n-19-50.pdf

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Part III – Administrative, Procedural, and Miscellaneous

Health Insurance Providers Fee; Procedural and Administrative Guidance

Notice 2019-50

SECTION 1. PURPOSE

This notice provides the Applicable Amount for the fee imposed by Section 9010
of the Patient Protection and Affordable Care Act (PPACA) for the 2020 fee year.
SECTION 2. BACKGROUND
Section 9010 of the PPACA, Public Law 111-148 (124 Stat. 119 (2010)), as
amended by Section 10905 of PPACA, and as further amended by Section 1406 of the
Health Care and Education Reconciliation Act of 2010, Public Law 111-152 (124 Stat.
1029 (2010)), imposes an annual fee on covered entities engaged in the business of
providing health insurance for United States health risks. The fee is a fixed amount
(Applicable Amount) allocated among all covered entities in proportion to their relative
market share as determined by each entity’s net premiums written for the data year,
which is the year immediately preceding the year in which the fee is paid (the year in
which the fee is paid is the fee year). Section 4003 of Division D—The Suspension of
Certain Health-Related Taxes enacted on January 22, 2018, Public Law 115-120 (132
Stat. 38), suspended the fee for 2019. Absent legislative action, the fee will resume in
2020.

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Section 9010(e)(1) provides the Applicable Amount for calendar years 2014
through 2018. The Applicable Amount for the 2018 fee year was $14,300,000,000.
Section 9010(e)(2) provides that in the case of any calendar year beginning after 2018,
the Applicable Amount shall be the Applicable Amount for the preceding calendar year
increased by the rate of premium growth (within the meaning of § 36B(b)(3)(A)(ii) of the
Internal Revenue Code).
Section 36B(b)(3)(A)(ii) generally provides that certain amounts are adjusted
annually to reflect the excess of the rate of premium growth over the rate of income
growth for the preceding calendar year. Sections 1.36B-2(c)(3)(v)(C) and 1.36B-3(g) of
the Income Tax regulations provide that the amounts may be further adjusted to reflect
updates to the data and data sources used to compute the ratio of premium growth to
income growth. The amounts are computed using a premium adjustment percentage
provided in guidance issued by the Department of Health and Human Services (HHS).
For years prior to 2020, the rate of premium growth was based on per enrollee spending
for employer-sponsored insurance as published in the National Health Expenditure
Account (NHEA). However, in the 2020 Notice of Benefit and Payment Parameters, 84
FR 17454 (April 25, 2019), HHS provided a new premium growth measure beginning in
calendar year 2020 that captures increases in individual market premiums in addition to
increases in employer-sponsored insurance premiums for purposes of calculating the
premium adjustment percentage for the 2020 benefit year and beyond. With this notice,
the Department of the Treasury and the Internal Revenue Service adopt the new
premium growth measure provided in the 2020 Notice of Benefit and Payment

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Parameters for purposes of determining the Applicable Amount for the fee imposed by
Section 9010.
SECTION 3. METHODOLOGY
.01 Premium growth. The measure of premium growth for a calendar year is the
premium adjustment percentage. For 2020, the premium adjustment percentage is
calculated as the difference between the percentage (if any) by which the most recent
National Health Expenditure Accounts (NHEA) projection of per enrollee premiums for
private health insurance (excluding Medigap and property and casualty insurance) for
the preceding calendar year, 2019 ($6,436), exceeds the most recent NHEA estimate of
per enrollee premiums for private health insurance (excluding Medigap and property
and casualty insurance) for 2017 ($5,929), the year preceding the last year that the
Applicable Amount was provided by statute (2018, the base year), carried out to 10
significant digits. This method implicitly takes into account the premium growth from
2017-2018 as well as 2018-2019, thereby reflecting updates to the data and data
sources that would have applied to compute the Applicable Amount for the 2019 fee
year if the fee had not been suspended for that year. Using this formula, the premium
adjustment percentage for 2020 is 1.0855118907.
.02 Applicable Amount. The 2020 Applicable Amount is determined by
multiplying the fee for the 2018 base year (14,300,000,000) by the premium adjustment
percentage for 2020 (1.0855118907), rounded to the nearest dollar.
SECTION 4. GUIDANCE FOR FEE YEAR 2020
The 2020 Applicable Amount is $15,522,820,037.
SECTION 5. APPLICABILITY DATE

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This notice applies to the 2020 fee year.
SECTION 6. DRAFTING INFORMATION
The principal author of this notice is Rachel S. Smith of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding
this notice, please contact Ms. Smith at (202) 317-6855 (not a toll-free call).