IRS casts wide net for insurers in health tax final rule

The Internal Revenue Service has issued final regulations laying out how it will collect new taxes on health insurance companies predicted to generate almost $60 billion over the next five years to help pay for premium subsidies.

In particular, the rule states the insurance tax will apply to companies with premium revenues of more than $25 million each year. The rule excludes government entities, nonprofit groups that receive at least 80 percent of their revenue from government programs and self-insured businesses.

The IRS specifically said companies subject to the health insurance tax include colleges that run their own health plans, companies operating Medicaid or other government programs, state-run high-risk pools operating in 2014, dental plans, and vision plans.

The rule also mandates insurers to report their total premium revenue to the IRS each year by April 15. The IRS will inform insurers how much they owe by August, and insurers have one month to pay the tax.

Insurers and their lobbying group, America's Health Insurance Plans, largely oppose the tax, saying it will only raise premiums as the companies pass on the fees to their members. Aetna CEO Mark Bertolini has said the insurance tax will end up costing his company about $600 million in additional fees, FierceHealthPayer previously reported.

In late October, when two lawmakers introduced legislation in Congress to postpone the implementation of the insurance tax by two years, AHIP voiced  it support. "Taxing health insurance undermines the goals of healthcare reform by making it harder for people to afford coverage," AHIP CEO Karen Ignani said in a statement.

To learn more:
- here's the IRS rule (.pdf)
- read the AHIP statement

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