Form 720 and the PCORI fee

What do arrow shafts, indoor tanning, and health plans have in common?

They’re all taxed on IRS Form 720.

If your health plan is self-funded or level-funded, that’s the form you owe the IRS by July 31. It’s the PCORI fee, and it’s easy to miss, because no single person tends to own it.

Fully insured plans don’t have this challenge. The carrier pays the fee and folds it into your premium. Self-funded plans work differently. The plan sponsor files and pays directly. Level-funded counts as self-funded here, which trips up employers who assumed level-funded meant the carrier handled everything.

It goes on Form 720, the quarterly federal excise tax return, reported in the second quarter and due July 31. Most employers who owe it never file Form 720 for anything else. That’s part of why it slips.

Two rates apply this year, set by where your plan year ended. Plan years ending January through September 2025 are $3.47 per covered life. Plan years ending October through December 2025, including calendar-year plans, are $3.84.

But focus on the ownership, not the fee. Often, the employer either doesn’t know about it or assumes the TPA handles it. The TPA doesn’t file excise taxes, so it doesn’t. Payroll never hears that the health plan created a tax return. The PCORI Fee is frequently missed.

If you run a self-funded or level-funded plan, the question worth asking this month is short. Who is filing your Form 720, and have they confirmed the rate?