Insurer fee expected to spike 2020 group premiums
ACA tax back in place for 2020
The Affordable Care Act requires insurers offering fully-insured plans to pay a “health insurance tax” based on premiums and market share. These fees help fund the ACA’s marketplace exchanges, but Congress passed a one-year hold on the tax in 2019.
The tax, also called a premium tax or health insurer provider fee, is back in place beginning in 2020, and fully-insured groups should expect to see higher premiums as a result.
Last year, an analysis by Oliver Wyman Actuarial Consulting predicted the $16 billion tax would tack on an extra 2.2 percent on renewal rates in 2020 and each subsequent year.According to the analysis, this spike translates to a $154 increase per person and $479 increase per family contract in the small group market.
Self-funded and level-funded plans provide more transparency to employers about where their benefit dollars are going, and allow the group to recognize savings associated with low-claim years.
To learn more, download “The Employer’s Guide to Self-Insuring” here.
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