Consolidated Appropriations Act extended the fee to 2029.  This means that employers who sponsor self-insured medical plans, including health reimbursement arrangements (HRAs) which are integrated with medical insurance, should begin preparing for payment of the PCORI fee.

The fee, in the form of a Federal excise tax, applies to all such plans – there are no exceptions for smaller employers, for example.  However, note that most health flexible spending accounts (FSAs) offered in conjunction with medical insurance are exempt from the PCORI fee.  A plan sponsor is also able to treat multiple self-insured plans with the same plan year as a single plan for reporting and payment purposes. For example, a plan sponsor with a self-insured plan providing major medical benefits and a separate self-insured plan with the same plan year that provides prescription drug coverage may be considered as a single plan so that the same covered life under each plan is counted only once.

The PCORI fee must be paid by filing IRS Form 720 (Quarterly Federal Excise Tax Return).  These fees are due each year by July 31 of the year following the last day of the plan year.  For plans ending in 2021, the next PCORI fee payment will be due August 1, 2022, since July 31, 2021, is a Sunday.  The fee is based on the number of “covered lives” during the plan year.  (Caution: the plan year of your integrated HRA may differ from the policy year of your insurance coverage.)  The fee per covered life depends on the plan year end date, as follows:

Plan year ended during:  Fee per covered life:
January 1, 2021 – September 30, 2021 $2.66
October 1, 2021 – December 31, 2021 $2.79


Who files Form 720 and pays the excise tax? 

  • For insured medical plans, with no integrated HRA, the insurance company is responsible, rather than the employer. The term “covered lives” includes employees and COBRA participants as well as their covered spouses and dependents.
  • For insured medical plans with an integrated HRA, both the insurer and the employer must file and pay the fee. However, the employer files only as to the HRA, and only employees or COBRA participants themselves are counted in determining the fee, not their spouses or dependents.
  • For self-funded (non-insured) plans, with or without an integrated HRA, the employer is responsible. “Covered lives” is defined the same as for insured plans with no HRA.


How are “covered lives” counted for purposes of Form 720? 

There are three possible methods applicable for plan years ending in 2021:

  • Actual count method: Covered lives are determined on each day of the plan year, and the result is averaged over the total number of days in the plan year.
  • Snapshot method: The number of covered lives is determined on the same day (plus or minus three days) of each quarter (or month, if desired) and averaged.  As a possible shortcut, rather than counting dependents, the number of employees who have dependent coverage may be multiplied by 2.35 and added to the number with employee-only coverage to determine total covered lives.
  • Form 5500 method: For health plans that are required to file IRS Form 5500 (those with 100 or more participants), alternative methods of counting are available depending on whether dependent coverage is offered.  Form 5500 must be filed by July 31 to use this option.  The additional details on using this method are beyond the scope of this summary.


More Information

For further information, including links to the final PCORI regulations, questions and answers regarding the PCORI Fee, a chart depicting the types of insurance coverage subject to the fee, and the Form 720, along with instructions, please visit the IRS website at https://www.irs.gov/affordable-care-act/patient-centered-outcomes-research-trust-fund-fee-questions-and-answers.



Please contact your Burnham Benefits Consultant or Burnham Benefits at 949‐833‐2983 or inquiries@burnhambenefits.com.

Burnham Benefits does not engage in the practice of law and this publication should not be construed as the providing of legal advice or a legal opinion of any kind. The consulting advice we provide is intended solely to assist in assessing its compliance with the Patient Protection and Affordable Care Act and other applicable federal and state law requirements, and is based on Burnham Benefit’s interpretation of federal guidance in effect as of the date of this publication. To the best of our knowledge, the information provided herein, and assumptions relied on, are reasonable and accurate as of the date of this publication. Furthermore, to ensure compliance with IRS Circular 230, any tax advice contained in this publication is not intended to be used, and cannot be used, for purposes of (i) avoiding penalties imposed under the United States Internal Revenue Code or (ii) promoting, marketing or recommending to another person any tax-related matter.