The IRS released the 2026 update to the annual PCORI fee. As a reminder, the PCORI fee was initiated as part of the Affordable Care Act to fund patient-centered research relating to health care. Both fully insured and self-funded health plans are required to pay the PCORI fee.
| Plan Year | PCORI Rate |
| Ending on or after October 1, 2024 and before October 1, 2025 | $3.47 |
| Ending on or after October 1, 2025 and before October 1, 2026 | $3.84 |
The Calculation
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, the calculation is based on average lives, not average employees. It is often referred to as the “belly button” tax, since it is paid for every “belly button” (or person) covered by the plan. This means the count is the average number of employees plus dependents covered under the plan.
Who Pays the Fee?
- Fully Insured Health Plans. PCORI fees for fully insured plans are baked into the premiums by the insurance carriers. The insurer completes the filing and pays the PCORI fees for participants covered under a fully insured plan
- Self Insured Health Plans. The Employer/Plan Sponsor is responsible for completing the filing and paying the PCORI fees for all participants covered under a self insured health plan.
Which Plans are Impacted?
The easy answer is all health plans. As outlined above, fully insured plans are handled by the carrier. Self-funded medical insurance plans are the responsibility of the Employer/Plan Sponsor. However, things get a bit more complicated when an HRA or FSA is added to the mix. HRA and FSA plans are self-funded health plans which means they are generally subject to PCORI fees, unless an exception applies.
- HRA Integrated with Fully Insured Coverage. Employers that maintain a fully insured major medical plan along with an HRA must pay PCORI fees on the HRA. The carrier will pay the PCORI fees on the fully insured health plan component. The HRA count is calculated as one life per participant. Note that dependents are not included in the count for HRA plans.
- HRA Integrated with Self-Funded Coverage. There is a special PCORI rule which allows employers with multiple self-funded health plans to treat those plans as one. Therefore, employers that have a self-funded health plan and an integrated HRA, may treat the two plans as a single plan for PCORI purposes (thus eliminating double fees for two plans). In this case, the employer would owe only one PCORI fee for participants covered under both self-funded plans. The participant count for fee calculation purposes would be based on the per human numbers of the underlying self-funded health plan, not the per employee numbers of the integrated HRA.
- EBHRA Plans. Excepted benefits are not subject to healthcare reform’s mandates which means that they are not subject to PCORI fees. Such plans must be offered alongside a traditional group health plan, have a benefit cap under the federal limit, and reimburse only expenses that are not essential health benefits (such as dental, vision, infertility, or state-mandated travel benefits). No PCORI fees are payable for EBHRAs.
- FSA Plans. “Regular” FSA plans that are funded by participant salary reductions qualify as excepted benefits and thus are not subject to PCORI fees. FSA plans that do not qualify as excepted benefits are subject to PCORI fees. This would include FSA plans with employer sponsorship of greater than $500 in the form of matching or seed funding. Counts for non-excepted FSA benefits are based on the employee only count (like HRAs).
- QSHRA Plans. An employer offering a QSHRA can’t, by definition, offer a group health plan. Therefore, a QSHRA is considered a standalone HRA plan and is subject to PCORI fees. The count is calculated as one life per participant.
- Stop Loss Coverage. Stop Loss policies are not subject to PCORI fees.
Employer Action
- Fully Insured Plans. Employers with fully insured plans do not need to take any action for PCORI fee filing as the fee is baked into the fully insured premium and paid by the carrier.
- Self-Funded Plans. Employers with self-funded health must calculate fees and submit payment on the Q2 Form 720. The deadline is July 31st each year.
- HRA/FSA Plans. Employers with HRA/FSA plans must first determine whether the plan is subject to PCORI fees (or exempted by the single plan rule or the excepted benefit rule). If subject, employers must calculate fees and submit payment on the Q2 Form 720. The deadline is July 31st each year.