One Less Tax Form You Have to Figure Out on Your Own

Most business owners have never heard of the PCORI fee until someone mentions they might owe it. That's not a knock on anyone, it's an obscure filing requirement that applies to a specific set of health plan arrangements, and it's easy to miss if nobody's watching for it. We track it for our clients, identify whether it applies to their plan, and handle the filing directly. You don't have to research it, and you don't have to wonder.

What the PCORI Fee Is and Where It Comes From

PCORI stands for the Patient-Centered Outcomes Research Institute, a nonprofit created under the Affordable Care Act to fund research on healthcare effectiveness. To pay for that research, the ACA established a small annual fee on certain health plans, and the responsibility for filing and paying it falls on the plan sponsor, which in most cases means you, the employer.

 

The fee itself is modest. What catches people off guard is not the dollar amount, it's discovering the obligation exists at all, usually right before the July 31 deadline.

Do You Actually Owe the PCORI Fee?

Not every employer owes it. The PCORI fee applies to self-funded health plans and certain health reimbursement arrangements, including some HRA structures that have become more common in recent years. Employers with fully insured group health plans generally do not file, the insurance carrier handles it on their behalf.

 

Here's what that means practically: if your plan structure has changed, if you've added an HRA, or if you're not certain how your plan is classified, there's a real chance you don't know whether you owe this or not. Part of what we do is make sure you're not guessing.

What Happens If You Miss the Deadline

The PCORI fee is reported and paid using IRS Form 720, and the deadline is July 31 of each year for the plan year that ended in the prior calendar year. Missing it doesn't trigger an enormous penalty on its own, but it does create an IRS filing discrepancy that can complicate things, and "I didn't know I owed it" is not a recognized exemption.

 

For a business owner already managing payroll, vendors, and everything else, one overlooked compliance requirement can quietly become a problem. The straightforward fix is having someone track it for you.

Filed for You, Not Just Explained to You

A lot of advisors will tell you what PCORI is and leave you to sort out the rest. That's not how we work. If the fee applies to your plan, we prepare the filing and submit it on your behalf. You don't need to learn IRS Form 720, calculate the applicable rate, or figure out which plan year the fee covers. We handle it.

 

This is part of a broader approach we take with compliance requirements across the board. We don't hand clients a checklist and wish them luck. We stay involved because that's the whole point of having someone in your corner.

What This Looks Like for a Typical Client

Here's how this usually plays out for the business owners we work with.

Step 1: We Review Your Plan Structure

Before anything else, we look at how your health benefits are set up, whether you're on a fully insured group plan, a self-funded arrangement, an HRA, or some combination. That review tells us whether the PCORI fee applies to your situation.

Step 2: We Calculate What's Owed

The PCORI fee is calculated based on the average number of covered lives under your plan and the applicable rate for that plan year, which the IRS adjusts annually. We run those numbers so you don't have to.

Step 3: We Prepare and File Form 720

IRS Form 720 is a quarterly federal excise tax return, and the PCORI fee is reported on it. We prepare the return, confirm the figures, and file it on your behalf before the July 31 deadline.

Step 4: You Get Confirmation and Move On

Once it's filed, we let you know it's done. There's no follow-up homework, no forms to review, and no deadline to track on your end. It's handled.

Common Questions About the PCORI Fee

  • What is the PCORI fee and who has to pay it?

    The PCORI fee is an annual assessment established under the Affordable Care Act to fund healthcare research. It applies to sponsors of self-funded health plans and certain health reimbursement arrangements. Employers with fully insured group health plans typically don't pay it directly, the insurer handles it. If you're not sure which category your plan falls into, that's exactly the kind of thing we sort out for clients.

  • Do businesses have to file PCORI fees regardless of size?

    It depends on your plan structure, not your size. Businesses with self-funded plans or qualifying HRAs do owe the fee, regardless of how many employees they have. Businesses on fully insured group plans generally do not. The confusion usually comes from not knowing which type of plan you're actually on, which is a more common situation than you'd think.

  • When is the PCORI fee deadline?

    The filing deadline is July 31 each year, covering the plan year that ended during the prior calendar year. So if your plan year ended December 31, the fee for that year is due the following July 31. We track this deadline for clients whose plans require the filing, so it doesn't sneak up on anyone.

  • What form is used to file the PCORI fee?

    The PCORI fee is reported and paid using IRS Form 720, the Quarterly Federal Excise Tax Return. Despite the "quarterly" name, the PCORI portion is filed once a year. We prepare and submit this form on behalf of clients who owe the fee.

  • What if I've never filed the PCORI fee and I think I should have?

    The first step is figuring out whether you actually owed it, not every plan triggers the requirement. If it turns out you did owe it and missed prior filings, that's a conversation worth having sooner rather than later. We can help you assess the situation and determine the right path forward. Reach out and we'll start there.