How to Calculate the PCORI Fee

To calculate the PCORI fee, multiply two numbers: the average number of lives covered during the plan or policy year, and the rate for the date that year ended.

PCORI fee = average covered lives × applicable rate

The math is one line. What goes wrong is the inputs: choosing the rate by the wrong date, or counting the wrong people. This guide shows how to get each input right, then works through three examples. If you only want a quick answer, the PCORI fee calculator does the multiplication.

How do you pick the right rate?

Look at the last day of the plan or policy year. Not the first day, and not the day you file. The rate changes each October 1, so a plan year ending September 30 and one ending October 31 of the same year use different rates.

Years ending on or after October 1, 2026 need a rate the IRS sets later. It is not in the sources for this article, so check the second-quarter 2027 Form 720 instructions. Rates for earlier years are on the IRS Q&A page.

How do you get the average covered lives?

Self-insured plan sponsors must use one of three methods, and must keep to the same one for the whole plan year. You can change methods from one plan year to the next.

• Actual count. Add the lives covered on each day of the plan year, then divide by the number of days in the plan year.
• Snapshot. Count lives on a date in each quarter, using dates that line up within three days from quarter to quarter, then divide by the number of dates. A count on each date can be the real headcount, or self-only participants plus 2.35 for each participant with other coverage.
• Form 5500. Use participant counts from the Form 5500 or 5500-SF for the plan, if it is filed no later than the fee's due date. Self-only plan: add the beginning and end counts and divide by 2. Plan that also offers other coverage: add them and do not divide.

Insurers have a different list: actual count, snapshot, member months, or state form. Our counting methods guide covers these in more depth.

Include everyone covered: employees, spouses, dependents, COBRA participants, and retirees. Two rules can lower the count. A sponsor whose only self-insured coverage is an HRA or health FSA may count one life per participant. And a sponsor offering both insured and self-insured options may leave out people covered only under the insured options.

Three worked examples, small to large

All three employers and all their figures are made up.

Example 1: small employer, insured medical plus an HRA. Lakeview Dental Supply buys fully insured major medical coverage, so the insurer handles the fee for that policy. It also sponsors an HRA that pays deductibles and copays. The IRS treats an HRA paired with an insurance policy as a separate plan with its own fee, unless it qualifies as an excepted benefit. Since the HRA is its only self-insured plan, Lakeview may count one life per employee in the HRA. 38 × $3.84 = $145.92.

Example 2: mid-size plan with a June 30 plan year. Ridgeway Foods has a self-insured plan year of July 1, 2024 to June 30, 2025. It counts covered lives on the 8th of the first month of each quarter:

1,676 ÷ 4 = 419 average lives. The plan year ended before October 1, 2025, so the rate is $3.47. 419 × $3.47 = $1,453.93. A company that assumes "it's 2025, so use the newest rate" would be wrong here.

Example 3: large plan using Form 5500. Northgate Logistics has a calendar plan year and offers self-only and family coverage. Its 2025 Form 5500 reports 2,140 participants at the start of the year and 2,260 at the end. Because family coverage is offered, it adds them and does not divide: 2,140 + 2,260 = 4,400. The plan year ended December 31, 2025, so 4,400 × $3.84 = $16,896.00. It can use this method only if the Form 5500 is filed by the fee's due date.

Checking your result before it goes on the form

The IRS e-file rules reject a return where the fee on a line doesn't equal the lives multiplied by the rate on that line, or where the IRS No. 133 tax doesn't equal the sum of the line fees. So enter the same average you used in your worksheet, and keep that worksheet with your records.

• Is the rate based on the last day of the year, not the filing date?
• Did you stay with one counting method for the entire plan year?
• Did you include dependents, COBRA participants, and retirees, unless a special rule lets you leave them out?
• Are you on the insurer lines or the self-insured lines?

Once you have your average, you can file your PCORI fee online with EasyFile720. You enter your figures, the rates for the return are built in, and the math is calculated for you. Validations catch common mistakes before you submit. Starting is free with no credit card, and a filing costs $39.95 when you file. The counting method is your choice and the count is your work, so bring the number you worked out above. The PCORI fee filing page has the details.

FAQ

Sources: Instructions for Form 720 (Rev. June 2026); Form 720 (Rev. June 2026); IRS PCORI Questions and Answers; 26 CFR 46.4376-1; IRS chart of coverage types; 720 Business Rules Publication 2026Q4 v1.0. General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.