Employers with a calendar-year health plan (with the plan year ending on December 31 each year) should have procedures in place to make sure they file IRS Form 720, Quarterly Federal Excise Tax Return, and pay their PCORI fee at a rate of $3.47 per covered life on or before July 31, 2025. The PCORI fee was mandated by the Affordable Care Act (ACA) to help fund research on the comparative effectiveness of medical treatments. The fees must be paid by July 31 following the last day of the plan year (e.g., for policy years and plan years ending on December 31, 2024, the fee is due by July 31, 2025). The IPA provided an unmodified audit opinion on PCORI’s fiscal years 2024 and 2023 financial statements. Specifically, the IPA found that PCORI’s financial statements were presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles. Further, for fiscal year 2024, the IPA did not identify any deficiencies in internal control that it considered to be material weaknesses or any reportable noncompliance with the selected provisions of laws, regulations, contracts, and grant agreements it tested.

However, an employer’s payment of PCORI fees is tax-deductible as an ordinary and necessary business expense. However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense. ​Insurance carriers are responsible for calculating and paying the PCORI fee for fully insured plans. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. Employers who sponsor self-insured plans subject to the PCORI fee are responsible for completing the Form 720 filing. Current Paylocity clients with Health Reimbursement Arrangement (HRA) services through Paylocity should expect to receive an Average Covered Lives Report when the filing date nears.

The employer is responsible for paying the fee on behalf of a self-insured plan, including a health new pcori fee released reimbursement arrangement (HRA). In general, health flexible spending arrangements (FSAs) are not subject to the PCORI fee. The total PCORI fee is calculated using the average number of lives covered during the policy or plan year, multiplied by the applicable dollar amount for that year. ​The average number of covered lives for the plan year is generally calculated using the snapshot, snapshot factor, actual count, or Form 5500 method.

What GAO Found

Such restrictions are commonly referred to as “gag clauses.” The CAA also requires plans and carriers to attest annually that their agreements do not include such impermissible gag clauses. The average number of covered lives for the plan year is generally calculated using the snapshot, snapshot factor, actual count or Form 5500 method. These counting methods will be described in more detail in a future alert as we approach the 2025 filing deadline. Insurance carriers are responsible for calculating and paying the PCORI fee for fully insured plans.

IRS Releases 2025 PCORI Fees

This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. This alert was prepared for Woodruff Sawyer by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on ERISA, Affordable Care Act.

• We reviewed certain aspects of this financial audit and found no significant issues requiring attention.
• The PCORI fee requirement is currently scheduled to expire after 2029 or 2030, depending on the contract or plan year.
• Winston Takeaway – Employers and insurers will need to calculate the fee, file IRS Form 720, and pay the 2023 PCORI fee by July 31, 2024.
• The PCORI fee requires insurers and employers with self-funded group health plans to pay an annual fee to fund PCORI research.

IRS Releases PCORI Fee For Plan Years Ending Before October 1, 2025

This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor. The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader.

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Had GAO performed additional procedures, other matters might have come to its attention that it would have reported. The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.

Winston & Strawn LLP: Benefits Bulletin – IRS Increases PCORI Fees Payable in 2024

PCORI was established under the Affordable Care Act to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, diagnose, manage or prevent illness or injury. The PCORI fee requires insurers and employers with self-funded group health plans to pay an annual fee to fund PCORI research. The PCORI fee requirement is currently scheduled to expire after 2029 or 2030, depending on the contract or plan year. The annual fee is calculated by multiplying the PCORI fee times the average number of lives covered on the health plan. There are multiple methods that can be used to calculate this average, including the Actual Count method, the Snapshot method, and the 5500 method.Note that the calculation is based on average covered lives, not average employees.

PCORI was established under the ACA to conduct research to evaluate and compare the clinical effectiveness, risks, and benefits of medical treatments, services, procedures, drugs, or other items or strategies that treat, manage, diagnose, or prevent illness or injury. The PCORI fee is assessed on issuers of health insurance policies and sponsors of self-insured health plans. The fees are calculated using the average number of lives covered under the policy or plan, and the applicable dollar amount for that policy or plan year.

Employers that sponsor self-insured group health plans must report and pay PCORI fees using the second quarter IRS Form 720, Quarterly Federal Excise Tax Return. The second quarter form is generally not released by the IRS until the second quarter of the applicable filing year (usually in or around May of the applicable filing year). The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of certain health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute. The PCORI fee was set to expire in 2019 but was extended for an additional 10 years and will now expire the plan year ending after September 30, 2029. The Patient-Centered Outcomes Research Trust Fund fee applies to issuers of certain health insurance policies and plan sponsors of applicable self-insured health plans. It helps fund the Patient-Centered Outcomes Research Institute (PCORI) and will expire on the plan year ending after September 30, 2029.

Keep Up With Compliance

PCORI’s purpose is to help patients, clinicians, policymakers, and others make informed decisions about health and health care options. Furthermore, GAO does not express an opinion on PCORI’s compliance with provisions of applicable laws, regulations, contracts, and grant agreements. The IPA is responsible for its reports on PCORI dated February 19, 2025, and the conclusions expressed therein. Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions.

• The IRS instructions for filing Form 720 include information on reporting and paying the PCORI fees.
• The fees must be paid by July 31 following the last day of the plan year (e.g., for policy years and plan years ending on December 31, 2024, the fee is due by July 31, 2025).
• The Patient Protection and Affordable Care Act requires PCORI to obtain an annual financial statement audit from a private entity with expertise in conducting financial audits.
• Therefore, the Form 720 used for the 2024 filing deadline will not likely be available until around May 2025, and employers who sponsor self-insured group health plans subject to the PCORI fee must wait to file until the correct Form 720 is available.
• PCORI fees are annually reported and paid using IRS Form 720 (Quarterly Federal Excise Tax Return).
• This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.

This institute is required to have its financial statements audited annually, and we’re required to review those audits. The institute’s auditor issued an unmodified (clean) opinion on its FY 2024 financial statements, concluding that they fairly presented the institute’s financial position and activities. In the meantime, if an employer believes it may have failed to file PCORI fees for one or more plan years prior to the plan year ending in 2024, the employer would need to file the Form 720 for the second quarter of the applicable filing year that applies to the plan year missed. For example, if the employer missed filing its PCORI fees for the plan year ending in 2023 plan year, it would use the second-quarter Form 720 for 2024.

The IRS instructions for filing form 720 include information on reporting and paying the PCORI fees. Information about calculating the fee can be found on the IRS PCORI Overview page. This means, for plan years ending in 2023, the PCORI fees are due by July 31, 2024. The IRS instructions for filing Form 720 include information on reporting and paying the PCORI fees.

Self-insured plan sponsors should use IRS Form 720 (Quarterly Federal Excise Tax Return) for the second quarter of the calendar year to report and pay the PCORI fee. Issuers of health insurance policies are responsible for paying the PCORI fee for insured plans. Employers that sponsor self-insured group health plans must report and pay PCORI fees using the second-quarter IRS Form 720, Quarterly Federal Excise Tax Return. The second-quarter form is generally not released by the IRS until the second quarter of the applicable filing year (usually in or around May of the applicable filing year). Therefore, the Form 720 used for the 2024 filing deadline will not likely be available until around May 2025, and employers who sponsor self-insured group health plans subject to the PCORI fee must wait to file until the correct Form 720 is available.