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The IRS has released Notice 2019-50, which outlines the Applicable Fee amount for the 2020 tax year. This is the fee to be charged to health insurance providers under Section 9010 of the ACA as the IRS continues to enforce the provisions of the health care law.
The 2020 fee of $15,522,820,037 is a fixed amount that is allocated to health insurers in proportion to their relative market share as determined by each health insurers’ net premiums written for 2019. The fee was suspended for the 2017 and 2019 tax years by Congress, but was applied to health insurers in 2016 and 2018.
This health insurance industry fee was included in the ACA to fund government marketplace exchanges. Congress suspended the fee in 2019 because it was concerned that the tax would increase insurance premiums and costs for consumers. It’s unclear if Congress will suspend the fee for 2020. A post by Modern Healthcare asserts that there is no plan to put the fee on hold for 2020.
The IRS stated in the notice that the methodology used for determining the premium adjustment percentage for the 2020 tax year is new. The methodology is based on a measure provided by the Department of Health and Human Services (HHS) that captures increases in individual market premiums and employer sponsored insurance premiums.
More details on the fee, the methodology for calculating it, and who it applies to can be found in the official notice. You can read it here.
