On September 3, 2019, the IRS issued the adjusted aggregate (applicable) amount for use in calculating health insurance provider annual fees under Section 9010 of the Patient Protection and Affordable Care Act (PPACA) (Notice 2019-50). Using a modified method for determining the fee, the IRS determined that the applicable amount for 2020 is $15,522,820,037.

PPACA Section 9010 (as amended) imposes an annual fee on covered entities engaged in the business of providing health insurance for US health risks. The annual fee is a fixed amount (referred to as the "applicable amount") that is allocated among Section 9010 health insurance providers based on each provider's relative market share. An insurer's fee reflects the insurer's net premiums written for the preceding year (see Practice Note, Expatriate Health Plans Under EHCCA and the ACA: Exemption from ACA Section 9010 Annual Fees on Health Insurance Providers).

Section 9010 annual fees are generally calculated by determining the ratio of:

This ratio is then applied to the applicable amount. Section 9010 included the applicable amounts for the 2014 through 2018 fee years; the applicable amount for 2018 was $14,300,000,000. After 2018, the applicable amount is the prior year's applicable amount multiplied by the rate of premium growth.

Although Section 9010 fees were suspended for 2017 and 2019, the fees will once again be imposed in 2020 – absent legislative action. (Regarding the 2019 suspension, see Legal Update, Government Funding Legislation Delays Cadillac Plan Tax Until 2022: Suspension of ACA Section 9010 Fees.)

The 2020 applicable amount reflects a recent change in how the underlying rate of premium growth is determined. For years before 2020, the rate was based on per individual spending for employer-sponsored insurance as published by the National Health Expenditure Account (NHEA). The new method was:

For 2020 and going forward, the new method reflects individual market premiums in addition to changes in employer-sponsored insurance premiums. Using this new method, the IRS determined that the Section 9010 applicable amount for 2020 is $15,522,820,037.

As the IRS notes, Section 9010 fees will apply for 2020 unless legislation is enacted to once again prevent the fee from being collected. It remains to be seen whether Congress will take up such legislation for 2020, though there is a precedent for doing so.