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Article Summary

• Understand how the PCORI Actual Count Method simplifies the calculation of average covered lives for determining PCORI Fee liability.

• Actual Count Method calculates covered lives by using daily enrollment data throughout the plan or policy year.

• Review the IRS regulations governing the Actual Count Method under 26 CFR §46.4375-1(c) and 26 CFR §46.4376-1(c).

• Learn which individuals are considered covered lives, including employees, spouses, and dependents covered under the health plan.

• Understand which types of plans may use the Actual Count Method and when daily enrollment records make this approach suitable.

• Follow a step-by-step example showing how to calculate average covered lives and determine the final PCORI Fee amount.

• Understand the importance of referring to IRS guidance and regulations when calculating and filing PCORI Fees.

• Discover how QuickFile720 simplifies PCORI Fee filing with automated calculations, online Form 720 filing, and IRS-authorized submission.

The computation of PCORI Fee could appear quite complex, particularly with the computation of the average number of covered lives in a health plan. But with the knowledge of the correct computation techniques approved by the IRS, the process will be greatly simplified.

This blog is a discussion of the PCORI Actual Count Method, which is one of the calculation methods approved by the IRS in computing the average number of covered lives subject to the PCORI Fee.

There are three ways that an employer, a plan sponsor, and an issuer can establish its PCORI liability:
1)Actual Count Method
2)Snapshot Method
3)Form 5500 Method (available for certain applicable self-insured health plans)

All approaches have unique IRS guidelines to which they should adhere. The approach that is used is determined by the type of the plan and enrollment data available.

The PCORI Actual Count Method is a method through which the number of covered lives under the health plan can be calculated by counting the number of covered lives for each day of the plan year or the policy year.

In this method, the sum of covered lives on each day of the year is calculated, and then it is divided by the number of days in the year.

Afterwards, this calculated average number of covered lives is multiplied by the relevant PCORI fee rate in order to compute the fee amount to be reported on Form 720, Quarterly Federal Excise Tax Return.

Description of the Actual Count Method per PCORI fee regulations:

-> 26 CFR §46.4375-1(c) Specified health insurance policy

-> 26 CFR §46.4376-1(c) Applicable self-insured health plan

The computation of the PCORI fee will be computed based on the covered lives and not only on the number of employees. For the self-insured health plan that qualifies, the number of covered lives will normally consist of the following:

1)Number of employees participating in the health plan

2)Number of spouses covered under the plan

3)Number of dependents covered under the plan

The Actual Count Method requires counting all covered individuals for each day of the plan year or policy year.

Visit IRS PCORI Q&A page where few scenarios are discussed in the FAQ’s

The IRS provides the information according to which the issuers of some particular health insurance coverage plans and the sponsors of some particular self-insured health plans are allowed to apply the Actual Count Approach in order to determine the average number of covered lives for the PCORI Fee purposes.

The Actual Count Approach will be appropriate if there is the data regarding the number of individuals enrolled every day as it will show the real number of the covered lives.

Some of the cases when this approach could be appropriate include:

# Daily enrollment data is easily accessible.

# It is important to show the effects of changes in coverage on their exact days.

# The plan favors using daily enrollment data to compute the average number of covered lives.

It is not necessary for the IRS to mandate a selection of the Actual Count Method based on the number of employees, size of employers or any enrollment fluctuation. Plan sponsors or issuers can choose any method approved by the IRS that is applicable to their circumstances.

The calculation process can be divided into two steps:
Formula: PCORI Fee = (Sum of actual number of covered lives on each day of the plan year ÷ Number of days in the plan year) × Applicable PCORI Fee Rate

Step 1: Calculate the Average Number of Covered Lives
Assume a company has the following enrollment details during its plan year:
1)25 covered lives for the entire 365-day plan year
2)5 additional covered lives for 180 days

Calculation:

Covered Life Days: 25 covered lives × 365 days = 9,125
5 additional covered lives × 180 days = 900

Total covered life days: 9,125 + 900 = 10,025

Average covered lives: 10,025 ÷ 365 = 27.47

Step 2: Calculate the PCORI Fee Amount
For plan years ending after September 30, 2025, and before October 1, 2026, the applicable PCORI fee rate is: $3.84 per covered life

Calculation:
Average covered lives × PCORI fee rate = 27.47 × $3.84 = $105.48
Therefore, the estimated PCORI Fee liability for the plan year would be $105.48

Always verify with IRS pages for any concept related to PCORI Fee.

Using Online PCORI filing method is always better than Manual PCORI filings. Visit our page on PCORI Online vs manual filing.

Counting covered lives by hand could be difficult, particularly if there are many changes in enrollment within a plan. QuickFile720 is an authorized online form 720 filing portal  by the IRS which has been developed in order to make the process of PCORI filing easier for you.

Using QuickFile720 will allow you to:
1)Calculate the PCORI Fee automatically (Try our online PCORI Fee Calculator)

2)Complete Form 720 filing process online

3)Decrease the possibility of miscalculating the PCORI fee

4)Monitor your filing status and acknowledgement

5)Complete your PCORI filing using an authorized platform by IRS

File your Online PCORI Fee for 2026 with Quickfile720 accurately!