New legislation aims to stop impending health insurance tax

November 28, 2011 by Christian Schappel

After flying under the radar since the passage of healthcare reform, one of the law’s mandates recently sparked a huge controversy and a new piece of legislation. 

The reform law’s health insurance tax (HIT) is slated to take effect in 2014. It is a requirement that health insurance companies pay a tax on premiums written in the fully-insured market.

A new bill introduced in the Senate, The Jobs and Premium Protection Act, would repeal the HIT tax.

Opponents of the HIT have said it’s actually a tax on businesses, claiming insurance companies will simply pass the tax along to those purchasing fully-insured health plans — primarily small businesses.

A release on the website of Senator John Barrasso (R-WY), who helped introduce the bill, says 87% of small businesses purchase insurance in the fully-insured market, as do the self-employed and uninsured — and those are the three groups who will be hit hardest by the tax.

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