House Passes Bill to Delay HIT

August 1, 2018

Prior to adjourning for August recess, the House passed a legislative package aimed at addressing rising health care costs and patient affordability issues, which would also extend the suspension of the health insurance tax (HIT) on insurers for two more years until 2022.

The Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act (H.R. 6311) sponsored by Rep. Peter Roskam (R-Ill.) would expand access to lower-cost health care options, encourage health care savings, and put a two-year delay on the Affordable Care Act’s (ACA) health insurance tax.

The HIT was designed to help pay for insurance coverage under the ACA, and unfortunately while the tax may have been politically expedient for proponents of the ACA at the time it was passed, it actually runs contrary to the original impetus to reform the health care system, namely to lower the costs of health care and health insurance. NSBA has long opposed the HIT because new taxes on health insurers will, and have been passed down to the fully-insured market; that is, primarily small businesses, their employees, and their families in the form of higher premiums.

In 2018 alone, the HIT added more than $14.3 billion to the cost of coverage, further driving up premiums for small businesses struggling to afford their health insurance. According to a report by Oliver Wyman, families are expected to pay an additional $523 annually as a result of the tax. Even more concerning is the impact of the HIT for those who can least afford it – individuals making between $10,000 – $50,000 bear a disproportionate percentage of the cost due to the return of the HIT.

H.R. 6311 addresses the misguided efforts to raise revenue by levying a tax on health insurers by delaying the ACA provision for another two years. The legislation would take immediate action to protect the nation’s small businesses, their employees, and the self-employed from greater instability, uncertainty, and higher costs. Even though HIT relief through 2022 provides a significant and meaningful step forward in support of small businesses and working Americans, the pending return of the tax jeopardizes small businesses’ financial standing and growth moving forward.

Legislation to repeal or suspend the HIT has been introduced on a bipartisan basis since 2013 in both the House and Senate, and since 2015 Congress has passed multiple suspensions of the HIT. NSBA is a member of the Stop the HIT Coalition, which represents small-business owners, their employees and the self-employed to repeal the onerous HIT. To read the coalition’s statement on the passage of this bill, click here.