PCORI Fee Late Filing Penalty: IRS Charges and Steps to Resolve It
Missed the July 31 PCORI deadline? The PCORI fee late filing penalty is the charge the IRS adds when a health insurer or a self-insured employer fails to report and pay the Patient-Centered Outcomes Research Institute (PCORI) fee on Form 720 by the annual deadline. The standard charge is 5 percent of the unpaid fee for every month the return is late, up to 25 percent, plus a separate late payment penalty and daily interest. The good news: a missed filing can still be fixed, and the IRS often reduces the penalty if you act quickly.
What Is the PCORI Fee Late Filing Penalty?
The PCORI fee is an annual excise tax created under the Affordable Care Act to fund patient-centered medical research. Insurance carriers pay it for fully insured policies, while employers pay it for self-insured plans, level-funded plans, and health reimbursement arrangements (HRAs). The fee is reported once a year on the second quarter Form 720, due by July 31 of the year after the plan year ends.
The IRS has no special penalty written only for PCORI. Because the fee is an excise tax, the regular Form 720 penalties and interest rules for late filing and late payment apply automatically.
PCORI Fee Rates and Due Date for 2026
Your rate depends on when your plan year ended. IRS Notice 2025-61 raised the fee to $3.84 per covered life for plan years ending on or after October 1, 2025. Both rates below are reported on the same return, due Friday, July 31, 2026.
| Plan Year End Date | Rate Per Covered Life | Filing Deadline |
|---|---|---|
| January 1, 2025 to September 30, 2025 | $3.47 | July 31, 2026 |
| October 1, 2025 to December 31, 2025 (includes calendar year 2025 plans) | $3.84 | July 31, 2026 |
Two points catch many filers off guard: there is no extension for the PCORI fee, and short plan years still owe the full rate with no proration. If the deadline is approaching, you can file your PCORI fee online and receive IRS confirmation the same day.
IRS Charges When the PCORI Fee Is Filed Late
Here is how the IRS calculates the charges once July 31 passes.
| IRS Charge | How It Is Calculated | Maximum |
|---|---|---|
| Failure to file penalty | 5% of the unpaid fee for each month or part of a month the Form 720 is late | 25% |
| Failure to pay penalty | 0.5% of the unpaid fee for each month it remains unpaid | 25% |
| Combined month rule | If both penalties apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount. | 5% total per month |
| Interest | Federal short term rate plus 3%, compounding daily on unpaid amounts | Until paid in full |
Steps to Resolve a PCORI Fee Late Filing Penalty
If the deadline has passed, follow these five steps in order.
- File the missed Form 720 immediately: The 5 percent monthly charge stops growing only when the return is filed, so file even if you cannot pay in full yet. Our Form 720 late filing service is built for exactly this situation.
- Pay the fee and any balance: Paying with the return limits the smaller 0.5 percent monthly penalty and stops interest from compounding.
- Correct errors with Form 720-X: If you already filed but reported the wrong covered life count or rate, amend it through Form 720-X. Remember, a 720-X can only amend a Form 720 that was actually filed.
- Request penalty relief: The IRS can waive penalties for reasonable cause, such as serious illness or a natural disaster, or through first time abatement if you have a clean three year compliance history. Respond to the IRS notice in writing with supporting documents.
- Claim refunds the right way: Overpaid PCORI amounts are recovered through Form 720-X, while the 8849 form is the refund claim route for other excise taxes such as fuel.
How to Avoid the PCORI Fee Late Filing Penalty in the Future
Prevention is far cheaper than abatement. Set a recurring reminder well before July 31 each year, choose your covered life counting method early (actual count, snapshot, or Form 5500 method), and confirm the correct rate against your plan year end date before filing. Most importantly, e-file through an IRS-authorized provider for real-time confirmation instead of mailed paper returns; with eFileExcise720, a complete PCORI filing costs a flat $35.95 and takes about five minutes.
Frequently Asked Questions
1. Is the PCORI fee per member or per employee?
The PCORI fee is determined on an annual basis, based on the average number of covered lives enrolled in the health plan during the plan year.
2. What is the penalty for not paying the PCORI fee?
Missing the PCORI Fee deadline can lead to serious IRS consequences. Since the fee is treated as an excise tax, late submission of Form 720 triggers a 5% penalty on the unpaid amount for each month or part of a month the return remains unfiled, capped at 25%.
3. Who is responsible for filing PCORI fees?
Employers with fully-funded plans are not responsible for submitting the PCORI report or fees, as they are paid through the insurance carrier.
4. How often do you pay PCORI fees?
PCORI fees are reported and paid annually using IRS Form 720.
File Before the Penalty Grows
Every extra month adds another 5 percent to a PCORI fee late filing penalty, so the cheapest day to fix it is today.