If you sponsor a self-funded or level-funded health plan, you are required to pay the annual Patient-Centered Outcomes Research Institute (PCORI) fee. Established by the Affordable Care Act (ACA), this nominal fee funds clinical research to evaluate and compare medical treatments.
While federal taxes can sound stressful, our team handles the complex portion of this process. We will calculate your covered lives and pre-fill your IRS form. However, as your TPA, we cannot pay federal taxes on your behalf.
Here is a simple breakdown of how this fee works, what we will do for you, and how you will make your payment.
The PCORI Fee Checklist
- Who is responsible? Employers sponsoring self-funded or level-funded plans. (If you have fully insured plans, your insurance carrier pays this automatically).
- What form is used? IRS Form 720 (Quarterly Federal Excise Tax Return). While it is a quarterly form, you only file it once a year for PCORI.
- When is it due? July 31st of each year.
- Is it tax-deductible? Yes, the IRS considers PCORI fees to be a tax-deductible business expense for self-funded plan sponsors.
How It Works: Our Role vs. Your Role
To make this as seamless as possible, we divide the work. We handle the calculations, and you handle the final submission.
1. What We Do (The Math & The Form)
Calculating your "average covered lives" (employees plus spouses and dependents on the plan) requires pulling daily enrollment logs. We handle all of this for you using IRS-approved counting methods.
- We pull your enrollment data.
- We multiply your covered lives by the current IRS rate ($3.84 per covered life for plan years ending in late 2025).
- We generate a pre-filled IRS Form 720 and send it directly to you.
2. What You Do (Review & Pay)
Once you receive the pre-filled Form 720 from us, you just need to review it, sign it, and submit your payment to the IRS.
Steps to File and Pay
Once we send you your pre-filled Form 720 in June, follow these steps to complete your filing before the July 31st deadline:
1.Review the pre-filled Form 720:5 minutes.
Verify that your business legal name and Employer Identification Number (EIN) at the top of the form are correct. The PCORI section on Page 2 (Part II, Line 133) will already have your covered lives and total tax calculated.
2.Sign and date the form:2 minutes.
Locate the "Sign Here" section on Page 3. Have an authorized company administrator sign, date, and enter their title.
3.Choose your payment method:5 minutes.
You have two ways to pay the IRS:
- Option A (Electronic): Use the Electronic Federal Tax Payment System (EFTPS). This is the fastest method and the one the IRS prefers.
- Option B (Mail): Write a check or money order payable to "United States Treasury". Write your EIN, "Form 720," and the tax period (e.g., "2nd Quarter 2026") on the memo line of your check.
4.Submit to the IRS:Deadline: July 31st.
If paying via EFTPS, submit your Form 720 electronically. If paying by mail, put the signed Form 720, your check, and the completed Form 720-V payment voucher (included in our packet) into a single envelope and mail it to the IRS address on the form.
A Quick Warning on Plan Assets: According to Department of Labor (DOL) rules, PCORI fees cannot be paid using plan assets (such as employee premium contributions or a health trust). The payment must come directly from your company’s general operating accounts.