2014 begins with slew of reform taxes for insurers
The New Year brought several healthcare reform taxes for the health insurance industry, including the health insurance tax (HIT) that kicked in Jan. 1.
The HIT will vary based on insurers' market share and will compensate insurers that take on the most costly policyholders. The tax starts at $8 billion this year, increases to $14.3 billion in 2018, and will continue to increase over the next decade, Politico reported.
Insurers and America's Health Insurance Plans oppose the tax, warning it will raise premiums as the companies pass on the fees to their members. Aetna CEO Mark Bertolini, for example, claimed the insurance tax will cost his company about $600 million in additional fees, FierceHealthPayer previously reported.
This year also marks the start of the reinsurance fee--a temporary, three-year tax on insurers. Insurers will pay the government $63 per member, totaling almost $12 billion for 2014, according to Politico.
Insurers support the reinsurance fee, which is meant to raise $25 billion over the next three years to help offset the costs of covering expensive and unhealthy consumers who are expected to buy policies on the health insurance exchanges, FierceHealthPayer previously reported. Despite the support, the U.S. Department of Health & Human Services said certain self-insured, self-administered health plans could be exempted from the reinsurance fee in 2015 and 2016.
As of Jan. 1, insurers selling plans on HealthCare.gov must pay a monthly 3.5 percent user fee to sell plans on the federal-run exchange, Politico noted. HHS said it might increase that fee, depending on how many people enroll in coverage through HealthCare.gov, as FierceHealthPayer previously noted.
Tax credits also kicked in Jan. 1, allowing individuals in households with incomes below 400 percent of the federal poverty level to qualify for substantial premium tax credit subsidies, according to FierceHealthPayer's healthcare regulatory timeline.
In what may be an attempt to bring the public into the fight against these fees, Alabama Blue Cross Blue Shield has started itemizing reform taxes on bills sent to their members. The insurer's line item for reform taxes includes a $2 per member fee for the Patient Centered Outcomes Research Institute, a premium tax that adds about 2 percent to consumer costs, the 3.5 percent exchange user fee, and reinsurance and risk-adjustment fees that create additional support for insurers with big medical claims.
To learn more:
- read the Politico article
IRS casts wide net for insurers in health tax final rule
AHIP: Insurance tax will dramatically raise premiums
Alabama Blues documents reform taxes on member bills
Timeline: Key healthcare deadlines for 2014 and beyond