Lawmakers Push Health Insurance Premium Tax
State Democratic lawmakers are proposing a new tax on health insurance premiums modeled on a now repealed component of the federal Affordable Care Act.
The proposed tax will drive up costs for employers by hundreds of dollars per employee annually, further hampering pandemic recovery efforts.
Advocates want to fund a package of proposed health insurance changes, including subsidies for residents who currently earn too much to qualify for federal subsidies through the state exchange.
The federal health insurance tax was a significant driver of healthcare costs under the ACA, raising the cost of fully insured plans by 1.5% to 3%.
The HIT was repealed in 2019 as part of the federal budget bill.
Premium rates filed by carriers and approved by the Connecticut Insurance Department now do not reflect the federal HIT charge, with subsequent cost-savings for consumers in 2021.
However, with Connecticut lawmakers looking to reinstate the HIT at the state level, premium costs will rise for those who purchase coverage through the fully insured group market and Access Health CT.
A study conducted by the actuarial consulting firm Oliver Wyman illustrates the burden the HIT placed on fully insured small and large employers.
For example, the study shows that if the HIT was renewed for 2020, fully insured small businesses owners and their employees would have seen an additional $479 premium hike for family coverage.
Fully insured large employers and their employees would have seen a premium increase of $458 for family coverage.
Additionally, individual health insurance premiums would have jumped by $196 annually.
Subsidies, Medicaid Expansion
While state lawmakers want to use the tax for increased subsidies, there are no plans to also reduce premiums for employers in the small or large group markets.
According to the Kaiser Family Foundation, 103,955 Connecticut residents bought health insurance through the individual marketplace in 2020 and 70% received advanced premium tax credits.
Democratic lawmakers hope to apply the revenue generated from the HIT to fill that 30% coverage gap and make the marketplace more attractive for higher earners who otherwise wouldn’t qualify for assistance.
Legislators also want to increase the qualifying earning threshold for Husky Part A.
Currently, parents and caregivers qualify for Part A coverage if they earn at or below 160% of the federal poverty level.
Lawmakers want to increase this qualifying threshold to 201% of the federal poverty level. By expanding the earning threshold, they say that Husky will be available to thousands of additional claimants.
Building on a bill introduced by the Human Services Committee two years ago, lawmakers also want to extend Husky coverage to undocumented residents.
While the cost of extending coverage to the more than 116,000 undocumented residents is unknown, the bill considered previously had a $52.6 million impact to the state in the first year of operation.
EXPLORE BY CATEGORY
Stay Connected with CBIA News Digests
The latest news and information delivered directly to your inbox.