Health Insurance Tax

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Our Position

Farmers and ranchers have two major concerns related to health insurance: cost and access. The Health Insurance Tax (HIT) increases health insurance costs for farmers, ranchers and other small businesses by imposing a levy on health insurance companies that is passed along to consumers. Repealing the HIT will reduce health insurance costs for farmers, ranchers and other small businesses.

Background

Most farmers and ranchers and other small businesses are not self-insured because they do not have a large enough pool of employees. Instead, small employers purchase health insurance in the fully insured market. Because fully insured health plans are the only plans that factor into the equation that determines how much HIT an insurance company pays, the cost of the tax is being passed through to small businesses that purchase those plans.

The HIT is pushing insurance costs even higher than they already are, making it harder for farmers and ranchers to purchase coverage for themselves, their families and their employees. A Congressional Budget Office (CBO) report confirms that the HIT “would be largely passed through to consumers in the form of higher premiums for private coverage.” A recent report from Oliver Wyman estimates that the HIT will force families purchasing coverage in the small group market to pay an additional $500 on average in premium costs a year. Worse, more than half of the entire tax is paid by those with income between $10,000 and $50,000.

The HIT was passed as part of the Patient Protection and Affordable Care Act (ACA) as a way to raise revenue to offset the cost of the legislation. The HIT, an excise tax levied on a health insurance company’s net premium, raised $8 billion in 2014, the first year the tax was collected, and $11 billion in 2015 and 2016. Congress suspended the tax for 2017 and 2019 but the tax is in effect for the current year. Providing temporary relief from the HIT is a welcome and critical first step, but Americans need the certainty of a full repeal.

Legislative Status

Farm Bureau supports:

  • Legislation to repeal the HIT, H.R. 246, introduced by Reps. Kristi Noem (R-S.D.) and Krysten Sinema (D-Ariz.)
  • Legislation H.R. 4894, to stop the HIT for 2018, by Reps Kristi Noem (R-S.D.)
  • Legislation S.1859 to delay the HIT for one year, introduced by Sen. Cory Gardner (R-Co.)
  • Legislation S. 1978 to delay the HIT for two years, introduced by Sen. Heidi Heikamp (D-N.D.)

AFBF Policy

Farm Bureau believes that one of the primary goals of health insurance reform should be to reduce costs. Farm Bureau opposes the HIT and supports its repeal. Until the HIT can be repealed, Farm Bureau supports an extension of the moratorium on the collection of the tax. 

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