PCORI Fee for QSEHRAs

Being small does not appear to get you out of it. A QSEHRA, or qualified small employer HRA, is an HRA that small employers commonly use to reimburse employees for health costs. The IRS PCORI materials we reviewed do not name it, and they list no size-based exception. They do say that HRAs are subject to the fee unless they meet the excepted benefit rules. We apply that HRA row to QSEHRAs here. That is our reading, not an IRS sentence, so have your tax advisor confirm it for your plan.

The usual shock for these employers is not the amount, which is small. It is learning that a business with a few employees has an excise tax return to file at all.

Is there a small-employer exception to PCORI?

Not in these sources. Read the exceptions in IRS Q&A 9 and in the IRS coverage chart and you will find types of coverage, such as Medicare, stand-alone dental, and on-site clinics. You will not find a headcount, a payroll limit, or a dollar floor.

Nothing in the PCORI materials mentions QSEHRAs or gives them a separate rule. The only way out the HRA row offers is treatment as an excepted benefit, a limited class of coverage under section 9832(c) of the tax code. The sources don't spell out what an HRA needs to qualify, so don't assume yours does without advice. If it does qualify, no fee is due on it.

Our guide to who must file Form 720 sets this in the wider picture of excise filers.

Worked example: a family of five still counts as one life

Sunrise Bakery is a made-up company. It has no group health plan, and it runs a QSEHRA with a plan year of July 1, 2025 through June 30, 2026. One employee's spouse and three children use the same reimbursement allowance. That employee is still one life. Here is the calculation using the snapshot method:

1. Choose matching count dates. Sunrise uses the 10th of the first month of each quarter: July 10, October 10, January 10, and April 10.
2. Count participating employees on each date, not family members. It finds 12, 12, 14, and 14.
3. Add the counts. 12 + 12 + 14 + 14 = 52.
4. Divide by the number of dates. 52 divided by 4 = 13 average lives.
5. Use the rate for the plan year-end. June 30, 2026 falls in the period October 1, 2025 to September 30, 2026, so the rate is $3.84.
6. Multiply. 13 x $3.84 = $49.92.
7. Note the due date. July 31, 2027 is a Saturday, so the return is due Monday, August 2, 2027.

The one-life rule is available because Sunrise has no self-insured plan other than the HRA. It comes from 26 CFR 46.4376-1(c)(2)(vi), which says the sponsor is not required to include any spouse, dependent, or other beneficiary of the participant. You can test your own number in the PCORI fee calculator.

What about the individual policies employees buy?

Those are a separate matter. The issuer of an insured policy is responsible for the fee on that policy. Your QSEHRA doesn't change that, and the issuer's payment doesn't cover your fee. The chart's example treats an HRA that pays deductibles and copays under an insured policy as subject to a separate fee, which appears to hold for premium reimbursement too, and allows plans to be combined only between self-insured plans with the same sponsor and plan year. So you do not need your employees' policy details to work out your number. You need only your count of participants.

Starting or stopping a QSEHRA midyear

Small employers often start in the middle of a year or stop when they grow. IRS Q&A 12 says the fee applies to a short plan year, meaning a plan year of fewer than 12 months. Q&A 13 sets the math: average lives during that short year times the dollar amount for that year. Q&A 14 keeps the same due date rule, July 31 of the year after the plan year ended.

For instance, if a made-up QSEHRA began April 1, 2025 on a calendar plan year, its first plan year ended December 31, 2025. You would average lives across April through December only, then apply $3.84. That return was due July 31, 2026. If a date like that has already passed, read our note on late PCORI filing.

Filing once a year, without a tax department

Many QSEHRA employers have no other Form 720 liability. In that case, the IRS says you file only the second-quarter Form 720 once a year, and you skip the other three quarters. Deposits aren't required for this fee.

EasyFile720 guides you from business details to submission. Enter your average lives, and the rate and math are calculated for you, then sign electronically. Validations catch common mistakes before you submit, which helps if this is your first excise return. An account is free to open with no credit card, and you pay $39.95 when you file the PCORI fee. Your past return stays in your account, so next year you can see how you counted. The main PCORI fee page has the rest of the rules for this return.

FAQ

Sources: IRS chart of PCORI coverage types; IRS PCORI Questions and Answers (Q3, Q8, Q12, Q13, Q14); IRS Patient-Centered Outcomes Research Institute fee page; 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.