On Wednesday, Senators Heidi Heitkamp (D-ND), Jeanne Shaheen (D-NH) and Joe Donnelly (D-IN) introduced S. 1978, the Small Business and Family Health Tax Relief Act. The bill would provide for a two-year delay of the Health Insurance Tax (HIT) and make it tax deductible thereafter. The bill is in addition to S. 1859, legislation introduced last month by Senator Cory Gardner (R-CO), which would extend the current one-year moratorium of the HIT through calendar year 2018. NAHU along with the Stop the HIT coalition have long advocated for permanent repeal of this tax, or short of that, to provide for a temporary delay of the tax until a more comprehensive solution can be implemented.
The tax, dubbed a fee, assesses a tax on all health insurance companies of insured plans both inside and outside the exchange based on their “net premiums” written. While it is charged to insurers to help pay for the ACA, it is ultimately passed down in the form of increased premiums for small businesses, middle-income families, seniors and young workers. Over a 10-year period, this tax is projected to increase premiums for single coverage by an average of $2,150 and family coverage by an average of $5,080.
In recent weeks, we have been urging Congress to include a full repeal or further delay of the tax with any market-stability legislation, emphasizing the impact that the HIT will have on Americans, with an additional $500 added to average premiums per affected family every year, and more than half of the tax paid for by those earning between $10,000 and $50,000. NAHU was a leading advocate for the initial one-year moratorium for the 2017 plan year that was signed into law by President Obama in December 2015.
There has been longstanding bipartisan support for relief from the HIT, with nearly 400 bipartisan members of Congress supporting the one-year moratorium in 2015. Previous legislation in the 114th Congress had the official backing of 236 members of the House, more than half of the chamber, and the Senate companion bill was co-sponsored by 39 senators. Earlier this year, Representatives Kristi Noem (R-SD) and Kyrsten Sinema (D-AZ) introduced H.R. 246, along with 81 co-sponsors to permanently repeal the tax.