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Press Release


Bill Would End Reinsurance Fee, Strengthen Access to Employer-Sponsored Health Care

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Washington, November 14, 2013 | comments

U.S. Congressmen Pat Tiberi (R-OH) and Daniel Lipinksi (D-IL) today introduced, H.R. 3489, a bill that would repeal the health care law’s reinsurance fee, often known as the “belly button tax.” The tax is intended to cover the administration’s reinsurance program, which provides payments to insurance companies to help offset high-cost enrollees. In 2014, the tax amounts to a $63 fee per health insurance recipient and is estimated to affect 190 million Americans. The three-year reinsurance program is funded at $25 billion.


“This covers every health insurance recipient, not just the policy holder. It’s a fee faced by every one that provides health insurance and they will most certainly pass on the cost to their employees and customers when they can,” said Congressman Tiberi, Chairman of the Ways and Means Subcommittee on Select Revenue Measures. “It’s simply outrageous that employers will be forced to pay the tax while they will get nothing in return from the program.”


“The majority of Americans with medical insurance purchase healthcare plans through their employers. The transitional reinsurance fee, the so-called ‘belly-button tax,’ would only discourage employers from continuing to offer this vital benefit to their workers,” Rep. Lipinski said. “Our bipartisan bill will protect workers from having their healthcare costs increased and prevent penalizing employers from having to pay millions of dollars in burdensome fees.”   


The punitive fee, set to begin in 2014, has a negative impact on access to employer-sponsored health care. Employers are the largest source of health insurance coverage in the United States. Of those employed, 70 percent receive employment-based health insurance, while 30 percent of unemployed Americans receive employer-sponsored health insurance. The tax has serious implications on decisions to offer employer-sponsored coverage moving forward as it is expected to cost many employers millions of dollars. In fact, some employers have already dropped coverage for some spouses, citing this fee as a reason. Employer-based coverage should be supported so Americans can sustain access to quality affordable coverage.


There has been an outcry from large and small employers across the country and even the Obama administration has recognized the negative effects of this tax. The Department of Health and Human Services announced its intention to propose an exemption from the fee for “certain self-insured, self-administered plans” for the 2015 and 2016 benefit years. However, reports have indicated that employers and even labor unions have voiced concern over the narrow-scope of the exemption since many plans are administered by third-parties.


“The administration’s intention is too little, too late. A delay or exemption does not change the fact that the overwhelming majority of employers will still have to pay this tax. At a time when so many families are losing the insurance they have and like, we need to provide stability and security, not provide another incentive for employers to discontinue their coverage,” added Congressman Tiberi.


The Tiberi-Lipinski bill has received support from labor groups, large employers, and small businesses, including the American Benefits Council, Corporate Health Care Coalition,
National Retail Federation, the Business Roundtable, the National Association of Manufacturers, and the International Union of Operating Engineers. [See Attached List]



Organizations that support the Tiberi-Lipinski Reinsurance Fee Repeal:


American Benefits Council

Business Roundtable

Corporate Health Care Coalition

ERISA Industry Committee

Food Marketing Institute

International Association of Machinists & Aerospace Workers

International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths,

Forgers, and Helpers

International Franchise Association

International Union of Operating Engineers

Laborers International Union of North America

National Association of Manufacturers

National Business Group on Health

National Electrical Contractors Association

National Restaurant Association

National Retail Federation

Retail Industry Leaders Association

Self-Insurance Institute of America

Sheet Metal and Air Conditioning Contractors’ National Association

Transportation Communications Union