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October 18, 2013

Delaying the Reinsurance Tax Provision Has Been Removed From Legislation

Congress was looking to delay the reinsurance tax, a $63 tax on every health insurance plan enrollee on the marketplace which is collected and used to help insurers in the individual marketplace with high cost cases that reach beyond the catastrophic case fund and would reimburse them for 80% of costs for claims between $60,000-$250,000 per person. The reinsurance tax would help smooth the transition of million of insurers on the individual marketplace and keep insurance affordable. Since the marketplace is a new phenomenon, there are concerns that there will not be a balance between healthy individuals. Without the tax, premiums could increase by 10-15%. The reinsurance tax is only available to insurers in the individual marketplace.

Successful passing of the bill would have caused a delay in the collection of the reinsurance tax for at least one year. However, this provision was stripped from the bill, and the reinsurance tax will still be implemented.