PCORI Fees Due July 31, 2026
The Affordable Care Act (ACA) requires health insurance issuers and self-insured plan sponsors to pay Patient-Centered Outcomes Research Institute fees (PCORI fees). The fees are reported and paid annually using IRS Form 720, the Quarterly Federal Excise Tax Return.
Form 720 and full payment of the PCORI fees are due by July 31 of each year and generally cover plan years that end during the preceding calendar year. For plan years ending in 2025, the PCORI fees are due by July 31, 2026.
Overview of the PCORI Fees
The PCORI fees were scheduled to expire for plan years ending on or after Oct. 1, 2019. However, a federal spending bill enacted at the end of 2019 extended the PCORI fees for an additional 10 years. As a result, these fees will continue to apply for the 2020-2029 fiscal years.
Calculating the PCORI Fee Payment
In general, the PCORI fees are assessed, collected and enforced like taxes. The PCORI fee is imposed on an issuer of a “specified health insurance policy” and a plan sponsor of an “applicable self-insured health plan” based on the average number of lives covered under the plan. Final rules outline several alternatives for issuers and plan sponsors to determine the average number of covered lives.
Using Part II, Number 133 of Form 720 (these fees are filed on the second quarter version of IRS Form 720, which has not yet been released), issuers and plan sponsors report the average number of lives covered under the plan separately for specified health insurance policies and applicable self-insured health plans. That number is then multiplied by the applicable rate for that tax year:
$3.84 for plan years ending on or after Oct. 1, 2025, and before Oct. 1, 2026
$3.47 for plan years ending on or after Oct. 1, 2024, and before Oct. 1, 2025
The fees for specified health insurance policies and applicable self-insured health plans are then combined to equal the total tax owed.
Employer Takeaway
To assess their obligations, employers should:
- Determine which plans are subject to the PCORI fees;
- Assess plan funding status (insured versus self-insured) to determine whether the issuer or the employer is responsible for the fees; and
- For self-insured plans, select an approach for calculating average covered lives.
The IRS provides helpful resources, including a chart on how the fees apply to specific types of health coverage or arrangements.
Health Plan Cost-sharing Limits for 2027 Plan Years Are Released
On Jan. 29, 2026, the U.S. Department of Health and Human Services (HHS) released the maximum limits on cost sharing for 2027 plan years under the Affordable Care Act (ACA). For 2027, the maximum annual limitation on cost sharing is $12,000 for self-only coverage and $24,000 for family coverage. This represents an approximately 13.2% increase from the 2026 cost-sharing limits of $10,600 for self-only coverage and $21,200 for family coverage. Employers should review their plan designs each year to ensure they comply with the ACA’s cost-sharing limits.
Out-of-Pocket Maximum
The ACA requires most health plans to comply with annual limits on total enrollee cost sharing for essential health benefits (EHBs). These cost-sharing limits are commonly referred to as an out-of-pocket maximums (OOPM). The ACA’s cost-sharing limits apply to all non-grandfathered health plans, including self-insured health plans, level-funded health plans and fully insured health plans of any size.
Under the ACA, EHBs must reflect the scope of benefits covered by a typical employer plan and include items and services in 10 general categories, including emergency services, hospitalization, prescription drugs, pediatric services, outpatient care and maternity and newborn care. Because the ACA’s cost-sharing limits apply only to EHBs, plans are not required to apply the annual OOPM to benefits that are not EHBs.
Once the OOPM is reached for the year, the enrollee cannot be responsible for additional cost sharing for EHBs for the remainder of the year. Any out-of-pocket expenses required by or on behalf of an enrollee with respect to EHBs must count toward the cost-sharing limit. This includes deductibles, copayments, coinsurance and similar charges but excludes premiums and spending on non-covered services. Health plans that use provider networks are not required to count an enrollee’s expenses for out-of-network benefits toward the cost-sharing limit.
Embedded OOPM
The ACA’s cost-sharing limit for self-only coverage applies to everyone, regardless of whether they have self-only coverage or family coverage. This requires health plans to embed an individual OOPM in family coverage if the family OOPM is greater than the ACA’s cost-sharing limit for self-only coverage ($12,000 for 2027 plan years). Many health plans are designed with an OOPM that is much lower than the ACA’s cost-sharing limits. However, to comply with the ACA, health plans must have an OOPM for family coverage that is not greater than the ACA’s cost-sharing limit for self-only coverage ($12,000 for 2027) or incorporate an embedded individual OOPM for family coverage that is not greater than the ACA’s self-only coverage limit.
High Deductible Health Plans
High deductible health plans (HDHPs) that are compatible with health savings accounts must comply with lower limits on out-of-pocket costs. The IRS has not published the HDHP cost-sharing limits for 2027; however, for 2026 plan years, an HDHP’s OOPM cannot exceed $8,500 for self-only coverage and $17,000 for family coverage.
Employer Takeaway
Employers sponsoring HDHPs should review their plans’ cost-sharing limits (i.e., the minimum deductible amount and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2027. Also, employers allowing employees to make pre-tax HSA contributions should update their plan communications with the increased contribution limits.
Settlement Funds from the Blues Are Being Issued
Settlement Funds from the Blues Are Being Issued
As we mentioned in April 2021, in October 2020, the Blue Cross Blue Shield Association and Blue Cross and Blue Shield companies, while not admitting guilt, agreed to a class-action settlement with subscribers related to licensing agreements within the Blue Cross and Blue Shield System. This included providing monetary payments to certain individuals and groups.
Well, rejoice — the checks have started coming (only took five years)! As a reminder, the settlement covers two separate classes:
- Individuals and insured groups who had Blue Cross Blue Shield coverage between Feb. 7, 2008, and Oct. 16, 2020; and
- Self-funded accounts that had coverage between Sept. 1, 2016, and Oct. 16, 2020.
Employer Takeaway
These settlement funds should be handled the same way premium refunds/rebates from carriers or MLR rebates are handled. Under ERISA, any portion of the settlement proceeds that are considered to be “plan assets” must be used for the exclusive benefit of participants in the plan (and their beneficiaries), so how you distribute these funds back to the employees will usually depend on what percent of the funds are considered plan assets, which generally equates to what percent of the premiums the employees pay:
- If the employer paid the entire cost of the insurance coverage, then no part of the settlement would be attributable to participant contributions and there would be no plan assets, and nothing would need to be returned to employees.
- If participants paid the entire cost of the insurance coverage, then the entire amount of the settlement would be attributable to participant contributions and would be deemed entirely plan assets and would have to be distributed entirely to the participants.
- If the participants and the employer each paid a fixed percentage of the cost, a percentage of the settlement equal to the percentage of the cost paid by participants would be attributable to participant contributions and would have to be distributed to the participants.
Also, if distributing payments to participants is not cost-effective because the amounts are small or would cause tax consequences for the participants, the employer may utilize the rebate for other permissible plan purposes, such as applying the rebate toward future participant premium payments or benefit enhancements.
