Is PCORI Federally Funded? A Complete Guide to PCORI Fees and Form 720
Is PCORI Federally Funded? A Complete Guide to PCORI Fees and Form 720
If you manage a self-insured health plan, you have probably heard of the PCORI fee. But is PCORI a federal agency, and where does its money actually come from? This guide answers every key question, from the nature of PCORI funding to your 2026 filing obligations.
PCORI is not federally funded in the traditional sense. It is an independent, non-governmental nonprofit organization. However, it receives financial support through the Patient-Centered Outcomes Research Trust Fund (PCORTF), which is sustained by a mix of U.S. Treasury appropriations and a fee assessed on private health insurance and self-insured plans. That fee, collected by the IRS via IRS Form 720, is what you may owe by July 31 each year.
What Is PCORI?
The Patient-Centered Outcomes Research Institute, or PCORI, was established under the Patient Protection and Affordable Care Act (ACA) in 2010. Its core mission is to fund research that helps patients, caregivers, and clinicians make better-informed healthcare decisions by comparing the effectiveness of different treatments, prevention strategies, and health interventions.
PCORI is often confused with a government agency because it was created by an act of Congress and receives a portion of its revenue from federal channels. However, PCORI operates as an independent, non-profit, non-governmental entity. It does not hold a federal agency designation and does not receive a Catalog of Federal Domestic Assistance (CFDA) number, which is a hallmark of true federal agencies. It is also organizationally separate from institutions like the National Institutes of Health (NIH) or the Centers for Medicare and Medicaid Services (CMS).
Since 2010, PCORI has committed over $4.5 billion to more than 2,400 patient-centered research projects spanning cancer, rare diseases, mental health, maternal health, and healthcare delivery equity. Its research is made publicly accessible and is designed to inform real-world healthcare decisions rather than basic science.
Is PCORI Federally Funded?
The short answer is: not entirely, and not in the way a federal agency would be. PCORI's money is not legally classified as federal funding, but it is supported by a federal trust fund that was created by Congress.
PCORI receives its operating revenue through the Patient-Centered Outcomes Research Trust Fund (PCORTF). This trust fund has two income streams:
U.S. Treasury Appropriations
Statutory appropriations from the general fund of the U.S. Treasury, authorized by Congress for fiscal years 2020 through 2029, ranging from $275.5 million (FY2020) to $399 million (FY2029).
The PCORI Fee on Health Plans
A fee assessed on private health insurance policies and self-insured health plans, collected by the IRS through Form 720. This is where most employers and plan sponsors come into the picture.
How the Money Is Split
PCORI receives 80% of the Trust Fund to support its research and operations. The remaining 20% goes to the Department of Health and Human Services (HHS), primarily through the Agency for Healthcare Research and Quality (AHRQ).
An important clarification from PCORI's own official guidance: PCORI does not establish, collect, or administer the fee. All questions about the PCORI fee should be directed to the IRS. The fee is a federal excise tax mechanism, not a payment made directly to PCORI.
PCORI vs. a Federal Agency: Key Differences
Understanding where PCORI stands organizationally matters for how you interpret your compliance obligations. Here is a side-by-side comparison:
| Characteristic | PCORI | Typical Federal Agency (e.g., NIH) |
|---|---|---|
| Organizational Type | Independent nonprofit | Part of the federal government |
| CFDA Number (Federal Designation) | No | Yes |
| Funded by Congressional Trust Fund | Yes | Yes |
| Created by Congress | Yes (ACA 2010) | Yes |
| Funds Research via Grants | Contracts (milestone-driven) | Grants and contracts |
| Patient Involvement in Research | Required by charter | Varies by agency |
| Part of NIH or HHS Hierarchy | No | Yes (for NIH) |
| Authorized Through | 2029 (Extended by Congress) | Ongoing appropriations |
What Is the PCORI Fee and Who Must Pay It?
The PCORI fee is a federal excise tax imposed on health insurance issuers and sponsors of self-insured health plans. It funds the PCOR Trust Fund, which in turn supports PCORI's research operations. The fee is calculated per covered life and is reported and paid annually using IRS Form 720 (the Quarterly Federal Excise Tax Return), specifically on Part II, Line 133.
Who Pays the PCORI Fee?
The obligation to pay depends on your plan type:
- Self-insured plan sponsors: The employer or plan sponsor calculates and pays the fee directly. This includes self-insured group health plans and Health Reimbursement Arrangements (HRAs) not integrated with a fully insured plan.
- Fully insured plan carriers: The insurance company pays the fee and typically builds the cost into premium rates. Employers with fully insured plans do not file separately.
- Level-funded plans: Fees are often included in carrier rates, but employers should confirm this with their carrier to ensure compliance.
Plans that are exempt from the PCORI fee include dental-only and vision-only plans, flexible spending arrangements (FSAs) in most cases, wellness programs, and government-sponsored programs like Medicare, Medicaid, and CHIP. Plans covering employees working and residing outside the U.S. are also exempt.
PCORI Fee 2026: Current Rates and Deadlines
Per IRS Notice 2025-61, the pcori fee 2026 rates depend on your plan year end date. The fee is indexed to inflation and has increased steadily from its original $1 per covered life since 2013.
Plan years ending Jan 1 to Sep 30, 2025
Plan years ending Oct 1 to Dec 31, 2025
Both rates due July 31, 2026
For most calendar-year plans ending December 31, 2025, the applicable pcori fee 2026 rate is $3.84 per covered life. The total fee equals your average covered lives multiplied by the applicable rate.
How to Calculate Covered Lives
The IRS permits three approved methods for determining the average number of lives covered under your plan:
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Actual Count Method
Add the total number of covered lives for each day of the plan year, then divide by the number of days in the plan year. The most precise method.
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Snapshot Method
Count covered lives on one specific date per quarter (or a consistent number of dates per quarter), then divide the total by the number of dates used. Widely used by mid-size employers.
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Form 5500 Method
Use participant data from your annual Form 5500 filing, adjusted using the IRS formula. Commonly used by larger group health plans already required to file Form 5500.
Covered lives include enrolled employees, enrolled spouses, dependents, and COBRA participants. For HRA-only plans, count one life per HRA participant (dependents are not counted separately).
How to Report and Pay Using IRS Form 720
The IRS requires all applicable plan sponsors to report the pcori fee on IRS Form 720, the Quarterly Federal Excise Tax Return. Although Form 720 is normally a quarterly filing, the PCORI fee is reported and paid once per year, for the second quarter period ending June 30. The pcori form 720 entry appears under Part II, Line 133 of the return.
The PCORI tax payment itself is made via EFTPS (Electronic Federal Tax Payment System) or by other IRS-approved payment methods. However, submitting payment through eftps alone is not sufficient. The irs form 720 pcori return must be separately submitted to the IRS. Using an IRS-authorized e-file provider like eFileExcise720 handles both the return submission and payment coordination in a single workflow, minimizing error risk.
Missing the July 31 deadline triggers IRS failure-to-file penalties of 5% of unpaid tax per month (up to 25%), plus failure-to-pay penalties and accrued interest. If you filed late or need to correct a prior filing, see our guide on PCORI Fee Late Filing Penalties and options for pcori online correction.
Why the PCORI Fee Matters Beyond Compliance
The pcori tax is more than a routine compliance obligation. Every dollar collected through pcori fees flows into research that directly shapes how clinicians treat patients across the United States. PCORI's comparative clinical effectiveness research (CER) is specifically designed to answer the questions patients and physicians actually face: which treatment works best for this patient, under these circumstances?
Since its launch, pcori funding has supported breakthroughs in chronic disease management, mental health treatment, rare disease research, and healthcare delivery for underserved populations. PCORI's 2026 annual meeting brings together researchers, patient advocates, and health systems to share findings and translate evidence into practice.
Congress originally authorized PCORI through 2019, then extended it for an additional ten years through 2029. This extension confirms that pcori fees and the PCORTF remain active obligations for applicable plans through policy or plan years ending before October 1, 2029.
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File PCORI Fee OnlineFrequently Asked Questions
PCORI is not funded by the federal government in the same way a federal agency is. Its money is not legally classified as federal funding, but it does receive support from the Patient-Centered Outcomes Research Trust Fund (PCORTF), which receives statutory appropriations from the U.S. Treasury and a fee collected by the IRS on private health plans. PCORI itself is an independent, non-governmental nonprofit organization.
No. PCORI is not part of the NIH, HHS, or any other federal agency hierarchy. Unlike NIH, PCORI lacks a federal agency designation or CFDA number. It was created by Congress through the ACA but operates as a fully independent nonprofit institution. Its research funding process and governance structure are distinct from standard federal grant programs.
For plan years ending between January 1 and September 30, 2025, the pcori fee 2026 rate is $3.47 per covered life. For plan years ending between October 1 and December 31, 2025 (including most calendar-year plans), the rate is $3.84 per covered life. Both are due by July 31, 2026, reported on IRS Form 720, Part II, Line 133.
IRS Form 720 is the Quarterly Federal Excise Tax Return used to report and pay a range of federal excise taxes, including the PCORI fee. For pcori form 720 reporting, self-insured plan sponsors enter their average covered lives and calculated fee amount on Part II, Line 133. The return is submitted annually for the second quarter period and is due by July 31. Filing pcori online through an IRS-authorized provider like eFileExcise720 automates the calculations and submits the return directly to the IRS. See our full guide: How to File PCORI Fees on Form 720.
Plans exempt from pcori fees include dental-only and vision-only plans, most FSAs, government programs (Medicare, Medicaid, CHIP), employee assistance programs (EAPs) that do not provide significant medical benefits, disease management and wellness programs, and plans covering employees working and residing exclusively outside the U.S.
Missing the July 31 pcori filing deadline results in IRS failure-to-file penalties of 5% of unpaid tax per month (capped at 25%), plus failure-to-pay penalties and accrued interest. Filing late is always better than not filing at all. Our PCORI Fee Late Filing Penalty guide explains your options and how to get back into compliance quickly.
The pcori fee originally expired in 2019 but was extended by Congress for an additional ten years. It now applies to health insurance policies and self-insured plans for plan or policy years ending before October 1, 2029. Employers should expect the fee to continue increasing annually in line with inflation.
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