The Insurer Fee, also called the Health Insurance Industry Tax or Health Insurance Provider's Fee, applies to health insurance issuers and does not affect self-funded coverage. Beginning in 2014, health insurance issuers will pay an annual fee based on net written premiums. The fee is permanent and will fund premium tax subsidies for low-income individuals and families who purchase insurance through Exchanges (Health Insurance Marketplaces).
A fee collected from health insurers based on net written premium with respect to health insurance.
Are all issuers subject to the Insurer Fee?
The fee is imposed on health insurers depending on the amount of the issuer's net written premium.
Issuers with less than $25M in net written premium are not subject to the fee.
Issuers with more than $25M but less than $50M in net written premium will have 50 percent of their premium subject to the fee.
Issuers with more than $50M in net written premiums will have 100 percent of their premium subject to the fee.
How much revenue is the Insurer Fee expected to collect?
The new fee is expected to total $8 billion in 2014 from affected issuers, increasing to $14.3 billion in 2018, and increasing by the rate of premium growth thereafter.
Has the federal government issued regulations on this requirement?
No regulations have been issued to date, although the statute requires that the Secretary of the Treasury issue regulatory guidance.
Our information about the industry fee comes from the statute, e.g., PPACA, industry sources and trade associations.
When does the fee go into effect?
The fee will be effective beginning on Jan. 1, 2014.
Is the Insurer Fee a permanent or temporary fee?
This fee is permanent.
How will the dollars collected be used?
The Insurer Fee will be used to help fund the federal and state health insurance exchanges.
Which types of coverage does the fee apply to?
The Insurer Fee applies broadly to most forms of health insurance:
Health plans for active employees (private and public sector)
Retiree health plans
Behavioral health, pharmacy, vision and dental benefit plans
Medicare Advantage plans
Part D prescription benefit plans
Medicaid (and CHIP) programs
Individual market, including student health plans
Stand-alone dental and vision
Executive Medical plans
What types of programs are excluded from the fee?
The insurer fee applies to health insurance. The following are exempt (not subject to the fee):
Self-funded employer sponsored group health plans
Non-profit corporations that receive more than 80 percent of their revenue from government sponsored poverty programs (Medicaid, CHIP) and that comply with certain restrictions on political activity
VEBAs sponsored by an entity other than an employer or employers
Medicare supplemental coverage that meets the requirements of section 1882(g)(l)
Coverage for specific diseases or hospital indemnity coverage
Accident only coverage
What is the financial impact of the fee?
Industry sources indicate that the financial impact will be approximately 2.5 percent of premiums. The Insurer Fee is included in the premium of fully insured plans, when approved by the state. The industry fee is designed to collect, on an industry-wide basis, the amounts shown below for each of the following years: