The annual PCORI fee is a crucial compliance requirement for self-insured health plans. As HR directors and benefits brokers navigate the complexities of healthcare administration, knowing PCORI obligations helps ensure smooth operations and supports valuable healthcare research that benefits plan participants.
Let’s take a closer look at PCORI, its fee structure, how the funds are used, and the future of PCORI compliance.
Understanding PCORI’s Mission and Your Role
Established in 2010 through the Affordable Care Act, PCORI operates as a private, non-profit organization dedicated to funding patient-centered comparative clinical effectiveness research (CER). This research directly benefits your organization’s health plan participants by providing evidence-based information to improve healthcare decisions and outcomes.
PCORI fees represent more than a compliance obligation; they’re an investment in healthcare research that directly benefits your organization’s participants. By understanding current requirements, implementing efficient calculation methods, and recognizing the strategic value of PCORI-funded research, HR directors and benefits brokers can transform this administrative requirement into a meaningful contribution that improves healthcare.
The research funded through your PCORI contributions helps create the evidence base that informs better healthcare decisions, ultimately supporting your organization’s goals of providing high-quality, cost-effective health benefits to your participants.
Current PCORI Fee Structure
- For plan years ending between October 1, 2025, and September 30, 2026, the PCORI fee is $3.84 per covered life
- For plan years ending between January 1, 2025, and September 30, 2025, the fee is $3.47 per covered life
- Annual deadline: July 31st; file by using IRS Form 720
The fee structure is updated yearly based on expected health spending per person, helping to fund research that improves healthcare and patient outcomes.
Who Must Comply with PCORI
The PCORI fee applies to most self-insured medical plans, including COBRA coverage. However, there are some important exclusions that protect certain types of plans.
Primary Exclusions
Plans serving employees working or residing outside the United States, as well as those classified as excepted benefits, are exempt from PCORI fees. Also excluded are:
- Healthcare Flexible Spending Account (FSA) plan for which the employer contributes less than $500 annually and offers another medical plan with non-excepted benefits.
- Health Reimbursement Arrangement (HRA) that reimburses for excepted benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and does not integrate with the group medical plan.
- Health Savings Accounts (HSAs)
For comprehensive guidance on specific plan types, consult the IRS’s detailed coverage chart.
Calculating PCORI Fees
The IRS provides three approved methods for determining average covered lives, allowing flexibility based on your administrative capabilities:
Actual Count Method
The most precise approach involves tracking daily enrollment throughout the plan year. To do this, add up the total covered lives for each day, and then divide that number by the total days in the plan year.
Snapshot Method
This approach simplifies things by using enrollment counts from specific dates in each quarter. To do this, count the covered lives on a single date (or multiple dates that are evenly spaced across quarters) that falls within the first, second, or third month of each quarter, and then divide that number by the total number of snapshot dates.
Form 5500 Method
Leverage existing compliance reporting by using participant numbers from your Form 5500 filing, Annual Return/Report of Employee Benefit Plan (or Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan). This method works well for plans already maintaining detailed participant records for Department of Labor reporting.
How PCORI Fees Drive Healthcare Innovation
Your PCORI contributions fund research that directly benefits your plan participants and the broader healthcare ecosystem. Understanding this connection helps demonstrate value to stakeholders and participants.
Research Portfolio Impact
PCORI continues expanding its research funding. Funding opportunities for 2026 cover various research areas, including cancer care, pain management, mental health, intellectual and developmental disabilities, maternal health, and other patient-centered comparative effectiveness research.
Tangible Benefits for Your Organization
Evidence-based treatment guidelines improve outcomes for participants, and comparative effectiveness research guides formulary decisions. By using patient engagement strategies, healthcare costs decrease, and implementation science helps put research into practice within your organization.
Continuing Through 2029
The Further Consolidated Appropriations Act of 2020 extended the collection of PCORI fees until 2029, giving organizations a clear direction for long-term benefits planning. This extension guarantees ongoing funding for research initiatives and lets organizations factor PCORI costs into their multi-year budgets.
By linking annual fee adjustments to healthcare cost projections, the focus stays on patient-centered outcomes research, which is tied to broader healthcare policy initiatives. This sets the stage for research findings to shape future coverage requirements and industry standards.
Beneliance has provided Arkansas employers with comprehensive third-party employee benefits administration and compliance services since 1996. Please enter your email (above right) to receive notifications about new blog articles as they are published.
