If you’re required to pay the PCORI fee, this guide walks you through how to calculate your fee, complete IRS Form 720, and submit payment.
Step 1: Calculate your average covered employees
The PCORI fee is calculated as:
Average number of covered employees × applicable rate
Methods for calculating average covered lives
The IRS allows several methods, but the most common for HRAs is:
Snapshot method (recommended)
Choose a consistent date each quarter (e.g., first day of each quarter)
Count enrolled employees on that date
Average those counts
Alternative: Actual count method
You may also:
Total covered employees for each day of the plan year
Divide by the number of days in the plan year
💡 This method is more precise but more time intensive.
Step 2: Determine your applicable rate
Plan Year End Dates | Rate |
Oct 1, 2025 – Sep 30, 2026 | $3.84 |
Oct 1, 2024 – Sep 30, 2025 | $3.61 |
Step 3: Complete Form 720
You will report the PCORI fee on:
Form 720 (Quarterly Federal Excise Tax Return)
Key sections to complete:
Part II, IRS No. 133 (PCORI fee line)
Enter:
Average covered lives
Applicable rate
Total fee
Step 4: File by the deadline
Due date: July 31 each year
Important:
PCORI is filed annually, even though Form 720 is quarterly
It is included only in the Q2 filing
Step 5: Submit your payment
Option 1: Pay by mail
Send:
Completed Form 720
Form 720-V
Check or money order
Internal Revenue Service
Department of the Treasury
Ogden, UT 84201-0009
Option 2: Pay electronically (EFTPS)
Submit payment by July 29 at 8:00 PM EST
For more detailed information, see the IRS Instructions for Form 720.
⚠️ You must still mail Form 720, even if you pay electronically.
Filing tips and best practices
✅ Double-check your employee counts for accuracy
✅ Use a consistent calculation method year over year
✅ Keep documentation in case of an IRS audit
✅ Set a reminder each June/July to prepare filing
What if I file Form 720 quarterly already?
If you file Form 720 for other excise taxes:
Only include the PCORI fee on your second-quarter return (Q2)
Additional resources
Form instructions:
https://www.irs.gov/pub/irs-pdf/i720.pdf
Disclaimer
This article is for general informational purposes only and should not be considered tax advice. Please consult a licensed tax professional for guidance specific to your situation.