Health Insurance Tax

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The health reform law imposes a new sales tax on health insurance that increases the cost of health care coverage. The amount of the tax will be $8 billion in 2014, increasing to $14.3 billion in 2018, and increased based on premium trend thereafter. The Joint Committee on Taxation estimates that the health insurance tax will exceed $100 billion over the next ten years.

Bipartisan Legislation to Delay Tax Introduced

Bipartisan legislation, The Small Business and Family Relief Act, introduced by Representatives Ami Bera (D-CA) and Charles Boustany (R-LA), would delay the health insurance tax for two years, providing immediate financial relief to those impacted by the tax.

The Congressional Budget Office (CBO) has said  that this tax will be “largely passed through to consumers in the form of higher premiums.” A 2011 analysis by Oliver Wyman estimates that this tax “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.” The Oliver Wyman analysis also estimates the effect of the new tax on insurance market segments and public programs: 

  • Impact on individual market consumers: Increase premiums over a ten-year period for single coverage by an average $2,150, and for family coverage an average $5,080. 
  • Impact on small employers: Increase premiums over a ten-year period for single coverage by an average $2,760, and for family coverage an average $6,830. 
  • Impact on large employers: Increase premiums over a ten-year period for single coverage by an average $2,610, and for family coverage an average $7,130. 
  • Impact on Medicare Advantage beneficiaries: Increase costs $16 to $20 per member per month in 2014 and will increase to between $32 and $42 by 2023.  The average expected increase in the cost of Medicare Advantage coverage over ten years is $3,590. 
  • Impact on Part D beneficiaries: Increase average premiums by $9 in 2014 and by $20 in 2023 for a total increase of $161 over ten years. 
  • Impact on Medicaid managed care beneficiaries: Increase the average costs of Medicaid coverage by about $1,530 per enrollee between 2014 and 2023. 

An updated report by Oliver Wyman, “Annual Tax on Insurers Allocated by State,” estimates the impact this tax will have on individual market consumers, employers, and Medicare Advantage beneficiaries in all 50 states, as well as the impact on state Medicaid managed care programs. AHIP has also developed infographics showing the state-by-state impact of the tax.

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(click thumbnail to view larger images) 

This tax will add a financial burden on families and small businesses at a time when they can least afford it, and it should be repealed. AHIP supports legislation to implement a two-year delay of the tax (H.R. 3367), as well as legislation introduced in both the House and Senate that would repeal the tax (H.R. 763, S.603).   

The health insurance tax will also be assessed on dental coverage which will increase the cost of this important coverage.

AHIP has launched Time for Affordability to raise awareness of how the health insurance tax and other provisions will affect premiums.

Latest Resources

Interactive Map of Co-Sponsors for HIT Delay and Repeal Legislation

Health insurance tax interactive map of co-sponsors for delay and repeal legislation.

State Law Charts | 08/04/2014

WTAS: HIT Media Coverage Infographic - [PDF]

A new "listicle" of media coverage from communities across the country showcases the far-reaching concern about the HIT's impact on affordability.

Infographics | Strategic Communications | 08/04/2014

A Roadmap to High Quality Affordable Health Care for All Americans

This document reviews current research outlining the key drivers of health care costs and advances a new policy framework for bending the cost curve and improving the quality of patient care.

Reports/Research/White Papers | Strategic Communications | 12/17/2013

AHIP Statement on New Bipartisan Legislation to Delay the ACA’s Health Insurance Tax

America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement in support of bipartisan legislation, The Small Business and Family Relief Act, introduced today by Representatives Ami Bera (D-CA) and Charles Boustany (R-LA) that would delay the ACA’s health insurance tax for two years.

Press Releases | Strategic Communications | 10/29/2013

Fact Check: Health Insurance Tax - [PDF]

 

Fact Sheets/Issue Briefs/Talking Points | Strategic Communications | 09/13/2013

Majority of U.S. House of Representatives Supports Repeal of Health Insurance Tax

Bipartisan legislation to repeal the Affordable Care Act’s (ACA) health insurance tax has reached 218 co-sponsors, a majority of the U.S. House of Representatives.

Press Releases | Strategic Communications | 06/17/2013

Comprehensive Assessment of ACA Factors That Will Affect Individual Market Premiums in 2014

A new report from Milliman, Inc. helps explain how the Affordable Care Act’s (ACA) coverage expansion, new benefits, and market reforms will impact individual market health insurance premiums in 2014. The report highlights how some provisions will increase premiums while others will make health care coverage more affordable for consumers. The focus of this report is to highlight the broad range of changes happening in the marketplace and the wide variation in impact that is likely to occur.

Reports/Research/White Papers | Strategic Communications | 04/25/2013

Health Insurance Tax Infographic - [PDF]

 

Infographics | Strategic Communications | 04/01/2013

AHIP Supports Senate Legislation to Repeal the ACA’s Health Insurance Tax

America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement in support of the Jobs and Premium Protection Act introduced today by Senators John Barrasso (WY) and Orrin Hatch (UT) to repeal the Affordable Care Act’s (ACA) health insurance tax.

Press Releases | Strategic Communications | 03/19/2013

New Regulation Released on ACA’s $100 Billion Health Insurance Tax

The Internal Revenue Service (IRS) at the U.S. Department of Treasurytoday issued a proposed rule on the $100 billion health insurance tax included in the Affordable Care Act (ACA). The health insurance tax will increase costs for consumers and employers in all 50 states, according to a recent analysis by Oliver Wyman

Press Releases | Strategic Communications | 03/01/2013

AHIP Supports Bipartisan Legislation to Repeal the ACA’s Health Insurance Tax

America’s Health Insurance Plans’ (AHIP) President and CEO Karen Ignagni released the following statement in support of bipartisan legislation co-sponsored by Representatives Charles Boustany (R-LA) and Jim Matheson (D-UT) to repeal the Affordable Care Act’s (ACA) health insurance tax.

Press Releases | Strategic Communications | 02/15/2013

State-by-State Impact of the Health Insurance Tax

 

Infographics | Strategic Communications | 12/06/2012

Health Insurance Tax to Hit Consumers, Employers in All 50 States

The new health insurance tax included in the Affordable Care Act (ACA) will increase the cost of health care coverage for consumers and employers in every state, according to a new state-by-state analysis conducted by Oliver Wyman for America’s Health Insurance Plans (AHIP).

Press Releases | Strategic Communications | 12/05/2012

Annual Tax on Insurers Allocated by State

In this report we have quantified the total premiums by state that will be assessed and estimated per member per year costs of this assessment by line of business.

Reports/Research/White Papers | 11/01/2012

End the Health Insurance Tax

 

Advocacy and Coalition Websites | Strategic Communications | 09/19/2012

JCT Partial Re-Estimate of Tax Provisions in ACA

The Joint Committee on Taxation projects that the new premium tax contained in the health reform law will total $101.7 billion between 2013 and 2022.

Reports/Research/White Papers | Strategic Communications | 09/19/2012

NFIB Study: Effects of the PPACA Health Insurance Premium Tax on Small Businesses and Their Employees - [PDF]

The National Federation of Independent Business Research Foundation released a study examining the private-sector job loss that will result from the health insurance premium tax.

Reports/Research/White Papers | Strategic Communications | 11/09/2011

Oliver Wyman Study: Estimated Premium Impacts of Annual Fees Assessed on Health Insurance Plans - [PDF]

A technical analysis by Oliver Wyman estimates that the new health insurance tax in the Affordable Care Act (ACA) “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.” AHIP commissioned this report as part of its ongoing effort to raise awareness about the impact the tax will have on consumers, employers and public program beneficiaries.

Reports/Research/White Papers | 10/31/2011

Marwood Group Study: Impact of ACA Annual Health Insurance Tax on State Medicaid Programs - [PDF]

The Marwood Group prepared this study on the impact of the health insurance premium tax on state Medicaid programs.

Reports/Research/White Papers | 10/06/2011

Higher Costs and the Affordable Care Act: The Case of the Premium Tax - [PDF]

The Affordable Act imposes a fee on health insurers that amounts to a de facto “health insurance premium tax” that will raise the cost of health insurance for American families and small employers. Specifically, under the law, an annual fee applies to any U.S. health insurance provider, with the intent of raising nearly $90 billion over the budget window.

Reports/Research/White Papers | 03/09/2011

Labor Market Incentives, Economic Growth and Budgetary Impacts - [PDF]

Former Director of CBO Doug Holtz-Eakin testified before a House Ways & Means Committee hearing that the tax increase on health insurance premiums will be passed on to consumers with American families paying as much as $135 billion in higher premiums over the next 10 years.

Congressional Correspondence | 01/26/2011