Sep 30, 2019
The IRS published a Notice stating that they expect to collect over $15.5 billion from health insurers in 2020 under the ACA’s Health Insurers Providers Fee — also known as the Health Insurance Tax (HIT). The HIT was created to fund implementation of the ACA's marketplace exchanges.
The fee was suspended during 2019. Absent legislative action, it will resume in 2020. In February, Rep. Ami Mera, MD (D-CA) introduced the Health Insurance Tax Relief Act of 2019 to delay the annual fee until 2022. However, the bill has not seen much action since then.
Although the HIT is not assessed to employer group health plan sponsors, they should expect to see rate increases. All LISI contracted carriers include the fees in group premiums except for UnitedHealthcare (Large Group). The insurance industry estimates that the HIT adds 1.5% to 3% to fully insured health plan premiums.
There is no way to predict exactly how much tax each carrier will pay since the tax is based on a complex formula that takes into account the size of the carrier, their market share, and other factors.
Carriers take different approaches to communicating the HIT to employers. Some present the tax they have estimated as a separate line item in the group insurance bill. Others treat the HIT as part of their administrative expenses, as they would with any other corporate tax liability.
