The Internal Revenue Service (IRS) has released Notice 2025-61, announcing an increase in the Patient-Centered Outcomes Research Institute (PCORI) fee. The new adjusted applicable dollar amount will be $3.84 per covered life, an increase from the previous rate of $3.47.
What Is the PCORI Fee?
The PCORI fee is a fee on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI). The institute helps patients, clinicians, purchasers, and policymakers make better-informed healthcare choices by advancing clinical effectiveness research.
Understanding the Fee Schedule
The applicable PCORI fee is determined strictly by the date on which your specific plan year ends. For plan years ending between October 1, 2024, and September 30, 2025, the fee remains at $3.47 per covered life. However, for plan years ending between October 1, 2025, and September 30, 2026, the fee increases to $3.84 per covered life. Practically speaking, this means that for employers operating on a standard calendar year plan (ending December 31, 2025), the new higher rate of $3.84 will apply, with payment due by July 31, 2026.
Who is Responsible for Payment?
- Self-Insured Plans. Employers that sponsor self-insured health plans (including Health Reimbursement Arrangements (HRAs) and Level-Funded plans) are responsible for calculating, reporting, and paying the fee directly to the IRS.
- Fully Insured Plans. The insurance carrier is responsible for paying the fee, though this cost is typically passed on to the employer through premiums.
Next Steps for Employers
To ensure compliance with the upcoming filing deadlines, employers should:
- Determine Your Rate: Confirm your plan year end date to verify if you owe $3.47 or $3.84 per covered life based on the schedule above.
- Determine Your Responsibilities: Employers with fully insured plans may confirm with their carrier that these fees are being paid through the plan, and employers of certain self-insured health plans should ensure they are paying PCORI fees annually.
- Select a Counting Method: For self-insured plans, review the permissible methods for counting covered lives (Actual Count, Snapshot, or Form 5500 Method) to determine which yields the most favorable average for your organization.
- Prepare Form 720: The PCORI fee is reported on the second quarter IRS Form 720 (Quarterly Federal Excise Tax Return). Even if you do not owe other excise taxes, you must file this form annually to report the PCORI fee.
