Employee Benefits Compliance, Taxes, Fees & Penalties

Health Insurer Tax (HIT) Will be Back in Effect in 2018

US Capitol Building

The Affordable Care Act (section 9010) created an annual fee on certain health insurance providers beginning in 2014. This is often referred to as the “HIT tax” or health insurer tax. The HIT tax was suspended for the 2017 calendar year but it will again be effective as of January 1, 2018.

If you will have an insured group health plan in 2018, keep this in mind when you review 2018 rate quotes from health insurers.

Here’s Why this is Important

  • Some carriers have estimated that the HIT tax will be about 3% in 2018, although amounts will vary among carriers based on their prior year’s net annual premiums.
  • In prior years, carriers sometimes added the HIT tax as a separate line item, they did not include it in the basic rates. Thus, some employers were not always aware of the additional amount until after they purchased health insurance.
  • The HIT Tax will be effective again in 2018 unless it is repealed by legislation which Congress has so far failed to enact.   

Additional Information about the “HIT” Tax

If Congress does not enact legislation to repeal or continue to suspend the health insurer tax, the total tax amount owed for 2018 will be $14.3 billion. The $14.3 billion is allocated among U.S. health insurance companies based on their share of net premiums written nationally in the prior year.  That’s why the exact percentage will vary for different insurers.

The 2017 suspension was part of the Consolidated Appropriations Act of 2016, Title II, § 201, Moratorium on Annual Fee on Health Insurance Providers.

Possible ways Congress could repeal or delay the HIT tax include adding provisions to:

  • A broader “repeal-Obamacare” bill (currently not happening)
  • Legislation to overhaul the Tax Code, or
  • A continuing resolution to fund the government.

Additional information is available at https://www.irs.gov/affordable-care-act/affordable-care-act-tax-provisions