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Informed on Reform Workplace Wellness Consumer-Driven Health Plans
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Home Employers Industry Insights Informed on ReformAffordable Care Act (ACA) Fees and Taxes

Fees and Taxes

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

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, 2021 will be $2.54 per participant
  • Fee is due each year on July 31 and is paid using IRS Form 720

Get additional CERF details

See payment amounts and due dates [PDF]

For more information, visit our 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  • The fee is in effect in 2020, then fully repealed and will no longer exist in and after 2021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Originally scheduled to go into effect in 2018, the Cadillac Tax was fully repealed on December 20, 2019.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 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:

  • Call 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 [PDF]

Fees and taxes in detail

Comparative Effectiveness Research Fee (CERF) Details

Fee Info
Fee Details
What it is/fee duration
Annual fee on insured and self-funded medical plans until 2029
Purpose
Fund comparative effectiveness research
Amount
  • Applies for plan years beginning on or after 10/2/2011
  • First payments were due 7/31/2013
  • Fee 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
  • For current fees, please review the CERF Payment/Due Date Grid [PDF]CERF Payment/Due Date Grid [PDF]
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
Estimated cost impact
  • $1 per member per year (PMPY) in first year
  • Increases annually
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) and on CignaAccess.com

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) and on CignaAccess.com
  • Employers will be able to request reports for self-funded, stand-alone Behavioral Health and Cigna Global Health Benefits® plans

Health Insurance Industry Fee Details

Fee Info
Fee Details
What it is/fee duration
  • Permanent, annual fee on health insurers (including HMOs)
  • Began in 2014 (suspended in 2017 and 2019)
Purpose
Help fund federal and state Marketplaces/Exchanges
Amount
  • $8 billion in 2014
  • Increases each year to $14.3 billion in 2018
  • Increases with premium growth after 2018
  • Allocated to insurers based on prior year’s share of total health insurance premium
Who pays
Insurers
Tax implications
Tax deductible for employers as part of premium
Estimated cost impact
  • 2%-2.5% of premium in 2014
  • Increasing to 3%-4% of premium in future years, when in effect
Types of coverage affected
  • Insured individual and group medical plans
  • Stand-alone insured dental, vision, behavioral health and pharmacy plans
  • Medicare Advantage plans
  • Retiree-only plans
  • Part D prescription benefit plans
  • Medicaid (and CHIP) programs
  • Taft-Hartley plans, to the extent the plans meet the other criteria for inclusion
Coverage excluded
  • Self-funded employer-sponsored group medical plans*
  • Nonprofit corporations that receive more than 80% of their revenue from government-sponsored poverty programs (Medicaid, CHIP) and comply with certain restrictions on political activity
  • Medicare supplemental coverage that meets the requirements of section 1882(g)(1)
  • VEBAs established by a union or collective bargaining agreement
  • Coverage for specific diseases or hospital indemnity coverage
  • Accident only coverage
  • ASO/Stop-loss
  • Employee Assistance Plans (EAPs), disease management programs and wellness programs that do not provide significant health insurance benefits
  • U.S.-issued expatriate plans after 2015

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 Cigna Corporation, are administered by Cigna Health and Life Insurance Company, and are insured by either (i) Cigna Health and Life Insurance Company (Bloomfield, CT); (ii) Life Insurance Company of North America (“LINA”) (Philadelphia, PA); or (iii) New York Life Group Insurance Company of NY (“NYLGICNY”) (New York, NY), formerly known as Cigna Life Insurance Company of New York. The Cigna name, logo, and other Cigna marks are owned by Cigna Intellectual Property, Inc. LINA and NYLGICNY are not affiliates of Cigna.

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