Each year, employers must wait for the IRS to update Form 720 in order to pay their Patient-Centered Outcomes Research (PCOR) fees correctly. The IRS has now released the updated version of Form 720 for fees due July 31, 2025.

What is the PCOR Fee?

The PCOR fee, established under the Affordable Care Act (ACA), funds research on patient outcomes. The goal of this research is to provide lower costs in delivering health care and lower premiums for health care coverage. Employer-sponsored health plans are subject to this fee.

Who must pay the fee?

Health reimbursement arrangements (HRAs) and some flexible spending accounts (FSAs) are responsible for PCOR fees as follows:

• HRAs integrated with fully-insured medical plans
  Employers pay a PCOR fee on the HRA based on the number of participants in the HRA and insurers pay a PCOR fee on the insured plan based on the number of participants in the insured plan.
  
• HRAs integrated with self-funded medical plans
  Employers pay a PCOR fee based on the sum of (1) the number participants who participate in both the HRA and the medical plan plus (2) the number of participants (if any) participating only in the HRA.
• Non-Integrated HRA
  Employers pay a PCOR fee based on the number of participants in the HRA (not applicable if the HRA reimburses only dental or vision expenses).
• Non-excepted health care FSAs
  Employers pay a PCOR fee on the FSA based on the number of participants in the non-excepted FSA.

Fee Amounts

The PCOR fees due by July 31, 2025 include plan years ending in 2024. The table below includes the applicable fee amount per covered life based on applicable plan year end date.

You can calculate the number of covered lives for HRAs and non-excepted health care FSAs using one of the following methods:

• Actual Count: Count the number of covered employees each day and divide that number based on the number of days in the plan year.
• Snapshot Method: Count the number of covered employees starting with the same day each quarter and divide by the number of quarters in the plan year. For 12-month plan years, divide by 4. For short plan years, divide by the actual number of quarters in the short plan year.
• Form 5500 Method: If the plan provides single and family coverage, count the number of covered employees on the first and last day of the plan year and add them together. If the plan only provides single coverage (employee only), count the number of covered employees on the first and last day of the plan year, then add them together, and then divide by two.

How to File

Employers must use IRS Form 720 to pay PCOR fees for self-funded medical plans, HRAs, and non-excepted health care FSAs.

• Form 720 https://www.irs.gov/pub/irs-pdf/f720.pdf
• Form 720 Instructions https://www.irs.gov/pub/irs-pdf/i720.pdf