---
kind: "section"
citation: "26 U.S.C. § 4375"
title: "26"
title_heading: "Internal Revenue Code"
number: "4375"
heading: "Health insurance"
release: "119-102"
url: "https://uscodex.org/usc/26/4375"
units:
  - "Subtitle D — Miscellaneous Excise Taxes"
  - "Chapter 34 — Taxes on Certain Insurance Policies"
  - "Subchapter B — Insured and Self-Insured Health Plans"
---

# §4375. Health insurance

- (a) **Imposition of fee—** There is hereby imposed on each [specified health insurance policy](#c-1) for each policy year ending after September 30, 2012, a fee equal to the product of $2 ($1 in the case of policy years ending during [fiscal year](/usc/26/7701.md?p=a-24) 2013) multiplied by the average number of lives covered under the policy.
- (b) **Liability for fee—** The fee imposed by [subsection (a)](#a) shall be paid by the issuer of the policy.
- (c) **Specified health insurance policy—** For purposes of this section:
  - (1) **In general—** Except as otherwise provided in this section, the term “specified health insurance policy” means any accident or health [insurance policy](/usc/26/4377.md?p=a-2) ([including](/usc/26/7701.md?p=c) a policy under a [group health plan](/usc/26/9831.md?p=d-1)) issued with respect to individuals residing in the [United States](/usc/26/4377.md?p=a-3).
  - (2) **Exemption for certain policies—** The term “[specified health insurance policy](#c-1)” does not include any insurance if substantially all of its coverage is of excepted benefits described in [section 9832(c)](/usc/26/9832.md?p=c).
  - (3) **Treatment of prepaid health coverage arrangements—**
    - (A) **In general—** In the case of any arrangement described in [subparagraph (B)](#c-3-B), such arrangement shall be treated as a [specified health insurance policy](#c-1), and the [person](/usc/26/4377.md?p=b-1-A) referred to in such subparagraph shall be treated as the issuer.
    - (B) **Description of arrangements—** An arrangement is described in this subparagraph if under such arrangement fixed payments or premiums are received as consideration for any [person](/usc/26/4377.md?p=b-1-A)’s agreement to provide or arrange for the provision of accident or health coverage to residents of the [United States](/usc/26/4377.md?p=a-3), regardless of how such coverage is provided or arranged to be provided.
- (d) **Adjustments for increases in health care spending—** In the case of any policy year ending in any [fiscal year](/usc/26/7701.md?p=a-24) beginning after September 30, 2014, the dollar amount in effect under [subsection (a)](#a) for such policy year shall be equal to the sum of such dollar amount for policy years ending in the previous [fiscal year](/usc/26/7701.md?p=a-24) (determined after the application of this subsection), plus an amount equal to the product of—
  - (1) such dollar amount for policy years ending in the previous [fiscal year](/usc/26/7701.md?p=a-24), multiplied by
  - (2) the percentage increase in the projected per capita amount of National Health Expenditures, as most recently published by the [Secretary](/usc/26/7701.md?p=a-11-B) before the beginning of the [fiscal year](/usc/26/7701.md?p=a-24).
- (e) **Termination—** This section shall not apply to policy years ending after September 30, 2029.

## Source credit

(Added Pub. L. 111–148, title VI, § 6301(e)(2)(A), Mar. 23, 2010, 124 Stat. 743; amended Pub. L. 116–94, div. N, title I, § 104(b), Dec. 20, 2019, 133 Stat. 3098.)

## Notes

### Editorial Notes

### Amendments

2019—Subsec. (e). Pub. L. 116–94 substituted “2029” for “2019”.