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With talk beginning in the new Congress of a repeal of President Barack Obama's Affordable Care Act (ACA), the US Chamber of Commerce (USCC) has urged the immediate elimination of the health insurance tax (HIT) as an immediate necessity.
Beginning in 2014, the ACA provided for the HIT to be assessed on all health insurance providers (referred to as covered entities). The Internal Revenue Service calculates the tax amount for each covered entity based on its portion of market premiums for the data year, which is the year immediately preceding the year in which the tax is payable.
Although the Protecting Americans from Tax Hikes (PATH) Act, approved at the end of 2015, suspended the tax for 2017, the USCC pointed out that, without its immediate repeal, the HIT "will start hitting premiums again as early as February. As small businesses and consumers begin enrolling in health insurance coverage for 2018, they will begin paying premiums which include this tax. Insurance policies that provide coverage into calendar year 2018 will factor this tax into premiums."
The Chamber also noted that, according to previous analysis, "the HIT is a middle class tax. … The average family will pay an additional USD5,000 over 10 years in extra premiums because of the HIT."
Further, it added that "84 percent of the tax burden for the four-year period from 2014-2018 would be borne by those earning less than USD100,000 per year and more than 50 percent of the tax burden would be borne by those earning less than USD50,000 per year."
"The HIT is a tax on health plans sold in the fully-insured market, 86 percent of these plans are purchased by small businesses," the USCC continued. "Since they bear much of the brunt of the tax, many small business owners feel they're being punishing for offering health insurance to their employees."
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