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NFDA Supports Repeal of the Health Insurance Tax

Posted: February 22, 2013

NFDA joined with 35 other small business groups expressing support for Reps. Charles Boustany (R-LA) and Jim Matheson's (D-UT) soon-to-be-introduced bill, the "Jobs and Premium Protection Act of 2013." The bill would repeal the onerous health insurance tax created by the Patient Protection and Affordable Care Act.

Beginning in 2014, the tax will be imposed on insurance companies that offer fully-insured coverage. The tax will be assessed on the net earned health insurance premiums as a percentage of their total premiums.

The Congressional Budget Office (CBO) has stated that the tax "would be largely passed through to consumers [small and family-owned businesses] in the form of higher premiums for private coverage."

A recent study by the Oliver Wyman Company found that on average, across all states from 2014 to 2023, premiums will increase $2,794 for small businesses employees with an individual plan and $6,883 for those with a family plan. In 2014, the first year of the new tax, the average increase in premiums will range from 1.9 to 2.3 percent. By 2023, the expected increases will range from 2.8 to 3.7 percent.

The study breaks the figures down by state, with the average increase for small business employees with a family plan ranging from nearly $5,000 to more than $9,000 in the first decade of the implementation of the tax.

The state facing the highest hike in premiums for small business employees with a family plan is West Virginia with an average increase of $9,221.

The state facing the lowest hike in premiums for small business employees with a family plan is North Dakota with an average increase of $4,930.

The 35 associations sent a letter to Boustany and Matheson that states:

"The employer community has historically had two major concerns related to health insurance, cost and availability. Increasing the cost of health insurance plans for small business owners and the self-employed make offering affordable coverage, or any coverage at all, to employees more difficult. As the HIT increases the cost of health insurance for small business, it should be repealed."

This position is consistent with the NFDA Public Policy Position that "NFDA strongly support legislative and regulatory initiatives that improve access to affordable health insurance for small business."

The House bill is expected to be introduced later this month and a Senate companion bill is expected to be introduced soon thereafter.

NFDA will keep members updated as more details are available.

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