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. Additionally, the agreements extended the Comparative Effectiveness Research Fee (CERF) through 2029. 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. Originally effective Oct. 2011 - 2019 (with final payments due in 2020), the Comparative Effectiveness Research Fee (CERF) is now extended through 2029 (with final payments due in 2030). The work of PCORI is partially funded by this fee.
- Annual fee applies to insured and self-funded medical plans from 2011 through 2029, with final payments due 2030
- Initial fee due July 31, 2013 was $1.00 per medical plan participant
- The 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
- The fee is in effect in 2020, then fully repealed and will no longer exist in and after 2021
- Fee is built into premiums and adds 3% to 4% to costs
Learn more about the Health Insurance Industry Fee
Excise “Cadillac” tax
Originally scheduled to go into effect in 2018, the Cadillac Tax was fully repealed on December 20, 2019. It no longer exists and will never take effect. Its goal was to reduce health care usage and costs by encouraging employers to offer plans that were cost-effective and engage employees in sharing in the cost of care. The tax applied to both insured and self-funded group health plans.
Alliance to Fight the 40
Many employers, unions, insurers and health insurance industry groups worked collectively for full repeal of the 40% Cadillac Tax due to adverse effects it would have on the majority of group health plans in the country.
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, and was paid by the plan insurer.
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 2029 |
| Purpose | Fund comparative effectiveness research |
| Amount |
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| Who pays |
|
| How paid | Tax is self-reported on Excise Tax Form 720 |
| Tax implications | Tax deductible |
| Estimated cost impact |
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| Types of coverage affected |
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| 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 |
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| How HRAs/FSAs are treated |
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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 |
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| How HRAs/FSAs are treated |
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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 |
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| Purpose | Help fund federal and state Marketplaces/Exchanges |
| Amount |
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| 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.