Title IX. Revenue Provisions

Reformed Excise Tax on Insurance Companies Offering High-Premium Plans

Part of the reason for high and rising insurance costs is that insurers have little incentive to lower their premiums.  That is why the President’s Bill includes a tax on health insurers offering the highest-premium health care plans.  CBO has estimated that this policy will reduce premiums as well as contribute to long-run deficit reduction. The President’s Bill changes the effective date of the Senate policy from 2013 to 2018 to provide additional transition time for high-cost plans to become more efficient.  It also raises the amount of premiums that are exempt from the assessment from $8,500 for singles to $10,200 and from $23,000 for families to $27,500 and indexes these amounts at general inflation plus 1 percent for 2019, and general inflation thereafter.  To the degree that health costs rise unexpectedly quickly between now and 2018, the initial threshold would be adjusted upwards automatically. To ensure that the tax targets the plans with the most generous benefits rather than simply plans with high costs, the President’s Bill includes an adjustment for firms whose health costs are higher due to the age or gender of their workers, no longer counts dental and vision benefits as potentially taxable benefits, and includes a permanent adjustment in favor of high-risk occupations such as “first responders.”

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