The Department of Health and Human Services announced the price of health insurance for Florida’s small businesses, and needlessly adding to that price is a tax on health insurance that individuals and small businesses purchase. If you have health insurance, you will be paying this new tax created to partially fund the Patient Protection and Affordable Care Act, and taxes on your health insurance will increase approximately 2 to 2.5 percent beginning on Jan. 1, 2014.
This sounds bad, but it’s even worse.
The tax will be assessed on almost all health insurance policies, individual policies, small group policies, Medicare advantage policies for seniors and Medicaid managed care policies for the needy. It will be collected by your health insurance company, and paid by employers, employees, and their families. The only group that escapes the tax are large corporations who are able to self-insure their health insurance.
Modest taxes on insurance premiums are a traditional state revenue source. Florida has had a premium tax for over 60 years.
Forty-six other states depend on some form of an insurance premium tax to fund their states. In Florida, through responsible state management, the insurance premium tax has been kept low at 1.75 percent – far lower than the feds’ opening bid of 2 to 2.5 percent.
The new federal insurance premium tax is a “stacked” tax. You will pay the new federal tax on your insurance premium, and on the amount of state premium taxes you already pay. But, Gov. Rick Scott and the Florida Legislature can help.
With a projected budget surplus in excess of $500 million, Gov. Scott is pursuing ideas to cut taxes and fees to help Floridians, and we think offsetting the impending impact of PPACA is a great place to start.
And, it is within the state Legislature’s capacity to take action to mitigate the increased health insurance costs that the Affordable Care Act creates.
They can cut the state premium tax on health insurance policies. This would indeed offset PPACA’s tax increase, helping bring down health care costs and ensuring that small-business owners aren’t double burdened by high health insurance costs at both the state and federal levels.
But remember, reducing the state premium tax wouldn’t just help small businesses – it would help nearly all Floridians. The HIT tax will entirely be passed on to consumers in the fully insured marketplace, where almost all business owners, employees and their families secure their health insurance coverage, jeopardizing reasonable healthcare costs for all of Florida’s citizens.
So, as the governor and the Legislature continue to hear what I’m sure will be a long list of great ideas to cut taxes and fees, they should prioritize mitigating the impact of Florida’s rising health insurance costs by eliminating the state premium tax on health insurance policies for Florida’s small businesses, their employees, and their families.
I implore them to soften the blow of PPACA-driven health insurance cost increases on Floridians.
Jerry Pierce is chairman of the National Federation of Independent Business, Florida’s leading small-business association.