$421 million in taxes increases premiums

Most Minnesotans don’t realize that health care premium taxes make up nearly 11 to 12 percent of an individual’s and  small employer’s health insurance premium.

Health care taxes are hidden. Most Minnesotans who pay these taxes and don’t even know they exist. The chart below shows most of Minnesota’s small employers, farmers and other individuals pay three times more in health insurance taxes than large employers that are exempt from most state health insurance taxes under federal law.

Public support for health care programs is important and has contributed to Minnesota having one of the lowest uninsurance rates in the country. However, it is unfair that smaller employers and individuals pay four to five times more in premium taxes than large employers do to fund these programs.

Health care premium taxes are the largest component of health plan administrative costs. In 2014, Minnesotans paid $421.4 million in health care premium taxes and assessments.





 Tax and purpose  2014 amount paid
Minnesota Comprehensive Health Association (MCHA) assessment, paid for care not covered by premiums for the state’s high risk pool. This tax ends in 2016.  $98.2 million
Premium tax on insurance company products. This money goes into the state’s General Fund.  $68.7 million
MinnesotaCare premium tax goes into the state’s Health Care Access Fund to help fund MinnesotaCare.  $65 million
MA Surcharge, helps fund the state’s Medical Assistance program. $32.6 million
MNsure withhold, helps fund the state’s health insurance exchange. This tax is new in 2014.  $1.9 million
Affordable Care Act Comparative Effectiveness Fee to help fund the national Patient-Centered Outcomes Research Institute. This tax is new in 2014.  $3 million
Affordable Care Act Federal Reinsurance Fund Fee to help pay some of the cost for individuals in the new Individual Market who need very expensive health care. This tax is new in 2014.  $74.1 million
Affordable Care Act Federal Industry Tax to help pay for federal health care reform. This tax is new in 2014.  $93.7 million