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The IRS released the updated Form 720 for the second quarter of 2025, with updated dates and fees on Line 133 for reporting the PCORI fee. The form, with a revision date of June 2025, can be found here.
Employers that sponsored self-funded medical plans that ended sometime during 2024 are required to report and pay the ACA Patient-Centered Outcomes Research Institute (PCORI) fee no later than July 31, 2025. Form 720 should be filed for the 2nd quarter ending June 30th, 2025.
Background
General summary information for PCORI fees can be found here. Health insurance carriers pay the fee on behalf of fully insured plans, but employers are responsible for reporting and paying the fee for any self-funded group health plans, including HRAs. The PCORI fee applies to most group health plans, including retiree-only plans, but not to excepted benefits. The IRS published a chart that describes the different types of plans subject to the fee here.
The fee is paid for self-funded group health plans using quarterly excise tax Form 720, Line 133(c) and (d), and must be paid by July 31st of the year following the last day of the plan year. The PCORI fee should be reported in the 2nd quarter of the calendar year following the end of the plan year, rather than filing sooner, to avoid any confusion for the IRS over which plan year the reporting applies to. If any corrections need to be made for prior years, use Form 720X.
Fee amount
Payment amounts due in 2024 will differ based on the employer’s plan year. The fees due in July 2025 are as follows:
$3.22 per covered life for plan years ending in January – September 2024.
$3.47 per covered life for plan years ending in October – December 2024.
Calculating the average covered lives
Self-funded plans may use one of three methods to determine the average covered lives used for reporting and paying the PCORI fee: (i) the actual count method; (ii) the snapshot method; or (iii) the Form 5500 method. It is okay to switch between counting methods from one year to the next to use whichever method results in the lowest number of covered lives.
There are special rules that apply for employers offering multiple self-funded plans and for employers paying the fee for a stand-alone HRA or for an HRA integrated with a fully insured plan. These special counting rules are outlined below.
Multiple Self-Funded Plans – If one plan sponsor maintains more than one self-funded health plan with the same plan years, the arrangements can be treated as a single plan for purposes of the fee, in which case each unique participant is counted for purposes of calculating the fee. For example, if the employer offers a self-funded group medical plan and an HRA, where the participants in both plans are the same, the PCORI fee is calculated based on the covered lives in the self-funded group medical plan (the HRA is disregarded).
HRAs – For an employer paying the PCORI fee solely for an HRA, the employer is required to pay the fee only with respect to participating employees (not required to count dependents or beneficiaries).
Please reach out to our team at engage@mzqconsulting.com if you would like more information about our PCORI filing service.
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