HRA With an Insured Plan: Who Pays PCORI?
Two parties pay. If your employee health coverage is an insurance policy and you also fund an HRA that pays deductibles and copays, the insurer owes the PCORI fee on the policy and your company owes a separate PCORI fee on the HRA. A Health Reimbursement Arrangement (HRA) is an employer-funded account that reimburses medical costs.
This is where many fully insured employers are caught out. They hear that the insurer takes care of PCORI, which is true for the policy, and stop there. An employer that is fully insured and has no HRA or other self-insured arrangement has nothing to file for this fee. Add the HRA and the answer changes.
The IRS example that settles it
The IRS coverage chart uses almost this exact setup as its example. It says that if amounts in an HRA may be used to pay deductibles and copays under a specified health insurance policy, the HRA and the policy are subject to separate PCORI fees. A specified health insurance policy is the IRS term for an insured health policy.
| Insured policy | HRA | |
|---|---|---|
| Who is responsible | The issuer (the insurer) | The plan sponsor (the employer) |
| Who is counted | All lives on the policy, including dependents | One life per employee with the HRA is permitted |
| Form 720 line, June 2026 form | 133(a) or 133(b) | 133(c) or 133(d) |
| Year that sets the rate | The policy year | The HRA plan year |
Why can't you combine the HRA with the policy?
People who have read about the combination rule often ask this. The rule exists, but it has a narrow reach. Two or more applicable self-insured health plans may be treated as one if they have the same plan sponsor and the same plan year. An insurance policy isn't a self-insured plan, and its issuer isn't your plan sponsor. So the rule never comes into play.
The reverse also holds. The chart adds that no similar rule exists for lives covered by more than one insurance policy. So an employer running two insurers next to one HRA still has each issuer dealing with its own policy, and the HRA remains yours.
The money: what each side reports
Westfield Print Shop is a made-up employer. Its insured medical policy and its HRA both run on a year ending December 31, 2025, so the rate on both is $3.84. On average 150 employees had the HRA, and the insurer's policy covered an average of 340 lives including dependents.
| Filer | Average lives | Rate | Fee | Form 720 line |
|---|---|---|---|---|
| The insurer | 340 | $3.84 | $1,305.60 | 133(b), on the insurer's return |
| Westfield Print Shop | 150 | $3.84 | $576.00 | 133(d), on its own return |
Westfield fills in only its own row. It enters 150 in column (a), and the $576.00 fee goes in column (c) and the Tax column for IRS No. 133. It's easy to assume the $576.00 is a charge on top of the same people, and in a sense it is, because the same employees appear in both counts. The law treats them as two arrangements. The PCORI fee calculator gives you a quick estimate of your own HRA row.
Mistakes to check for in this setup
- Counting the policy's lives on your return. Your line is for the HRA only. Entering everyone on the insurance policy overstates your fee.
- Assuming the HRA matches the policy year. They can differ, because they aren't combined. The HRA's own plan year sets your rate and due date.
- Leaving out employees who joined the HRA midyear. The fee uses an average, so run actual count or matching snapshot dates across the HRA plan year, not a single year-end headcount.
- Assuming the HRA is excepted. The chart exempts an HRA only if it satisfies the requirements for an excepted benefit. The IRS PCORI sources don't list those requirements, so get that opinion in writing.
- Missing prior years. If you only now realize the HRA was a separate plan, past years may be open too. Our notes on late PCORI filing and penalties explain the consequences.
For the wider view on which arrangements owe the fee, read PCORI for HRAs and FSAs.
Filing the employer's HRA fee
Your job is small: one number on one line, on a second-quarter Form 720. Have your HRA plan year dates and your participant counts in front of you before you start. If the HRA is your only Form 720 item, the IRS says you don't file for the other three quarters.
To file the HRA's PCORI fee online with EasyFile720, create a free account with no credit card and enter your business details. You enter your average HRA lives, and the fee is calculated at the rate built into the return. You pay $39.95 when you file and sign electronically, and you get an electronic acknowledgment from the IRS once it's accepted. If a benefits broker or preparer handles this for you, they can file for multiple client businesses under one account. The main PCORI fee guide covers what else you'll want ready.
FAQ
Our broker said the insurer handles PCORI. Is that wrong?▼
It is right for the insurance policy, but the IRS chart makes the plan sponsor responsible for the HRA. Ask specifically who is handling the HRA, because the policy answer does not cover it.
Can the insurer file the employer's HRA fee on its own return?▼
The IRS sources describe separate fees, with the sponsor responsible for the HRA. They do not describe an insurer reporting a sponsor's HRA fee on its own return.
Does every employee on the insured plan count for the HRA fee?▼
No. The HRA count is for employees with the HRA. Employees who are on the insurance policy but not in the HRA belong only in the insurer's count.
Do I need the insurer's PCORI figures for my return?▼
No. Your line uses only your own average HRA lives. The insurer's count goes on the insurer's return.
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 (Q5, Q7, Q8, Q16); 26 CFR 46.4375-1; 26 CFR 46.4376-1; Instructions for Form 720 (Rev. June 2026); Form 720 (Rev. June 2026). General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.
