Introduction
On July 7, 2026, the IRS released an updated Form 720 (Quarterly Federal Excise Tax Return). The IRS had previously released an updated Form 720 on June 26, 2026, but withdrew that version thereafter. Employer plan sponsors should ensure they are using the most updated Form 720, which currently states that it was “Created 7/6/2026” in the bottom right-hand corner of the first page of the Form. If an employer plan sponsor utilized and filed the June 26, 2026 version of the Form 720, they will need to seek advice from their legal counsel/tax professional on whether corrective action is necessary.
As a reminder, the Form 720 is used to accompany an employer plan sponsor’s applicable PCORI fee payment to the IRS, and reports information related to a group health plan’s average number of covered lives for plan years ending in the previous calendar year. Employer plan sponsors should use the updated Form 720 posted on July 7, 2026 to report the number of covered lives for the plan year ending in 2025 and pay the PCORI fee amount to the IRS by July 31, 2026.
Entities Responsible for Filing Form 720 and Paying the PCORI Fee
The PCORI fee was established under the Affordable Care Act to fund research that helps patients and providers make better-informed healthcare decisions. PCORI fees apply to all group health plans, but self-funded or level funded group health plan sponsors must specifically file Form 720 and pay the PCORI fee directly to the IRS. Insurance carriers handle this obligation directly with the IRS on behalf of any fully insured group health plan.
For plan years ending January 1 through September 30, 2025, the fee is $3.47 per covered life. The fee is $3.84 per covered life for any plan year ending October 1, 2025 through December 31, 2025.
Plans Subject to the PCORI Fee
Self-insured, level-funded, and fully insured plans that provide group health plan coverage that do not qualify as an excepted benefit are subject to the fee. This includes HRAs and any self-funded non-excepted benefit plan or payment arrangement that provides employer reimbursement of health expenses similar to an HRA, such as a self-funded fertility benefit or direct-to-consumer arrangement. Employer plan sponsors of self-funded/level-funded major medical plans and HRAs are directly responsible for filing Form 720 and paying the fee to the IRS and therefore should pay particular attention to the applicable filing and payment deadline of July 31, 2026.
Action Steps for Plan Sponsors
To stay compliant, consider taking the following steps now:
- Confirm and identify any self-insured/level-funded group health plan coverage (that is not an excepted benefit) with a plan year ending any time during calendar year 2025
- Obtain the number of covered lives within a benefit plan with a plan year ending in calendar year 2025 from the TPA/plan administrator
- Determine which approved counting methodology you will use to report the average number of covered lives in each applicable benefit plan that had a plan year ending in 2025
- Complete the PCORI fee calculation using the fee amount applicable to your plan year end date(s)
- Prepare Form 720 in advance of the filing/payment deadline, and file Form 720 along with the payment of the applicable PCORI fee amount to the IRS by July 31, 2026.
Please contact your Brown & Brown team with any questions or learn more about Brown & Brown’s comprehensive compliance support here.
