Understanding the PCORI Fee for Your ICHRA

The PCORI (Patient-Centered Outcomes Research Institute) fee is a small annual federal excise tax that helps fund research comparing the effectiveness of medical treatments. Because an ICHRA is a self-insured health plan, employers offering one are responsible for reporting and paying this fee directly to the IRS — it isn't handled by an insurance carrier.

Who Pays

The employer (plan sponsor) is responsible for the fee, not your ICHRA provider or the ICHRA administrator. This applies even to companies with just one ICHRA participant.

Filing Requirements

• Reported on IRS Form 720 (Quarterly Federal Excise Tax Return), filed once a year using the second-quarter version.
• Due by July 31 for plan years ending in the prior calendar year.
• Late filing penalty: 5% of unpaid tax per month, up to 25% of the amount owed. A separate penalty of 0.5% per month applies if the fee itself goes unpaid — these two penalties can stack, so it's best to file and pay together.

Where to Find Covered-Life Data

Employers can pull the enrollment data needed to complete Form 720 from the Documents tab in the StretchDollar portal. This reflects enrolled employees and dependents by month, which employers can use to calculate their average covered lives for the plan year using the IRS's "actual count" method.

Tip: This fee is a deductible business expense. Employers should confirm plan year-end dates and covered-life counts with their TPA or accountant before filing.