By April Handlir, EHD’s Compliance Specialist

All employers offering a group health plan are subject to the PCORI fee per the ACA (Affordable Care Act) requirements.  For fully insured group health plans, the carrier will handle the calculation and submission. For self-funded group health plans, the employer will need to calculate and submit on behalf of the plan. If offering an HRA (Health Reimbursement Account) or FSA (Flexible Spending Account), the rules can be more complicated.

  1. Integrated, Fully Insured Medical and HRA: The carrier pays the medical PCORI fee, and the employer pays an additional HRA PCORI fee. The HRA calculation is based on the employee only, not dependents, whereas the medical calculation is for all enrollees.
  2. Integrated Self-Funded Medical and HRA (same plan year): The employer pays for the medical PCORI fee only. An additional PCORI fee for the HRA is not required.
  3. FSA: The PCORI calculation is for the employee only.
  4. QSEHRA (Qualified Small Employer HRA) and ICHRA (Individual Coverage HRA): Both are subject to the PCORI fee.

CLICK HERE to view a chart outlining Coverage that is subject to PCORI fees.

When calculating the medical PCORI fee, you will use the average number of enrollees (including employees and dependents). Please review the IRS page on “Calculating the fee” for the complete instructions. There are five calculation methods to choose from with, the Form 5500 and Snapshot methods being the most widely utilized.

  1. Actual Count Method: Self-funded health plans and specified health insurance policies.
  • Count the total number of lives covered each day of the plan year and divide by the number of days in the year
  1. Snapshot Method: Self-funded health plans and specified health insurance policies.
  • Count the number of lives covered on specific dates during each quarter and average these counts (use the same dates).
  1. Member Months Method: Specified health insurance policies.
  • Count the average number of lives covered by adding the total number of lives covered for each month dividing by 12
  1. State Form Method: Specified health insurance policies.
  • Use data from state insurance forms to determine the average number of lives covered
  1. Form 5500 Method: Self-funded health plans.
  • Use the participant count reported on the Form 5500 filed. The total number of participants at the beginning and end of the plan year is averaged.

The PCORI fee will be paid through EFTPS (Electronic Federal Tax Payment System) with Form 720 indicating the second quarter tax filing date due annually by July 31st. Form 720 has not yet been updated with the new fee for 2025. The IRS usually updates the form by early June; be sure not to submit the incorrect form. Your fee will be based on the date your most recent plan year ended.

  1. For plan years that ended on or after October 1, 2023, and before October 1, 2024, the fee is $3.22 multiplied by the average annual number of lives.
  2. For plan years that ended on or after October 1, 2024, and before October 1, 2025, the fee is $3.47 multiplied by the average annual number of lives.

For a deeper understanding, the IRS has put together a Q and A that will further advise on the parameters set for the PCORI fee.