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  • Home Employers Industry Insights Informed on Reform Affordable Care Act (ACA) Fees and Taxes

    Fees and Taxes

    Insurers and employers pay several fees and taxes to help fund the ACA.

    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 currently 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
    • Fee for any given plan year is due July 31 that follows the last day of the plan year and is paid using IRS Form 720
    • Annual payment amounts are available on the IRS FAQs page under Question 3

    Get additional CERF details

    Health Insurance Industry Fee

    This fee on health insurers started at $8 billion in 2014 and increased each year with premium growth. While the fee took effect in 2014, it was suspended for 2017 and 2019, then fully repealed effective in 2021. The fee, which applied only to insured business, was based on each insurer’s share of the taxable health insurance premium base (among all U.S. health insurers).

      Excise “Cadillac” tax

      Originally scheduled to go into effect in 2018, the Cadillac Tax was fully repealed in 2019.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.

      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 HealthcareSM 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:

      Comparative Effectiveness Research Fee (CERF) Details

      Fee Info
      Fee Details
      What it is
      Annual fee on insured and self-funded medical plans
      Fund comparative effectiveness research
      • Applies for plan years beginning on or after 10/2/2011
      • First payments were due 7/31/2013
      • Fee currently continues through 9/30/2029, with the last payment due 7/31/2030
      • Initial annual fee began at $1 per participant, including dependents, and is indexed to national health expenditures
      • Current fee amounts are posted under Question 3 of the IRS FAQ page
      Who pays
      • Insured: Insurers; fee is built into premiums
      • Self-funded: Employers; insurers are not allowed to pay or calculate
      How paid
      Tax is self-reported on Excise Tax Form 720
      Tax implications
      Tax deductible
      Types of coverage affected
      • Insured group medical plans, including minimum premium plans
      • Self-funded group medical plans
      • Individual/family plans
      • Stand-alone, insured, behavioral health plans
      • Limited medical plans (also known as voluntary plans)
      • Individuals on a temporary U.S. Visa who live in the U.S.
      • Medicare Surround and Medicare Expand policies
      • Retiree-only plans for post-65 retirees where Medicare is the primary payer
      • Health Reimbursement Accounts (HRAs)
      • Flexible Spending Accounts (FSAs) if the employer contribution is > $500 and more than the employee contribution
      Coverage excluded
      • U.S.-issued expatriate plans
      • Exempt FSA plans
      • Medicare Parts A-D coverage
      • Medicaid coverage
      • Health Savings Accounts (HSAs)
      • Stand-alone dental and vision plans
      • Employee Assistance Plans (EAPs) that do not provide significant health insurance benefits

      Information for fully insured employers

      Fee Info
      Fee Details
      How the fee is paid
      The fee is built into insurance premiums
      How the fee is determined
      • Cigna Healthcare pays the fee using the “Snapshot Method” to determine average covered lives
      • Cigna Healthcare will add the total lives covered on one or more dates in each quarter of the policy year and divide by the number of dates on which a count was made
      How HRAs/FSAs are treated
      • HRAs/FSAs are considered self-funded group health plans
      • Insurer pays one fee for the medical policy
      • Employer pays a separate fee for the HRA/FSA

      Cigna Healthcare reporting for fully insured employers

      • At no additional cost, Cigna Healthcare 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)

      Information for self-funded employers

      Fee Info
      Fee Details
      How the fee is paid
      The employer is responsible for paying the fee
      How the fee is determined
      • Upon request, Cigna Healthcare will provide reporting to help employers determine average covered lives,
      • Employers can also determine using their own records
      How HRAs/FSAs are treated
      • If the medical plan and the HRA or FSA have the same plan year, the employer pays one fee
      • If they have different plan years, an annual fee is due on each

      Cigna Healthcare reporting for self-funded employers

      • At no additional cost, Cigna Healthcare 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)
      • Employers will be able to request reports for self-funded, stand-alone Behavioral Health and Cigna Global Health Benefits® plans

      View Cigna Healthcare Company Names

      *Some benefits may be covered under an insured plan and therefore subject to this fee.

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      Individual and family medical and dental insurance plans are insured by Cigna Health and Life Insurance Company (CHLIC), Cigna HealthCare of Arizona, Inc., Cigna HealthCare of Illinois, Inc., Cigna HealthCare of Georgia, Inc., Cigna HealthCare of North Carolina, Inc., Cigna HealthCare of South Carolina, Inc., and Cigna HealthCare of Texas, Inc. Group health insurance and health benefit plans are insured or administered by CHLIC, Connecticut General Life Insurance Company (CGLIC), or their affiliates (see a listing of the legal entities that insure or administer group HMO, dental HMO, and other products or services in your state). Accidental Injury, Critical Illness, and Hospital Care plans or insurance policies are distributed exclusively by or through operating subsidiaries of The Cigna Group Corporation, are administered by Cigna Health and Life Insurance Company, and are insured by either (i) Cigna Health and Life Insurance Company (Bloomfield, CT). The Cigna Healthcare name, logo, and other Cigna Healthcare marks are owned by The Cigna Group Intellectual Property, Inc.

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