Health Insurance Tax Repeals
As the year comes to a close most of us are thinking about enjoying the Holidays, wrapping up 2019 and the decade of the 10’s, and planning for 2020. U.S. political news has revolved around impeachment and the usual congressional bickering. Yet, mixed into all of this was some good news for health insurance costs in the near future.
On December 20th President Trump signed a budget deal passed by Congress that included three repeals in health insurance taxes:
- The Cadillac Tax: A significant funding mechanism of the Affordable Care Act (ACA) that was supposed to be implemented in 2018, but ended up getting postponed. This tax would have been passed on to health insurance subscribers whose health plan premiums exceeded a certain dollar value. “Platinum” level plan holders like municipal workers and corporate executives would have been paying this tax, so Union and business leaders both fought to have this tax repealed.
- The Medical Device Tax: This was a 2.3% tax on the sale of medical devices (think wheel chairs, crutches, insulin pumps, etc.). The cost of this tax would have been passed on to consumers in the form of higher prices or insurance claims/premiums.
- The Health Insurance Tax (HIT): This is still included in 2020 health insurance premiums, but going forward the removal of this tax will reduce the average family premium by over $450 per year.
However, the Patient Centered Outcomes Institute Fee (PCORI) has been extended. Originally set to expire in 2019 this has been authorized to continue until 2029. According to the PCORI website “PCORI was established to fund research that can help patients and those who care for them make better-informed decisions about the healthcare choices they face every day, guided by those who will use that information.” The tax ads $2.45 to every covered life on an insurance plan.
Overall the repeal of these taxes are good news for the cost of private health insurance. Health insurance companies should be passing the savings on to businesses, employees, and individual consumers in the form of lower premium increases. It remains to be seen how the loss of revenue by the federal government will impact future insurance subsidies being provided to eligible consumers through the Health Insurance Marketplace.