The legislation would eliminate a fee on health insurance companies scheduled to take effect when the law goes into full effect next year. The fee, commonly referred to as the health insurance tax (HIT tax), will be calculated based on the plans insurers sell directly to individuals and companies, known as the fully insured market, and excludes plans set up and managed by firms themselves, called the self-insured market.
Most large companies self-insure their employees; consequently, experts warn that insurance firms will pass the added costs of collecting the fee to small businesses, which tend to purchase coverage in the fully insured market.
“It’s pretty straightforward, what’s going to happen, that the tax is going to be passed along,” Rep. Jim Matheson (D-Utah) said in an interview, noting that insurance agents and underwriters have told him as much. “It isn’t really taxing the insurance companies, it’s taxing the people paying the premiums, and in this case, that’s small business owners.”