PCORI Fee for Retiree-Only Plans
A plan covering only retirees still owes the PCORI fee. The IRS coverage chart gives "retiree-only health or major medical coverage" its own row, and the answer is yes. The insurer pays if the coverage is insured. The plan sponsor pays if it is self-insured.
If you have heard that retiree-only plans sit outside some other health coverage rules, don't carry that over to this fee. We aren't covering those other rules here. The IRS PCORI sources we reviewed have no exception for a plan because it covers only retirees. In the listed exceptions at Q&A 9, you won't find retirees at all.
Who files for a retiree-only plan?
Start with how the benefits are paid. If an insurer issued a policy, that insurer deals with this fee. If benefits are paid other than through an insurance policy, the plan is self-insured, even when a trust or an administrator handles the money. A self-insured plan set up for "employees or former employees" is an applicable self-insured health plan under 26 CFR 46.4376-1.
The next question is who the "plan sponsor" is. Retiree plans are often set up in ways active plans aren't, so the regulation's list is worth reading closely:
| Plan established or maintained by | Plan sponsor |
|---|---|
| A single employer | The employer |
| An employee organization, such as a union | The employee organization |
| A multiemployer plan | The joint board of trustees |
| A voluntary employees' beneficiary association (VEBA) that actually maintains the plan, not just funds it | The trustee |
| A multiple employer welfare arrangement | The committee |
| A rural electric cooperative or rural cooperative association | The cooperative or association |
| Others, such as several related employers | The person the plan document identifies or designates, if the written rules are met. If none, each employer files separately for its own employees and their beneficiaries |
One trap for trusts: a VEBA that is merely a funding vehicle for an employer's plan doesn't make the trustee the sponsor. In that case, the employer remains the sponsor. Government employers are in scope too. Under IRS Q&A 10 and the chart's row for state and local plans, a plan for retirees is subject unless it is an exempt governmental program. Whether the fee itself can be paid from a trust or plan assets is a separate issue, covered in our article on paying the PCORI fee from plan assets.
Who counts when everyone is retired?
Everyone covered, including spouses and other beneficiaries (Q&A 5 and 6). That point catches out employers used to thinking of retirees as a list of former employees. In a retiree plan, the spouse or surviving spouse is often a big part of the count.
Two common situations need attention:
- Retirees who also have Medicare. Medicare itself is an exempt program, and the fee doesn't apply to coverage under it. The sources don't remove a person from your self-insured plan because they also have Medicare, and the general rule counts all covered individuals. No source addresses this situation by name, so have your advisor confirm how you treat a large Medicare-age group.
- A retiree HRA. An HRA for retirees falls under the HRA row of the chart. It is subject unless it qualifies as an excepted benefit, and the sponsor is responsible. The regulation's one-life rule applies when the sponsor has no self-insured plan other than an HRA or health FSA. See our article on HRAs and FSAs for more.
Example: averaging a group that shrinks each quarter
Retiree groups usually get smaller over time, so a single year-end headcount is not the right number. The fee uses an average for the plan year. Oakdale Steel is a made-up employer with a self-insured retiree-only plan on a plan year of July 1, 2025 to June 30, 2026. It uses the snapshot count method, counting each covered retiree and spouse on one matching date per quarter:
| Quarter | Covered lives on the count date |
|---|---|
| Quarter 1 | 240 |
| Quarter 2 | 238 |
| Quarter 3 | 236 |
| Quarter 4 | 234 |
| Total | 948 |
The average is 948 divided by 4, or 237 lives. At $3.84, the fee is $910.08. The fourth-quarter figure alone would have given 234, so it would understate the average. Try your own figure in the PCORI fee calculator.
A retiree plan next to an active-employee plan
If you sponsor a self-insured plan for active employees and a separate self-insured retiree plan, the combination rule may apply. Two applicable self-insured plans can be treated as one if they have the same sponsor and the same plan year. A person in both would count once, which can come up in a transition year. If the plan years differ, each is reported on its own.
If the retiree coverage is an insured policy and the active plan is self-insured, the two can't combine. You report only the self-insured side.
Filing for the retiree plan
If this retiree plan is your only reason to file Form 720, the IRS says you file only the second-quarter return each year. Retiree plans are often handled by a pension or benefits office instead of the tax team, so make sure someone owns the date.
In EasyFile720, you enter the plan sponsor's details and the average lives you calculated, and the fee is calculated at the rate built into the return. You can file the PCORI fee for your retiree plan online and sign electronically. An account is free to create with no credit card, and you pay $39.95 when you file. Past returns stay in your account, which helps when staff change. Preparers can file for multiple client businesses under one account. The PCORI fee page lists the rest of the return's rules.
FAQ
We closed the retiree plan to new people. Does it still owe?▼
A closed plan still covers people, and the sources show no exception for closed plans. The fee follows its covered lives until no one is left in it.
Do surviving spouses count?▼
A covered surviving spouse is a covered individual. IRS Q&A 5 counts everyone covered, and Q&A 6 includes beneficiaries of retirees and other former employees.
Is a city's retiree plan treated differently from a company's?▼
No. The chart lists state and local government plans for employees or retirees as subject, with the insurer or the plan sponsor responsible in the same way.
If our company pays a retiree premium to an insurer, do we file?▼
If the coverage is an insurance policy, the chart makes the issuer responsible for that policy. A separate retiree HRA would be treated under the HRA row, with the sponsor responsible.
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, Q6, Q9, Q10); 26 CFR 46.4376-1; 26 CFR 46.4377-1; 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.
