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IRS Final Regulations Require Electronic Filing for Annual Health Insurance Providers Fee



Electronic Filing of the Report of Health Insurance Provider Information, 26 CFR Part 57, 84 Fed. Reg. 61547 (Nov. 13, 2019)

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The IRS has finalized regulations on the health insurance providers fee, requiring electronic filing of Form 8963 (Report of Health Insurance Provider Information). As background, the Affordable Care Act imposes a fee on any entity engaged in the business of providing health insurance based on “net premiums written” with respect to United States health risks—including health insurers, but not self-insured health plans and certain other entities. Form 8963 is the IRS’s primary source of premium information, allowing the IRS to calculate each insurance provider’s proportionate share of the aggregate fee for the year, which is over $15.5 billion for 2020 (see our Checkpoint article). These regulations were proposed in December 2016, along with a separate set of since-finalized regulations clarifying how “net premiums written” are determined (see our Checkpoint article). The proposed regulations are adopted with no substantive change other than the applicability date.

The electronic filing requirement will begin in the 2020 fee year because the fee will not be collected in 2019. (The fee was suspended for 2019 but, absent legislative action, will apply again for the 2020 calendar year (see our Checkpoint article).) The rule is expected to affect primarily larger entities because the electronic filing requirement is only imposed if the filer must report more than $25 million in net premiums.

EBIA Comment: This new rule will primarily interest health insurers since the annual health insurance providers fee is not assessed directly against employer plan sponsors (although it may affect premiums paid by employers sponsoring insured plans). The fee does not apply to self-insured health plans. For more information, see EBIA’s Health Care Reform manual at Section XXXVI.K (“Annual Fee on Health Insurance Providers”) and EBIA’s Self-Insured Health Plans manual at Section IV (“Why Self-Insure?”).

Contributing Editors: EBIA Staff.