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Affordable Care Act (ACA) Taxes

Beginning January 1, 2014, two new taxes took effect as a result of ACA: the health insurer tax and the transitional reinsurance tax.

Health insurer tax

Effective Date: Tax years beginning 1/1/2014 and after
Responsible Party: Issuers of fully-insured plans

This annual tax is designed to offset a portion of the expenses related to providing premium subsidies and tax credits to qualified individuals purchasing coverage through exchanges. It is expected to be approximately 2% of dues and/or premiums.

Transitional reinsurance contribution program tax

Effective Date: January 1, 2014 through 2016
Responsible Party: Issuers of fully-insured plans and Sponsors/administrators of self-insured plans

This tax will be used to fund transitional reinsurance programs in each state to help cover costs of the highest-risk individuals in the non-group market.

 


Other taxes include:

Patient-Centered Outcomes Research Institute fee (PCORI)

Effective Date: Plan/policy years that end after 9/30/2012 and begin before 10/1/2019
Responsible Party: Issuers of fully-insured plans and Sponsors/administrators of self-insured plans

$1 or $2 per year, per person (adjusted annually for inflation), based on the average number of covered lives.

Tax on high income earners and unearned income

Effective Date: Tax years beginning 1/1/2013 and after
Responsible Party: Individual taxpayers

0.9% Medicare surtax on wages in excess of $200,000 single/$250,000 married couples

3.8% tax on unearned income for taxpayers with modified adjusted gross income in excess of $200,000 single/$250,000 married couples

High-cost insurance tax

Effective Date: Tax years beginning 1/1/2018 and later
Responsible Party: Issuers of fully-insured plans and Sponsors/administrators of self-insured plans

Annual excise tax of 40% on health plan costs that exceed “Cadillac” plan thresholds of $10,200 for single coverage or $27,500 for family