IRS Notice 2019-50 (Sept. 3, 2019)
Available at https://www.irs.gov/pub/irs-drop/n-19-50.pdf
The IRS has issued Notice 2019-50, establishing for 2020 the “applicable amount” for purposes of the health insurance providers fee under the Affordable Care Act (ACA). The fee is imposed on any entity engaged in the business of providing health insurance—including health insurers, but not self-insured group health plans or certain other entities. The applicable amount, which is the aggregate fee for the year determined according to the statute and related regulations, is allocated among the entities subject to the fee. The fee payable by an entity is determined according to the entity’s proportionate share of the applicable amount based on its net premiums written for U.S. health risks for the previous calendar year. The fee was suspended for 2019 but, absent legislative action, will apply again for the 2020 calendar year (see our Checkpoint article).
The notice explains that, for 2014 through 2018, the applicable amount is set forth in ACA § 9010. For calendar years after 2018, the applicable amount is the applicable amount for the preceding calendar year increased by the premium growth rate, which (beginning with 2020) is determined using premium growth measures set forth in the annual Notice of Benefit and Payment Parameters (see our Checkpoint article). According to the notice, the methodology used to determine the 2020 applicable amount implicitly takes into account data that would have been used to determine the 2019 applicable amount had the fee not been suspended for that year. The 2020 applicable amount is $15,522,820,037.
EBIA Comment: The IRS calculates each entity’s proportionate share of the fee using information reported by the entity on Form 8963 (see our Checkpoint article). Even though the fee is not directly assessed against plan sponsors, it affects premiums paid by employers that sponsor insured plans. For more information, see EBIA’s Health Care Reform manual at Section XXXVI.K (“Annual Fee on Health Insurance Providers”).
Contributing Editors: EBIA Staff.