Fees and Taxes
The Affordable Care Act established several fees and taxes designed to generate revenue to help fund the law. These include:
- Comparative Effectiveness Research Fee (CERF)
- Health Insurance Industry Fee
- Excise “Cadillac” Tax
- Reinsurance Fee
Employers and insurers are responsible for paying most of these fees.
Read the Fees and Taxes Fact Sheet for an overview and see more details below.
Comparative Effectiveness Research Fee (CERF) – Funds the Patient-Centered Outcomes Research Institute, which conducts research to compare which of two or more treatments is most effective
- Effective through 2019 with amounts indexed annually
- Paid by insurers and self-funded medical plans
- Due each July 31 using IRS Form 720
Health Insurance Industry Fee – Helps fund PPACA implementation
- Took effect in 2014; suspended for 2017 and 2019 fee years
- Paid by insurers on insured medical, dental and vision plans
- Built into premiums and adds 3% to 4% to costs
Excise "Cadillac" Tax – Intended to reduce preferred treatment of employer sponsored health plans, reduce excess health care spending and help finance the expansion of health coverage under the ACA
- Original 2018 effective date delayed until 2022
- 40% excise tax on high-cost employer medical plans
- $10,200 individual/$27,500 family (2018 indexed amounts)
- Employers are responsible for calculating the tax
- Insurers are responsible for paying the tax for insured plans
- "The person who administers the plan benefits" is responsible for paying the tax for self-funded plans
- Open issues to be addressed in future regulations:
- What is applicable coverage
- Cost of applicable coverage
- Dollar limit
- Who pays the tax
- How the tax will be paid
Many employers, unions, insurers and health insurance industry groups would like to see this tax repealed or modified based on concerns about administrative burdens for employers and potential adverse impacts to employees.
Reinsurance Fee – Annual fee intended to lessen the impact of adverse selection in the individual market was effective 2014-2016. The fee sunset after final 2016 payments were made in 2017.
To support our self-funded clients in understanding these fees, the Cigna ASO PPACA Fees and Reporting Resources team is available via phone or email to support questions from sales, brokers, and clients on the CERF and Reinsurance Fees.
Additional Information on Fees, Taxes and Employer Responsibilities
Excise "Cadillac" Tax
This 40% tax on high-cost employer-sponsored medical plans was delayed from 2018 to 2020.
YOUR ACA ROADMAP
Get a snapshot of your annual employer responsibilities and compliance deadlines.
EMPLOYER REPORTING AND ADMINISTRATIVE RESPONSIBILITIES
Employers have various reporting requirements based on size and funding.