Upcoming Health Insurance Tax Could Increase Costs for Seniors

Posted by: Daniella Chambers

The rising costs of health care remain a great concern to seniors and disabled individuals across the United States. As the new Congress begins its work following the government shutdown, Members face a decision on a multi-billion-dollar tax on health insurance coverage that would impact the costs and benefits under Medicare Advantage.

As part of the Patient Protection and Affordable Care Act (ACA), an annual tax was imposed on health insurance premiums called the Health Insurance Tax (HIT). The HIT is a tax that applies to individual policies, small group plans, employers who are not self-insured, Medicaid managed care, Medicare Part D, and Medicare Advantage. If you are enrolled in Medicare Advantage or a Medicare Part D plan, the HIT could have a significant impact on you.

The HIT would likely result in increases in plan premium costs, less cost sharing reductions for beneficiaries, fewer supplemental benefits provided under plans, or a combination of all three. The HIT has been suspended in previous years, but it is scheduled to return in 2020. If it allowed to go into effect, annual plan premiums could increase by $241 for the average beneficiary and approximately $500 for the average couple on Medicare Advantage. Research shows that over 25% of the financial burden of the HIT is carried by Medicare Advantage and Medicare Part D enrollees.

We know beneficiaries value their Medicare Advantage coverage for the high-quality, affordable care it provides. More than half of all Medicare Advantage beneficiaries live on less than $30,000 a year and most live on fixed incomes. Protecting seniors and individuals on disabilities in Medicare Advantage from cost increases should be a high priority for policymakers.
Suspending the HIT for 2020 is one of the most direct ways for Congress to provide financial relief for seniors and disabled individuals who rely on Medicare Advantage plans to maintain access to quality health care and prescription drug coverage.

Two bills have been introduced that would delay the HIT Tax for 2020 and 2021. In the Senate, S. 172 is sponsored by Senators Cory Gardner (R–CO), Jeanne Shaheen (D-NH), John Barrasso (R-WY), Doug Jones (D-AL), Tim Scott (R-SC), and Kyrsten Sinema (D-AZ). A companion bill, H.R. 1398 has been introduced by Representatives Ami Bera (D-CA), Josh Gottheimer (D-NJ), Jackie Walorski (R-IN), and Kenny Marchant (R-TX) in the House of Representatives.

Better Medicare Alliance supports bipartisan efforts to protect Medicare Advantage beneficiaries from rising health care costs. We have voiced our strong support for delaying or repealing the HIT. We will continue to advocate for this action and will continue to monitor legislative progress towards that goal Demonstrating support for Medicare Advantage by requesting a suspension of the HIT for 2020 is critically important. We encourage you to contact your member of Congress and Senators and urge them to co-sponsor these bills. To do so, sign our petition today!