If your business provides health benefits through health reimbursement arrangements such as a 105-HRA, a QSEHRA, or an ICHRA, you likely must file IRS Form 720 and pay the annual Patient-Centered Outcomes Research Institute (PCORI) fee by July 31, 2026.
What Is the PCORI Fee?
Although the fee is small, many business owners overlook this filing requirement. Failing to file can result in unnecessary IRS notices and may weaken the documentation supporting the validity of your health reimbursement arrangement.
Who Must Pay the PCORI Fee?
The PCORI fee applies to most employer-sponsored health reimbursement arrangements, including:
- 105-HRAs
- Qualified Small Employer HRAs (QSEHRAs)
- Individual Coverage HRAs (ICHRAs)
How the PCORI Fee Is Calculated
The current fee equals $3.84 multiplied by the average number of employees covered under your plan during the plan year ending in 2025. Dependents generally do not count as separate covered lives.
For many small businesses, the fee is minimal. For example, if your business covers only one employee under the HRA, the total PCORI fee is just $3.84.
You report and pay the fee annually using IRS Form 720. Even though Form 720 usually applies to quarterly excise taxes, employers who file only for the PCORI fee submit it just once each year.
The filing deadline is July 31 of the calendar year following the end of the plan year. For a calendar-year 2025 plan, the deadline is July 31, 2026.
The PCORI fee is deductible as a business expense.
While the fee itself is small, filing Form 720 helps demonstrate that your HRA operates as a legitimate employer health plan. Proper compliance can help avoid future IRS issues and support your medical expense deductions.
How We Can Help
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