With all the focus on the tax reform bill and the repeal of the individual health insurance mandate, the Health Insurance Tax has slipped under the radar.
HIT, as it’s known, was passed in the original Affordable Care Act and took effect in 2014 to help fund the ACA. The tax was applied to health insurance plans purchased by small business owners, but Congress passed a one-year moratorium on it. The thing is, it affects everyone, according to a KTVN report, and it’s going to cost them—and some of them a lot—when it returns in 2018.
The report quotes Reno health insurance consultant Gene Furr, who represents the nonpartisan Northern Nevada Association of Health Underwriters, saying about the return of HIT, “Anyone who purchases an individual policy, anyone who purchases a group health plan through their employer is going to be impacted. Even seniors are impacted.”
In fact, the return of HIT could also put the kibosh on small business growth, as a report from KTUU indicates. The report quotes Linda Peters, the owner and general manager of ProComm Alaska, saying, “It actually puts pressure on me to actually not grow, don’t hire new people, don’t increase benefits, don’t increase paid time off, don’t increase salaries. Where’s that money going to come from? My choices are this: I pass it on to my employees or I pass it on to my customers.”
HIT can cause so much trouble because it’s going to raise the price of health coverage—already well beyond the reach of many—as a 3–6 percent charge on top of any business-provided plans that cost more than the national average.
And for individuals? The KTVN report cites the Association of Health Underwriters saying it will affect half of all Nevadans, and the 3 percent rise in premiums “pales to what it will cost in real dollars.” Says the report, “An individual will have to shell out another $215 a year. A family of four? $500. As Furr said, ‘That's $500 a year in additional in additional cost on a product that's already extremely expensive.’”
Businesses there will be in trouble, too, with Zach Cage, owner of The Brewers Cabinet beer production plant, saying in the report that his business is about to be crippled. “We see it impacting not just our employees which are the next generation, but also the industry and the local area, which we're passionate about,” he’s quoted saying.
If another moratorium on HIT isn’t put in place, lots of people will be paying more for coverage on top of rates that have already been hiked to cover the unpredictability of the health insurance markets under the Trump administration.
There actually is a bill in the works, called the “Healthcare Tax Relief Act,” introduced to postpone HIT yet again, but currently Congress has other things on its mind; the bill is not even scheduled for a vote.
Furr says in the report that taxpayers “can talk to their congressman. But they’re not that aware of it. This is one of those taxes...like everything else, it’s typically hidden." But not hidden for long, the report notes, “once the costs show up on insurance bills.”
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