Compliance Alert July 2026

Download the PDF version here!

IRS Republishes the Second Quarter Form 720

After a week of waiting, the IRS has republished its second quarter Form 720, resolving the availability gap that began last week.

For a quick timeline, on 6/26, the IRS updated Form 720 with the new PCORI fee rates. On 6/30, the form was temporarily removed from the IRS website while corrections were made to Lines 11a through 11f. As of July 7, 2026, the corrected Form 720 is once again available.

For employers who already filed using the interim version available between June 26 and June 30, no refiling or corrective action is necessary.

The only revision involved the overpayment election in Part III (whether an overpayment should be refunded or applied to a future return). This change does not affect the PCORI fee calculations.

The applicable PCORI fee rates remain:

• $3.47 per covered life
• $3.84 per covered life

Employers and plan sponsors who were waiting for the updated form should now complete and submit Form 720 before the July 31, 2026 filing deadline.

Who This Applies To

• Self-funded medical plans ending in 2025, including level-funded plans, HRAs, ICHRAs, QSEHRAs, MERPs, and other less common arrangements as described on the IRS chart. 

• Fully insured plans are the carrier’s responsibility to file and pay.

• Exceptions: Excepted benefits are exempt, including stand-alone vision or dental plans, HSAs, and health FSAs that qualify as an excepted benefit.

Background on the PCORI Fee

The Affordable Care Act requires certain group health plans to pay the Patient-Centered Outcomes Research Institute (PCORI) fee.

For fully insured plans, this fee is included in insurance premiums and paid by the carrier.

For self-funded plans, employers and other plan sponsors must calculate and remit the fee directly to the IRS.

This requirement applies to:

• Self-funded group health plans
• Level-funded health plans
• HRAs
• ICHRAs
• QSEHRAs
• Most MERPs

Filing Deadline

Although the fee is calculated by plan year, it is paid annually using the second-quarter IRS Form 720.

The filing deadline is:

July 31 of the calendar year following the calendar year in which the plan year ends.

For example:

Any plan year ending during 2025 requires payment by July 31, 2026.

2025 PCORI Fee Rates

The applicable fee depends on when the plan year ended.

Plan Years Ending Before October 1, 2025

• $3.47 per covered life
• Reported on Form 720 Line 133(c)

Plan Years Ending On or After October 1, 2025

• $3.84 per covered life
• Reported on Form 720 Line 133(d)

PCORI Fee Schedule

Counting Covered Lives

For self-funded and level-funded health plans, covered lives include:

• Employees
• Former employees
• Spouses
• Dependents

For HRAs, ICHRAs, QSEHRAs, and MERPs:

Only primary covered individuals (employees and former employees) are counted.

Spouses and dependents are not included.

Additional IRS guidance is available regarding:

• Multiple self-funded plans
• Short plan years
• Multiple PCORI filings in the same year
• Approved counting methods

Consequences of Noncompliance

Failure to correctly calculate or file PCORI fees may result in IRS penalties and interest.

Potential penalties include:

• Failure to File: 5% of the unpaid tax per month, up to a maximum of 25%.
• Failure to Pay: 0.5% of the unpaid tax per month, up to a maximum of 25%.
• Minimum Penalty: The lesser of $100 or 100% of the tax owed (when applicable).
• Interest: Accrues daily using quarterly-adjusted IRS interest rates.

Although PCORI fees are relatively small, penalties and interest can accumulate over time.

Even if a third-party administrator or benefits consultant performs the calculations, employers remain responsible for ensuring their tax filings are accurate.

Practical Steps for Employers

1. Confirm Applicability

Determine whether your plan is:

• Self-funded
• Level-funded
• An HRA
• An ICHRA

Also confirm that the plan year ended during 2025.

If the plan year ends during 2026, the PCORI filing is not due until July 31, 2027.

Next, determine whether the applicable fee is:

• $3.47
• $3.84

based on the plan year end date.

2. Calculate the Fee

Request enrollment reports from your vendors.

For HRAs and ICHRAs

Only employee counts are required.

For Self-Funded or Level-Funded Medical Plans

You’ll need:

• Employee enrollment by coverage tier
• Total covered lives, including spouses and dependents

Employers may choose any IRS-approved counting method, including the method resulting in the lowest allowable fee.

3. File and Pay

Complete Form 720 using the updated version that reflects:

• $3.47 on Line 133(c)
• $3.84 on Line 133(d)

Do not use an outdated version of Form 720 showing previous year’s fee amounts.

When completing the form, include:

• Legal business name
• Federal Employer Identification Number (FEIN)
• Business address
• Filing quarter listed as June 2026

Submit Form 720 and payment by July 31, 2026, either electronically or by mail using Form 720-V with the Second Quarter box selected.

Finally, retain documentation supporting:

• Covered life calculations
• Payment confirmation
• Filing records

Because there is no IRS portal for reviewing prior Form 720 submissions, employers should keep these records for at least four years.