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IAFF LEGISLATIVE FACT SHEET
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FIXING THE HEALTHCARE REINSURANCE FEE

The IAFF supports H.R. 3489 and fixing the Reinsurance Fee.

BACKGROUND

The Patient Protection and Affordable Care Act (ACA) extends insurance coverage to millions of previously uninsured Americans. While insurance companies will now have access to millions of new customers, they will also be facing higher costs as less healthy individuals are absorbed into the system. To help lessen the impact of this additional cost, the ACA created the Transitional Reinsurance Program. This program will provide temporary assistance to insurance companies to help mitigate cost increases associated with insuring people who have pre-existing conditions.

The Transitional Reinsurance Program is funded by a fee imposed on health insurance companies for three years based on the number of people they cover. Because the fee is based on the total number of individuals covered, rather than number of policy holders, the fee is said to be assessed for each “belly button.” In the first year, the fee will be $63 per individual and in the second year, $44 per individual. While the third year is yet to be set, the law dictates that the tax amount would decrease from the second-year amount.

While large insurance companies will be able to pay this fee from the increased revenue they receive from their new customers, many observers believe that “self-insured plans”—which cover a smaller pre-defined group—will be adversely impacted by the fee. Because self-insured plans, including those managed by unions and local governments, will not be gaining new customers under the ACA they will in effect be subsidizing large insurance providers.

To address this problem, organized labor and others who sponsor these health plans have argued that the fee should be eliminated, delayed or at the very least that self-insured plans should be simply exempt from the tax. In response to this effort, the Obama Administration delayed the fee for plans that are both self-insured and self-administered. This fix would only benefit a small number of self-insured plans, but Administration officials claim that any further relief would require Congress to change in the law.

CURRENT LEGISLATION

U.S. House:           H.R. 3489, legislation to repeal the funding mechanism for the Transitional
                             Reinsurance Program

                             Sponsors:       Representative Patrick Tiberi (R-OH)
                                                    Representative Dan Lipinski (D-IL)   

                                                    View Cosponsors Here                                       

Summary:             H.R. 3489 would repeal the Reinsurance Fee.

CONGRESSIONAL ACTION

On November 14, 2013, H.R. 3489 was introduced in the U.S. House of Representatives and referred to the House Committee on Energy and Commerce.


 


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