PCORI Fee for ICHRAs
If you offer an ICHRA, plan on treating it as an HRA for the PCORI fee, and on your business being the one that reports it. That answer takes one step of reasoning, and you should see the step. The IRS sources we checked do not contain the word ICHRA. They do give a rule for HRAs, including premium-only HRAs.
An ICHRA, or individual coverage HRA, is commonly described as an arrangement where an employer reimburses employees for individual health insurance they buy. The PCORI materials do not define it. So this article separates what the IRS says from how we apply it.
What the IRS says, and how that reaches an ICHRA
| IRS statement | Source | Applied to an ICHRA |
|---|---|---|
| HRAs, including premium-only HRAs, are subject to the fee unless treated as an excepted benefit | Coverage chart | Our reading: an ICHRA is an HRA, so it falls in this row unless it is an excepted benefit |
| The plan sponsor is responsible for an HRA | Coverage chart | The employer sponsoring the ICHRA reports and pays |
| Sponsors may assume one life for each employee with an HRA | Coverage chart; 26 CFR 46.4376-1(c)(2)(vi) | One life per participating employee, not per family member, if the sponsor has no other self-insured plan |
| An HRA and an insurance policy it works with are subject to separate fees | Coverage chart | The issuer of each individual policy has its own fee; yours is on the ICHRA |
The third column is our application, not IRS wording. You can read the rows yourself in the IRS coverage chart. Because the IRS has not named ICHRAs in these sources, ask your benefits counsel or tax advisor to confirm the treatment of your specific plan. Our separate article on HRAs and FSAs covers the broader rule.
Why reimbursing only premiums does not take you out
A common assumption goes like this: the ICHRA only reimburses insurance premiums, the insurer already pays PCORI on the policy, so nothing more is owed. The chart closes off that logic. It names the premium-only HRA as subject to the fee.
The chart's example says that an HRA used with a specified health insurance policy, which is the IRS term for an insured health policy, and the policy itself are subject to separate fees. That example talks about deductibles and copays, but the same separation appears to hold for premiums, since the only combination rule is between two self-insured plans. An individual policy is not self-insured, so the two can't merge.
The one way out named in the chart is excepted benefit status. Excepted benefits are limited kinds of coverage defined in section 9832(c) of the tax code. The IRS PCORI sources do not list the requirements for an HRA to qualify. If someone tells you your arrangement is excepted, ask them to show you the basis in writing.
How to count ICHRA participants
Count people with the arrangement, not people on their policies. Under the regulation, a sponsor with no applicable self-insured plan other than an HRA or health FSA may treat each participant's HRA as covering a single life. You skip spouses and children completely.
You still have to average across the plan year, because ICHRA enrollment moves as people join and leave. The actual count and snapshot methods both fit. For example, Birch Street Logistics, a made-up company, has an ICHRA with a plan year running July 1, 2025 to June 30, 2026. Using the snapshot method, it counts participants on one matching date per quarter:
- Quarter 1: 38 participants
- Quarter 2: 42 participants
- Quarter 3: 44 participants
- Quarter 4: 40 participants
The total is 164. Divided by 4, the average is 41 lives. At $3.84, the fee is $157.44. The PCORI fee calculator can run the same multiplication for your count.
If you also sponsor a self-insured medical plan for another group of employees, this picture changes. The combination and counting rules for that setup are different, so review them with your advisor before relying on one life per employee across the board.
Which rate and due date apply to your ICHRA year?
Both follow the last day of the plan year, not the date of any reimbursement.
| ICHRA plan year ends | Rate per life | Form 720 due |
|---|---|---|
| December 31, 2025 | $3.84 | July 31, 2026 |
| June 30, 2026 | $3.84 | Monday, August 2, 2027, because July 31, 2027 is a Saturday |
| December 31, 2026 | Not in the IRS materials we reviewed. The IRS publishes it. Check the instructions for the second-quarter 2027 Form 720 | Monday, August 2, 2027 |
Reporting the ICHRA fee online
Employers with only an ICHRA often have never filed an excise return. The good news is that the filing is small: if PCORI is your only liability, it is one second-quarter Form 720 a year, not four. The IRS does not require e-filing for this fee, but it is available.
To file your PCORI fee online with EasyFile720, create a free account with no credit card, enter your business details, and enter the average lives you counted. The rate for the return is built in and the fee is calculated from your figure. You sign electronically, and you pay $39.95 when you file. If you expect to file for several businesses or years, the Full Year Plan is $139.99 for 4 credits that don't expire. We don't decide whether your arrangement is subject or choose your counting method, so settle those points first using the table above. The PCORI fee filing page lists what else to have ready.
FAQ
Do my employees pay anything on their own for this?▼
The IRS sources put the fee on issuers and plan sponsors, not on individual employees. An employee does not report this fee on Form 720 just for having an ICHRA.
Do employees who were offered the ICHRA but did not join count?▼
The IRS counting rule refers to each employee with an HRA, and the regulations refer to each participant. A person who is not participating is not part of that count.
Must I file for every quarter because of an ICHRA?▼
No. If the PCORI fee is your only Form 720 liability, you file only the second-quarter return once a year.
Does the size of the reimbursement allowance change the fee?▼
No. The fee is average covered lives times the applicable dollar amount, so the allowance amount is not part of the calculation.
File your PCORI fee online
Create a free account with no credit card and build your return. You pay $39.95 only when you file. EasyFile720 is an IRS-authorized e-file provider, and you get an acknowledgment when the IRS accepts your return.
Sources: IRS chart of PCORI coverage types; IRS PCORI Questions and Answers (Q3, Q5, Q7, Q8, Q12, Q13); 26 CFR 46.4375-1; 26 CFR 46.4376-1; Instructions for Form 720 (Rev. June 2026). General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.
