- Executive Summary
The new Health Insurance Industry Fee is intended to fund the Health Insurance Marketplaces – the federal and state insurance Exchanges – and other mandates of the Patient Protection and Affordable Care Act (PPACA). This permanent fee applies only to the insured business of health insurers and HMOs. It will be based on the insurer’s/HMO’s prior-year share of the taxable health insurance premium base (among all insurers of U.S. health risks).
This fee is tax deductible for employers as part of premium. The total industry fee starts at $8 billion in 2014 and increases each year to $14.3 billion in 2018. After 2018, it will continue to increase as a function of premium growth. For the specifics, please see the link to Cost and Payment details.
- What Employers and Plans are Affected by the Health Insurance Industry Fee?
Health insurers and HMOs are required to pay the fee based upon their share of the total industry net premium for health insurance on U.S. health risks in the prior calendar year. The fee applies to the following products:
- Individual and group medical insurance policies (self-funded plans are exempt)
- Standalone, insured pharmacy and behavioral health plans
- Standalone, insured dental and vision plans
- Medicare Advantage plans
- Retiree-only plans
- Part D prescription benefit plans
- Medicaid (and CHIP) programs
- Insured Taft-Hartley Plans to the extent the plans meet the other criteria for inclusion
- What Employers and Plans are Exempted from the Health Insurance Industry Fee?
- Self-insured employer-sponsored group health plans. Important: Some benefits may be covered under an insured plan and therefore subject to this fee as well.
- Non-profit corporations that receive more than 80% of their revenue from government sponsored poverty programs (Medicaid, CHIP) and that comply with certain restrictions on political activity
- Medicare supplemental coverage that meets minimum standards and requirements under the Social Security law
- Voluntary Employee Benefit Association (VEBA) plans sponsored by an entity other than an employer or employers
- Hospital indemnity and specified disease plans
- Accident-only coverage
- Stop-loss insurance
- Who is Responsible for Paying the Health Insurance Industry Fee?
The Health Insurance Industry Fee is the responsibility of the health insurer/HMO. You will not need to do anything to comply with this provision.
California Network plans
If you offer Network (Point-of-Service) plans to individuals in California, special circumstances may apply. Click here to learn more.
- Cost and Payment Details
What will it cost? The estimated costs are:
- 2% – 2.5% of premium in 2014
- 3% – 4% of premium in future years
- Insurer/HMO pays (included in premium)
When is it first due?
- September 30, 2014
Is the Fee tax-deductible?
- Tax deductible for employers as part of premium.
- The Health Insurance Industry Fee… Just the Facts
- Reform Today Column: Primer on PPACA's New Fees and Taxes
- "Proposed Rule" on Health Insurance Industry Fee