PCORI Fee for Small Employers
A 12-person shop and a 12,000-person company face the same PCORI test, and headcount isn't part of it. We looked through the IRS Q&A, its coverage chart, the Form 720 instructions, and the regulations, and none of them shows a small employer exemption. What decides your answer is how the coverage is funded. For a small employer, the realistic question is whether you have a self-insured plan, and if so, how little work it can take.
What the IRS does exempt
IRS Q&A 9 lists the exceptions, and none of them is about size. They are:
- Exempt government programs such as Medicare, Medicaid, and the Children's Health Insurance Program.
- Coverage limited to excepted benefits, such as stand-alone vision or dental.
- Employee assistance, disease management, or wellness programs that don't provide significant medical care or treatment.
- Plans designed specifically for employees working and residing outside the United States.
Q&A 10 adds that tax-exempt organizations and government employers aren't excused either, unless the plan is one of those exempt programs. So a small nonprofit is in the same position as a small business.
Which small employer are you?
| Your setup | Do you file? | Lives you count |
|---|---|---|
| Fully insured group policy, nothing else | No, the insurer does | None |
| Fully insured policy plus an HRA | Yes, for the HRA (unless an excepted benefit) | One per participant if the HRA is your only self-insured plan |
| Premium-only HRA | Yes (unless an excepted benefit) | One per participant |
| Self-insured medical plan, which can include a level-funded plan | Yes | Employees and covered dependents |
| Dental, vision, or an HSA only | No | None |
Level-funded plans are easy to overlook, because the bill looks like a premium. Our post on level-funded plans explains why they can land on your desk. Stop-loss coverage doesn't change the result: the stop-loss policy isn't subject to the fee, and the regulation describes the employer as keeping its liability to the covered people.
What does a small plan actually owe?
The fee is average covered lives times the rate. For plan years ending October 1, 2025 through September 30, 2026, the rate is $3.84. These employers are made up:
| Made-up employer | Average lives | Calculation | Fee |
|---|---|---|---|
| Print shop with a 12-participant HRA only | 12 | 12 x $3.84 | $46.08 |
| Dental practice with a self-insured plan | 18 | 18 x $3.84 | $69.12 |
| Landscaping firm with a self-insured plan | 45 | 45 x $3.84 | $172.80 |
The HRA figure counts each participant once. The regulation allows that only when the sponsor has no other self-insured plan beyond a health FSA or HRA. On a medical plan, dependents count: IRS Q&A 5 says an employee and a dependent child are two lives. For your own number, use the PCORI fee calculator.
Related small companies should check one more thing. In the regulation's example, three employers under one owner share a self-insured plan and the plan document names no sponsor. Each employer must file its own Form 720 for its own employees and their dependents. If the document names one of them as sponsor, and that company consents in writing by the return's due date, it files once for the whole group. So a small group of companies should read the plan document before deciding who files.
How much work is this for a small employer?
Not much, once you know you owe it. The return is once a year. Here is the job from start to finish:
- Find the plan year end date. It sets your rate and your deadline.
- Pick a counting method. With a small roster, the snapshot method often means pulling four enrollment lists, one per quarter of the plan year. The regulation calls for at least one date in each quarter, with the same number of dates each quarter and later dates within three days of the matching date. An HRA-only employer can simply count participants on those dates. Our guide to covered lives outlines the choices.
- Multiply. Average lives times the rate gives the fee.
- File the second-quarter Form 720. Report on line 133(c) or 133(d) on the June 2026 form for a self-insured plan, and enter the total on the line for IRS No. 133.
- Pay by the due date. Deposits aren't required.
Filing on paper is allowed, because the IRS says electronic filing is available but not required. So e-filing is a convenience, not a requirement.
Your calendar has only one PCORI date. The fee is due July 31 of the year after the plan year ends. Plan years ending in 2026 are due Monday, August 2, 2027, since July 31, 2027 is a Saturday. If your plan year ends after September 30, 2026, which includes a calendar 2026 plan, the IRS publishes that rate later, so check the second-quarter 2027 instructions.
How do you file a small plan's fee online?
With EasyFile720, the filing is guided from your business details through to submission. The rates are built in, the math is calculated after you enter your figures, and validations catch common mistakes before you submit. You sign electronically and get an electronic acknowledgment from the IRS once the return is accepted. Your past returns stay in your account, which helps a small office where nobody remembers last year's figure.
The cost is plain: $39.95 per filing, separate from the fee you owe the IRS. On a very small HRA, that charge can come close to the fee itself, as the print shop example shows, so weigh it against the time a paper return takes.
Your next step: find your plan year end date and your average lives, then start your PCORI filing. Creating an account is free and needs no credit card, and you pay only when you file. The PCORI fee page is the place to begin.
FAQ
Is there a minimum number of employees before the PCORI fee applies?▼
None appears in the IRS Q&A, the chart of coverage types, the Form 720 instructions, or the regulations we reviewed. The listed exceptions are based on the type of coverage or program, not the size of the employer.
Do I need a Form 5500 to figure the fee?▼
No. The Form 5500 method is only one of three options, and it requires that the form was filed for the plan by the fee's due date. The actual count and snapshot methods work from your own enrollment records.
Does the fee being small mean I can skip the return?▼
The sources we reviewed contain no small-amount exception for owing the PCORI fee. If you sponsor an applicable self-insured health plan, you report and pay it on Form 720.
Do I have to make quarterly deposits?▼
No. The IRS says deposits aren't required for this fee. You pay at the time the Form 720 is due, and you don't file for the other three quarters if PCORI is your only excise tax.
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 PCORI Questions and Answers (Q5, Q7, Q8, Q9, Q10); IRS chart of coverage types; IRS PCORI fee page; Form 720 and Instructions for Form 720 (Rev. June 2026); 26 CFR 46.4376-1. General information, not tax advice. Confirm how the rules apply to you with a qualified advisor or the IRS.
