The Internal Revenue Service (IRS) just released Notice 2025–61, increasing the fees paid by group health plans to fund the Patient-Centered Outcomes Research Institute (PCORI).
For group health plan years ending on or after October 1, 2025 and before October 1, 2026, including plan years ending December 31, 2025, the updated PCORI fee amount is $3.84 multiplied by the average number of covered lives under the plan.
This amount is an increase from the $3.47 amount applicable for plan years ending on or after October 1, 2024 and before October 1, 2025.
What Employers Need to Know
- Self-funded plans: Employers with self-funded group health plans are responsible to file and pay the PCORI fee annually on IRS Form 720. PCORI fees for the previous year are generally due July 31st each year, regardless of the plan year end date (see table below for 2026 PCORI fee filing and payment deadlines).
- Fully insured plans: Employers with fully insured group health plans do not pay PCORI fees directly since they are already assessed this fee in their monthly premium payments by their health insurance carriers. However, certain employers with fully insured plans may still owe the PCORI fee if they also sponsor a Health Care Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA) (see section below for more information).
PCORI Fee Background
The PCORI fee is a requirement under the Affordable Care Act to fund the Patient-Centered Outcomes Research Institute, focusing on clinical effectiveness research. It was scheduled to end for plan years ending on or after October 1, 2019. However, a federal spending bill passed by Congress in 2019 reinstated the PCORI fees and filings for another ten years, through 2029.
The PCORI fee is filed and paid annually on IRS Form 720 (Quarterly Federal Excise Tax Return). Employers with self-funded health plans ending in 2025 are advised to use the 2nd quarter Form 720 to file and pay the PCORI fee by July 31, 2026. The information is reported in Part II of Form 720.
Since Form 720 is a tax form, rather than an informational return form such as Form 5500, employers or their accountants, rather than third-party administrators, must prepare and file it. The IRS permits employers to deduct PCORI fees as an ordinary and necessary business expense under Internal Revenue Code Section 162(a).[1]
For self-funded group health plans, the fee is calculated using the average number of lives covered under the plan (including employees, dependents, COBRA beneficiaries, and retirees) and the applicable rate for that plan year, outlined in the table below.
Other Health Plans/Arrangements & PCORI Fees
Click here for an IRS table detailing which common health plans/arrangements are subject to the PCORI fee (also summarized in the non-exhaustive table below).
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Type of health plan/arrangement
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Subject to the PCORI Fee (Yes/No)
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Self-funded group medical plan
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Yes (plan sponsor responsible for filing and payment)
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Fully insured group medical plan
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Yes (but the insurance carrier is responsible for filing and payment)
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Standalone dental or vision plan
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No
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Health Reimbursement Arrangement (HRA)
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See details below for special HRA & FSA rules
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Flexible Spending Arrangement (FSA)
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See details below for special HRA & FSA rules
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Health Savings Arrangements (HSAs)
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No
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Hospital indemnity or specified illness benefit plans
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No
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Employee assistance programs, disease management programs, or wellness programs
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No, as long as the program does not provide significant benefits in the nature of medical care or treatment.
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On-site medical clinic
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No
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Self-funded medical plan covering employees primarily who are working and residing outside the United States
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No
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Special Rules for HRAs & Health Care FSAs
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Health Reimbursement Arrangements (HRAs): For HRAs, the IRS outlined two special PCORI fee-related rules:
- HRAs integrated with fully insured medical plan: the plan sponsor must pay the PCORI fee with respect to the average number of lives covered by the HRA in addition to the fees that will be paid for by the insurance carrier for the fully insured plan. The HRA's covered lives will be determined using the one life per participant rule. As such, the plan sponsor is not required to include as covered lives any covered dependents in the HRA.
- HRAs integrated with self-funded medical plan: the HRA is not subject to a separate PCORI fee as long as the HRA and the self-funded group medical plan have the same plan sponsor and have the same plan year. In this case, the plan sponsor will be required to pay the PCORI fee only once with respect to each covered life under the HRA and the other plan, because the same life covered under each arrangement would count as only one covered life under the plan for purposes of calculating the fee.
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Individual Coverage HRAs (ICHRAs) are subject to the PCORI fee.
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Health Care Flexible Spending Accounts (FSAs): Health Care FSAs are generally not subject to PCORI fees since they typically qualify as excepted benefits.
Similar to an HRA offered with a fully-insured integrated medical plan, the plan sponsor may assume one covered life for each employee with a Health Care FSA that does not qualify as an excepted benefit for purposes of calculating the PCORI fee.
Excepted Benefits & FSAs:
Health Care FSAs qualify as "excepted benefits*" if they satisfy the availability and maximum benefit requirements outlined below:
- Availability Requirement — Other non-excepted group health plan coverage (for example, major medical coverage) must be made available for the year to the class of participants by reason of their employment.
- Maximum Benefit Requirement — The maximum amount available must not exceed twice the employee’s contribution, or, if greater, $500 plus the employee’s contribution.
*as defined under the Health Insurance Portability and Accountability Act of 1996 (HIPAA)
PCORI Filing and Payment Date Deadlines for 2026
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Plan Year End Date
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PCORI Fee Rate
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Filing and Payment Date
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January 2025
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$3.47/covered life
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July 31, 2026
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February 2025
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$3.47/covered life
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July 31, 2026
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March 2025
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$3.47/covered life
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July 31, 2026
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April 2025
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$3.47/covered life
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July 31, 2026
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May 2025
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$3.47/covered life
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July 31, 2026
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June 2025
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$3.47/covered life
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July 31, 2026
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July 2025
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$3.47/covered life
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July 31, 2026
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August 2025
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$3.47/covered life
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July 31, 2026
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September 2025
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$3.47/covered life
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July 31, 2026
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October 2025
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$3.84/covered life
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July 31, 2026
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November 2025
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$3.84/covered life
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July 31, 2026
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December 2025
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$3.84/covered life
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July 31, 2026
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Click here for a previous Risk Strategies article that takes a deeper dive into PCORI fee calculations and other key details.
Risk Strategies is here to help. Contact your Risk Strategies account team with any questions, or contact us directly here.
[1] IRS Chief Counsel Memorandum, No. AM2013-002 (June 7, 2013).
