The Internal Revenue Service (“IRS”) has released its annual update to the Patient-Centered Outcomes Research Institute (“PCORI”) fee, affecting health plans with plan years ending between October 1, 2025, and September 30, 2026. This update is provided in IRS Notice 2025-61 and reflects continued adjustments to this Affordable Care Act (“ACA”) mandated fee that helps fund comparative clinical effectiveness research in the U.S. healthcare system.
What is new for 2025-2026?
For plan years ending on or after October 1, 2025, the PCORI fee amount has increased to $3.84 per covered life, up from $3.47 for plan years ending before October 1, 2025. This adjustment is based on changes in national health expenditures as determined by the Department of Health and Human Services.
| Plan Year End Date | PCORI Fee Amount |
|---|---|
| Oct 1, 2024 – Sep 30, 2025 | $3.47 per covered life |
| Oct 1, 2025 – Sep 30, 2026 | $3.84 per covered life |
Plan sponsors with standard calendar year plans that end on December 31, 2025, will generally be subject to the $3.84 rate for purposes of filing in 2026.
Who must pay the PCORI fee?
The PCORI fee is not optional; it broadly applies to:
- Issuers of specified health insurance policies (fully-insured group health plans), and
- Sponsors of applicable self-funded health plans, including level-funded plans and many Health Reimbursement Arrangements (“HRAs”).
While insurance carriers generally pay the fee for fully-insured plans, that cost is typically reflected in premiums. Self-funded employers are responsible for calculating, reporting, and remitting the fee directly to the IRS.
What are the reporting and payment requirements?
The PCORI fee must be reported and paid annually using IRS Form 720, Quarterly Federal Excise Tax Return, even though it applies only once each year. The IRS designates this as part of the second quarter filing, and the payment deadline is July 31 of the year following the end of the plan year (for 2025 plan years, this means July 31, 2026).
Key steps for employers:
- Determine the applicable fee amount based on your plan year end date.
- Calculate the average number of covered lives, using one of the IRS-approved counting methods.
- Complete IRS Form 720 (Second Quarter) to report and pay the fee by the due date.
Covered lives generally include employees and their enrolled dependents; special rules may apply for HRAs and certain other arrangements.
Why does this matter?
Although the PCORI fee is modest on a per-covered-life basis, it remains an important annual compliance requirement for plan sponsors. Mistakes in filing, such as using the wrong plan year or miscounting covered lives, can result in IRS notices, penalties, or interest.
The PCORI fee was originally set to expire in 2019, but Congress extended it through plan years ending before October 1, 2029. Employers should continue to include this obligation in their annual ACA compliance calendars.
Other resources
For more information, please refer to:
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