Final Regulations on Health Insurance Provider Fee
December 4, 2013
On November 29, the Treasury Department and the Internal Revenue Service (IRS) issued final regulations on the Health Insurance Provider Fee, also known as the Health Insurance Industry Fee. Health insurers will begin paying this permanent annual fee in 2014.
The amount of the fee begins at $8 billion in 2014 and is scheduled to increase each year. It will be allocated among insurers based on each insurer’s share of total U.S. health insurance premiums.
The cost of this fee will be built into premiums for insured medical, dental and vision plans. It does not apply to self-funded plans.
The final regulations did not include significant changes from the proposed regulations. They clarified that the following types of plans are excluded:
- Voluntary Employees’ Beneficiary Associations (VEBAs) established by a union or collective bargaining agreement
- Employee Assistance Plan (EAP), disease management programs and wellness programs that do not provide significant health insurance benefits
Each year’s fee will be based on the insurer’s previous calendar year premiums. The regulations confirmed the method for calculating the fee, and changed the date by which each insurer must report net premiums for the previous year from May 1 to April 15. Payment of the fee is due by September 30 each year.
Simultaneously, the IRS issued initial drafts of the IRS form insurers will need to file when reporting and paying the fee.
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