HRA PCORI Fees – Do I need to pay someone to prepare this for me?

Do I Need to Pay Someone to Prepare This for Me?

If you sponsor a Health Reimbursement Arrangement (HRA), you’ve likely come across the term “PCORI fee” and wondered whether it’s something complicated enough to require outside help. The name alone sounds technical, and many employers assume it involves complex calculations or compliance risk. In reality, the PCORI fee is one of the simpler annual requirements tied to employer-sponsored health benefits.

The Patient-Centered Outcomes Research Institute (PCORI) fee was created under the Affordable Care Act to fund research that evaluates the effectiveness of medical treatments and healthcare strategies. While the purpose behind it is complex, the way employers handle it is not. The fee applies to most employer-sponsored health plans, including HRAs, and it must be paid once per year to the IRS. The requirement has been extended through 2029, so it remains an ongoing compliance item for the foreseeable future.

For employers offering HRAs, the obligation to pay the PCORI fee is straightforward. Whether you sponsor a traditional integrated HRA, an Individual Coverage HRA (ICHRA), or a Qualified Small Employer HRA (QSEHRA), the fee applies. Unlike some other benefit-related filings, however, HRAs come with a simplifying advantage that makes this process easier than many expect.

One of the most helpful aspects of the PCORI fee as it relates to HRAs is how covered lives are counted. For most group health plans, employers must account for employees and their dependents, which can make calculations more involved. HRAs are different. Employers are only required to count participating employees, not spouses or dependents. This significantly reduces both the administrative burden and the likelihood of error.

The amount of the fee itself is modest and adjusted annually for inflation. For the 2026 filing season, which covers plan years ending in 2025, the applicable rate is $3.47 per covered life for plan years ending between January and September of 2025, and $3.84 per covered life for plan years ending between October and December of 2025. Most employers operate on a calendar-year plan, which means they will use the $3.84 rate. For example, an employer with 25 employees participating in an HRA would owe just $96 for the year.

Timing is another area where the rules remain consistent and predictable. The PCORI fee is due annually on July 31. In 2026, that means the deadline for 2025 plan year filings is July 31, 2026. The fee is reported using IRS Form 720, specifically as part of the second-quarter filing. Even employers who do not otherwise file Form 720 during the year are still required to submit it for this purpose.

The actual filing process is refreshingly simple. Employers determine the average number of covered employees during the plan year, apply the correct rate, and report the total on the designated PCORI line within Form 720. Payment is then submitted to the IRS, typically through electronic means. There is no need for actuarial calculations, complex testing, or specialized software.

Despite its simplicity, mistakes do happen. Employers sometimes file the form under the wrong quarter, use an outdated fee amount, or mistakenly include dependents in their count. These errors can lead to IRS notices, but they are easily avoided with a basic understanding of the rules.

This brings us back to the original question: do you need to pay someone to prepare and file the PCORI fee? For most employers, the answer is no. The process generally takes less than half an hour and requires only basic administrative effort. If you are comfortable counting employees, performing a simple multiplication, and completing a short IRS form, you are fully capable of handling this requirement internally.

There are, however, situations where outside assistance may make sense. Employers managing multiple self-funded plans, operating across different plan years, or dealing with prior filing errors may benefit from professional support. In those cases, outsourcing can help ensure accuracy and consistency. But for the majority of HRA sponsors, paying a third party to handle the PCORI fee is often unnecessary.

In the end, the PCORI fee is a small, predictable, and manageable part of offering an HRA. With a clear understanding of how it works and a simple annual reminder, employers can confidently handle the requirement on their own without added cost or complexity.

You can pay someone else to prepare Form 720 for you, but it will most likely cost more to pay someone to prepare it than the amount of the fee you will pay. There is a vast amount of information and instructions available, but there is no need to feel overwhelmed, especially if you employ fewer than 10 employees.

The PCORI Fee is paid with the Quarterly Federal Excise Tax Return (IRS Form 720) for the second quarter of each year, due by July 31. If you do not normally file Form 720 and you are only doing so now to pay the PCORI fee, you will only file this form once each year.

Also see: PCORI fee due July 31 on some HRA/FSA plans

In order to complete form 720 you will need the following information:

1. Employer’s legal name
2. Employer’s FEID
3. Employer’s Address
4. Your HRA is considered an “applicable self-insured health plan”
5. You need to know the average number of lives covered by your HRA during the previous Plan Year.

The only information you might not have at your fingertips is “the average number of lives covered by your HRA during the previous Plan Year”.

You can use any of these three methods suggested by the IRS, also from the Form 720 Instructions:

1. The actual count method.

2. The snapshot method.

3. The state form method.

If you have very few employees, my recommendation is the snap-shot method. You pick several days in the previous Plan Year at your discretion (I suggest one date from each quarter). Look at how many participants were enrolled on each of those dates, add the number of participants, divide it by the number of days you looked at – there is your average.

If you are the only employee of a C Corporation and you know that you were the only employee covered by your HRA – you’re done. You pay about $2.50 and get on with your life.

If you would like to see the full IRS description of each method, see Internal Revenue Bulletin 2012-52.

Once you have determined the “the average number of lives covered by your HRA during the previous Plan Year” go to line 133 of Form 720, write this number in column (a) on the line for “Applicable self-insured health plans”, multiply this by $2.17 ($2.26 after 10-2016) and enter the total in the next column and in the “Tax” column. You then write this amount at the bottom of Part II where it says “Add all amounts in Part II”. Then write this same amount in box 3 at the top of Part III “Total tax. Add Part I, line 1 and Part II, line 2. Sign at the bottom, complete the payment voucher (720-V) at the very end of Form 720, and mail both with your check.

If you are already enrolled in EFTPS, you can pay electronically. If you are not already enrolled, go to https://www.eftps.gov/eftps/ for more information. Their website says that it takes 5-7 business days to receive your PIN

There is one bit of good news that might be worth mentioning here – A Memo released by the IRS on June 7, 2013 indicates that the PCORI fee is a deductible business expense. Not that exciting for those of you that just spent half an hour paying a little over $2.00 to the IRS. But you can rejoice in the fact that you are done and can move on with your life.

RELATED RESOURCES (PCORI Fees):

Form 720 Instructions:

https://www.irs.gov/pub/irs-pdf/i720.pdf

Form 720:

https://www.irs.gov/pub/irs-pdf/f720.pdf

PCORI Q&A at IRS.gov

https://www.irs.gov/uac/Patient-Centered-Outcomes-Research-Trust-Fund-Fee:-Questions-and-Answers

Internal Revenue Bulletin 2012-52

https://www.irs.gov/irb/2012-52_IRB/ar11.html

Core Documents, Inc. has been providing free consulting, affordable plan documents, and plan updates as needed for Section 125 Cafeteria Plans and Health Reimbursement Arrangements since 1997. See more information about these fringe benefit plans at Core Documents’ website: https://www.coredocuments.com, or call toll free 1-888-755-3373.