On December 20, 2019, President Trump signed into law a full repeal - with varied effective dates - of three ACA taxes: the Cadillac Tax, the Health Insurance Industry Fee (a.k.a. the Health Insurer Tax), and the Medical Device Tax. Read our news alert for more details.
Fees and taxes overview
Comparative Effectiveness Research Fee (CERF)
The ACA established the Patient-Centered Outcomes Research Institute (PCORI) to fund and conduct research to compare the effectiveness of various medical services used to treat, manage, diagnose or prevent illness or injury. The work of PCORI is partially funded by this fee.
- Annual fee applies to insured and self-funded medical plans from 2011 through 2019
- Initial fee due July 31, 2013 was $1.00 per medical plan participant
- Final fee due July 31, 2020 will be $2.45 per participant
- Fee is due each year on July 31 and is paid using IRS Form 720
See payment amounts and due dates
For more information, visit Cigna’s CERF Toolkit
Health Insurance Industry Fee
This fee on health insurers started at $8 billion in 2014 and continues to increase each year with premium growth. The fee, which applies only to insured business, is based on each insurer’s share of the taxable health insurance premium base (among all U.S. health insurers).
- Fee applies to insured medical, dental and vision plans
- Fee took effect in 2014 and was suspended for 2017 and 2019
- Fee is built into premiums and adds 3% to 4% to costs
Learn more about the Health Insurance Industry Fee
Excise “Cadillac” tax
This 40% tax on high-cost employer medical plans was intended to reduce preferred treatment of employer-sponsored health plans and reduce excess health care spending.
This tax has been delayed from the original effective date of 2018 to 2022. No regulations have been issued to date, and there are many open issues about that need to be addressed before the tax takes effect.
- 40% excise tax on high-cost employer medical plans
- Original 2018 effective date delayed until 2022
- $10,200 individual/$27,500 family (2018 amounts to be indexed)
Learn more about the Excise “Cadillac” Tax
Alliance to Fight the 40
Many employers, unions, insurers and health insurance industry groups would like to see this tax repealed or modified.
The Alliance is a group of stakeholders seeking to repeal the 40% Cadillac Tax.
Reinsurance Fee
This annual fee on medical plans was collected from 2014 through 2016, and sunset after the final payments were made in 2017. The majority of the $25 billion collected was used to fund a reinsurance program intended to lessen the impact of adverse selection in the individual market.
The fee applied to both insured and self-funded medical plans. For an insured plan, the fee was paid by the health insurer. For a self-funded plan, the fee was the employer’s responsibility.
For questions about fees and taxes
The Cigna ASO PPACA Fees and Reporting Resources team is available to respond to questions from sales, brokers and clients.
This team can be reached by phone and email:
- Call 855.275.0555, from 9:00 am–6:30 pm (EST), Monday through Friday
- Email ASO_PPACA_Fees&Reporting@Cigna.com
Learn more about the services this team provides
Fees and taxes in detail
Comparative Effectiveness Research Fee Details
| What it is/fee duration | Annual fee on insured and self-funded medical plans until 2019 |
| Purpose | Fund comparative effectiveness research |
| Amount |
|
| Who pays |
|
| How paid | Tax is self-reported on Excise Tax Form 720 |
| Tax implications | Tax deductible |
| Estimated cost impact |
|
| Types of coverage affected |
|
| Coverage excluded |
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Information for fully insured employers
| How the fee is paid | The fee is built into insurance premiums |
| How the fee is determined |
|
| How HRAs/FSAs are treated |
|
Cigna reporting for fully insured employers
- At no additional cost, Cigna will provide information on HRA/FSA covered lives via self-service reporting, based on eligibility as of the 15th of each month
- Employers will have the option of using this data or their own data for calculating the fee payable for HRAs/FSAs
- Eligibility information is available on the Client Resource Portal (CRP) and on CignaAccess.com
Information for self-funded employers
| How the fee is paid | The employer is responsible for paying the fee |
| How the fee is determined |
|
| How HRAs/FSAs are treated |
|
Cigna reporting for self-funded employers
- At no additional cost, Cigna will provide information on covered lives via self-service reporting, based on eligibility data as of the 15th of each month
- Employers will be able to access a report for: Medical, Pharmacy, Behavioral, FSAs, HRAs and Medicare Surround and Medicare Expand
- Available on the Client Resource Portal (CRP) and on CignaAccess.com
- Employers will be able to request reports for self-funded, stand-alone Cigna Behavioral Health and Cigna Global Health Benefits® plans
Health Insurance Industry Fee Details
| What it is/fee duration |
|
| Purpose | Help fund federal and state Marketplaces/Exchanges |
| Amount |
|
| Who pays | Insurers |
| Tax implications | Tax deductible for employers as part of premium |
| Estimated cost impact |
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| Types of coverage affected |
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| Coverage excluded |
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*Some benefits may be covered under an insured plan and therefore subject to this fee.