What you need to know about the forces reshaping our industry.


May 25, 2018

Lawmakers introduced a bipartisan bill to delay the ACA's on-again, off-again health insurance tax

Daily Briefing

    A bipartisan group of federal lawmakers on Thursday introduced a bill (HR 5963) that would delay implementation of the Affordable Care Act's (ACA) health insurance tax from 2020 to 2021.

    Here's your cheat sheet for understanding health care's legal landscape


    According to the Washington Examiner, the tax is intended to offset the costs associated with expanding health insurance coverage under the ACA. The Congressional Budget Office had projected that the tax would generate $142 billion in revenue for the federal government over a 10-year period beginning in 2014. Oliver Wyman Actuarial Consulting has projected the tax likely would result in health insurance premiums increasing by 2.7% to 2.8% each year the tax is in effect, the Examiner reports.

    According to Modern Healthcare, the tax cost insurers $8 billion in 2014, the first year the tax took effect, and slightly more than $11 billion in 2015 and 2016. Insurers did not have to pay the tax in 2017 because Congress had passed legislation that suspended the tax for one year. According to the Examiner, the federal government in 2017 lost $13.9 billion in revenue because of the tax's suspension.

    The tax took effect again this year, meaning insurers again are required to pay the tax, which they estimate will cost $14.3 billion. However, the tax will be suspended for 2019 as a result of a continuing resolution that President Trump signed into law earlier this year. The tax currently is scheduled to take effect again in 2020.

    Bill details

    The bill would extend by one year the current one-year suspension of the tax that begins in 2019, effectively delaying the tax's implementation until 2021. Reps. Ami Bera (D-Calif.), Kristi Noem (R-S.D.), Kyrsten Sinema (D-Ariz.), and Jackie Walorski (R-Ind.) have co-sponsored the measured.


    Several groups have expressed their support for the bill.

    America's Health Insurance Plans in a statement said, "Americans have been calling for more affordable coverage and care, and this bill delivers for them. Suspending the health insurance tax will help to lower premiums for everyone, whether they get coverage through their jobs, buy their own coverage, or enroll in Medicare Advantage or Medicaid."

    Stop the HIT, a business coalition that opposes the tax, said, "Providing relief from the [tax] in 2020 would ensure millions of Americans continue to receive much-needed cost-savings for their health care dollars" (Luthi, Modern Healthcare, 5/24; Leonard, Washington Examiner, 5/24; AHIP statement, 5/24).

    Just updated: Your cheat sheets for understanding health care's legal landscape


    To help you keep up with the ever-changing regulatory environment, we recently updated our cheat sheets on some of the most important—and complicated—legal landmarks to include a brand new one-pager on the new tax law.

    Check out the cheat sheets now for everything you need to know about MACRA, the Affordable Care Act, antitrust laws, fraud and abuse prevention measures, HIPAA, and the two-midnight rule.

    Get the Cheat Sheets

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.