Since the Affordable Care Act’s (ACA) passage, ASA and others have been fighting for repeal of the Health Insurance Tax (HIT). Now, with just 60 days before it hits small businesses, the bipartisan Small Business and Family Relief Act
has just been introduced to delay the HIT, providing two years of relief to the millions that would be impacted.
Scheduled to take effect beginning in 2014, the HIT is actually a hidden tax on small business. ACA assesses a tax on all health insurance companies based on their “net premiums" written. The tax will raise $8 billion starting in 2014, $14.3 billion in 2018 and more in later years. The amount of the HIT that the insurance company is responsible for is roughly equal to the percent of the market subject to the tax that the insurance company covers. The larger the insurance company’s market-share, the higher their annual HIT. Insurers and economists have consistently agreed throughout the health care debate that new taxes on insurers inevitably mean new costs passed along to customers. The group that experiences the most cost shifting is the fully insured market.
The HIT is an often-overlooked aspect of the Affordable Care Act that taxes health insurance policies purchased on the fully-insured market – the marketplace where 88 percent of small businesses and individuals buy insurance. Over the next decade, the HIT is expected to affect 34 million Americans and cost the average family $5,000.
While we applaud the introduction of this delay, ASA and the Stop the HIT Coalition will continue its fight for full repeal and educate members of Congress of its impact on our members. To learn more, click here