Extra, Extra! ACA Tax News, Read All About It! | California Benefits

By Jennifer Kupper
In-house Counsel & Compliance Officer for iaCONSULTING, a UBA Partner Firm
healthcostThe Patient Protection and Affordable Care Act of 2010 (ACA) has many tax provisions written within its 906 pages. I’ll give a brief overview of the taxes, and sprinkle in some good news among some not-so-good news.
HIP
Section 9010 of the ACA imposes a fee on each covered entity engaged in the business of providing health insurance for United States health risks. This fee is commonly known as the health insurance tax (HIT) or the health insurers providers (HIP) fee. As a result of the HIP fee, insurance premiums increased approximately two to three percent. A benefit of being self-funded is that self-funded plans are not subject to the HIP fee.
The HIP fee’s projected revenue stream was estimated to be:

  • 2014: $8 billion
  • 2015 and 2016: $11.3 billion
  • 2017: $13.9 billion
  • 2018: $14.3 billion
  • Years after 2018: preceding year amount increased by the rate of annualized premium growth

Good news! The Consolidated Appropriations Act of 2016 included a one-year moratorium on the HIP fee, suspending the collection of the fee for the 2017 calendar year.
Groups may not feel the immediate impact of the moratorium because it applies to the payment that would be due in the 2017 calendar year based on 2016 data. The Centers for Medicare & Medicaid Services (CMS) state that markets should feel the impact on 2017 premiums because the administrative costs will be adjusted for the moratorium.
The not-so-good news is that the moratorium does not affect the filing requirement and payment of fees for 2016, and currently extends for only one year. It has no effect on the fee amount for the fees due in 2018 based on 2017 data. To urge Congress to support the Stop the Hit legislation, visit NAHU’s action center.
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