Health Insurance Tax

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The health reform law imposed a new sales tax on health insurance that increases the cost of health care coverage. The amount of the tax was $8 billion in 2014 and increase by 41 percent for 2015. The tax will total more than $145 billion over the next ten years.

 

Bipartisan Legislation to Repeal the Health Insurance Tax & #Driveto218

Repealing the health insurance tax is an important step policymakers can take to make health insurance premiums more affordable and would provide immediate financial relief to those impacted by the tax.

AHIP supports legislation in the House and Senate to fully repeal the health insurance tax—the Jobs and Premium Protection Act in the Senate, introduced by Sen. Orrin Hatch (UT) and Sen. John Barrasso, and bipartisan legislation in the U.S. House of Representatives, introduced by Rep. Charles Boustany (R-LA) and Kyrsten Sinema (D-AZ).

In order to raise awareness about the importance of having a majority of members in the House (218) sign on to this legislation, join the conversation on Twitter using the hashtag #Driveto218.

Impact of the Health Insurance Tax

According to an analysis by the actuarial firm Oliver Wyman, the total impact of the tax will mean that an individual purchasing coverage on his or her own for 2015 will pay $170 in higher premiums and small businesses will pay an additional $530 for each family they cover. The Congressional Budget Office (CBO) has said that this tax will be “largely passed through to consumers in the form of higher premiums.”

The Oliver Wyman analysis also estimates the effect of the new tax on insurance market segments and public programs: 

  • The health reform law includes a $145 billion tax on health insurance.  The tax started at $8 billion in 2014, increased by 40 percent in 2015, and will nearly double over the course of four years to $14.3 billion in 2018. The tax will continue to increase based on premium trend each year. 
  • According to an analysis by Oliver Wyman, repeal of the health insurance tax will save consumers on average:
    • $514 per year (individual), $688 per year (small group), and $719 per year (large group) for family coverage;
    • $360 per year for each senior with Medicare Advantage; and
    • $152 per year for each Medicaid enrollee.
     

     

    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.

    Chart3
    (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. 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

    AHIP Statement on HIT Repeal

    Press Releases | Strategic Communications | 03/26/2015

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

     

    Press Releases | Strategic Communications | 02/12/2015

    2015 Health Insurance Tax Infographic - [PDF]

     

    Infographics | 01/16/2015

    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 (ePub)

    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 (ePub)

    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