Know what the HIT tax is? Well….join the club. It is a tax to be applied to all health insurance policies starting in 2014. Since this is one of the major taxes to fund reform and subsidies, one wonders how far it will get. And this is just one of many taxes to be enacted. Review this posting from the NAHU legislative team today::

Representatives Charles Boustany (R-LA) and Jim Matheson (D-UT) introduced legislation this week to eliminate the new national health insurance premium tax set to take effect in 2014. This tax will be levied on health plans based on their premium volume for all full-insured group and individual health insurance policies but is expected to be passed right down to policyholders. The amount of the tax will vary based on the carrier, state and type of policy sold, but America’s Health Insurance Plan officials have estimated to NAHU that the tax will cost an average family in a small group plan more than $500 a year beginning in 2014 and that the amount will rise annually. Furthermore, a 2011 analysis by Oliver Wyman estimates that this tax “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.” The Oliver Wyman analysis also estimates the effect of the new tax on insurance market segments and public programs:

  • Impact on individual market consumers: Increase premiums over a ten-year period for single coverage by an average $2,150, and for family coverage an average $5,080.
  • Impact on small employers: Increase premiums over a ten-year period for single coverage by an average $2,760, and for family coverage an average $6,830.
  • Impact on large employers: Increase premiums over a ten-year period for single coverage by an average $2,610, and for family coverage an average $7,130.
  • Impact on Medicare Advantage beneficiaries: Increase costs $16 to $20 per member per month in 2014 and will increase to between $32 and $42 by 2023. The average expected increase in the cost of Medicare Advantage coverage over ten years is $3,590. 
  • Impact on Part D beneficiaries: Increase average premiums by $9 in 2014 and by $20 in 2023 for a total increase of $161 over ten years. 
  • Impact on Medicaid managed care beneficiaries: Increase the average costs of Medicaid coverage by about $1,530 per enrollee between 2014 and 2023.
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