State directs health insurers to refile lower group rates

CRANSTON – Responding to recent Congressional legislation suspending collection of a major health care tax, the Office of the Health Insurance Commissioner (OHIC) announced today that they have instructed Rhode Island’s commercial insurers to amend premium rates for employer-based plans to immediately realize savings for business owners.

Collection of the Health Insurance Tax (HIT) was anticipated in 2019, but a spending bill enacted by Congress earlier this year imposed a moratorium on collection of the tax until 2020. Because small and large group plan renewals occur throughout the year, the HIT was included in previously approved rates for businesses who renew coverage in 2018 that would carry over into 2019.

“Rather than allowing health insurers to collect the tax on all business plans that carry over into 2019, OHIC has directed insurers to immediately submit amended large group and small group rates for businesses that renew in the latter part of 2018, so that we can provide more immediate rate relief to some of Rhode Island’s employers,” Health Insurance Commissioner Marie Ganim said.

Preliminary estimates suggest these actions could result in approximately $1.8 million in total savings to be realized across up to 1,800 small businesses (with 2 to 50 employees) in Rhode Island. On average, each small business that is impacted by this change could see roughly $1,000 in savings.

For small groups renewing in quarters 1 through 3 of 2018 (January through September), OHIC will deduct the tax paid in 2019 from the 2020 tax estimates during the rate review process beginning next month.

Insurers have already begun calculating this tax savings into the rates for some large group purchasers. OHIC will ensure that large group premium rates appropriately reflect the suspended tax.

Because individual plans are issued during open enrollment and line up with the calendar year, no 2018 rates will be amended for this purpose. For individual market plans, suspension of the tax will be reflected in 2019 rates, to be submitted for OHIC approval by insurers next month.