The Affordable Care Act (ACA) imposes an annual, non-deductible health insurer fee on insurance companies that offer fully insured plans and other providers of health coverage. The fee was included in the ACA to fund the state and federal ACA marketplaces. The fee is based on an insurer’s share of the market, which is calculated based on each insurer’s net premiums for the year. The applicable amount to be allocated between payers for the 2020 fee year is $15,522,820,037. ACA required the annual fee to be paid in each calendar year beginning after 2013, but legislation enacted in December 2015 suspended the collection of the annual fee for the 2017 year, and legislation enacted in January 2018 suspended the collection of the fee for the 2019 year. Thus, insurers were not required to pay this fee for 2017 or 2019. Unless Congress acts, the fee will go into effect again next year.
The annual fee for health insurers is assessed and paid on a calendar-year basis, using data from the preceding calendar year. Therefore, the 2020 health insurance providers fee is due September 30, 2020, based on 2019 data. Only insurance carriers are required to pay the fee. However, health insurance carriers will typically pass along the tax to their employer group clients by way of higher premiums. As a result, the increased health insurance providers fee amount will likely result in plan premium increases for 2020, adding roughly 3% to the overall premium costs. Plan sponsors should be aware this fee may be reflected in their 2020 premiums.
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