During the government shutdown, there was a lot of talk about the Affordable Care Act, specifically the Act’s Reinsurance Tax, which would provide relief to insurers which cover large numbers of high-cost medical cases. In their proposal to open the government, members of the Senate included a one year delay in the tax's implementation. Even though the federal government opened last week, both houses are still negotiating the fine details of their compromise. While we all wait for Congress, MBR explains what the Reinsurance tax is.

The ‘reinsurance’ tax is a $63 tax assessed on nearly every health insurance plan for the next three years. The money raised by the federal government will be pooled and used to help insurers in the individual market to cover up to 80% of the costs of certain high-cost cases, typically the ones that fall between $60,000 and $250,000 per person. The tax was one of several provisions in the 2010 health care law that was intended to smooth the transition of millions of Americans into the individual market while attempting to keep insurance affordable. Enrollees in the individual market historically tend to be sicker and, therefore, cost more than enrollees in other plans. Without the reinsurance tax, individual market premiums would be about 10-15% higher, according to the Department of Health and Human Services, due to insurers’ concern that not enough healthy people would enter the individual marketplace.  This tax is expected to collect around $25 billion in total over three years.