With the implementation of the Affordable Care Act (ACA) over the next few years there are going to be several new fees for both health insurers and employers sponsoring self-insured health plans that go into effect.
A recent Human Resource Services Insight from PricewaterhouseCoopers (PwC) outlines what these new fees going into effect in 2013 and 2014 are and how they will impact insurers and many employers going forward.
[See also: PwC report points to need for new healthcare payment models]
According to the report, the new fees will be based on the average number of individuals covered under a health insurance plan or policy, which also includes an employee's dependents.
One fee will help fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the ACA to research comparative clinical effectiveness aimed at advancing the quality and relevance of evidence-based medicine and improving the value of healthcare, said Amy Bergner, managing director at PwC and one of the authors of the report.
For the PCORI fees, insurers will pay and file returns with the IRS for each person insured in one of their health plans and employers will file the returns and pay the fees for their self-insured plans. According to Bergner, the fee will be $1 per person in the plan or policy for the first year ending on or after Oct. 1, 2012. The fee will then increase by $2 per person for the next six years with medical cost inflation rates built in, she said.
"The idea of this fee is that those individuals covered by health insurance plans will benefit directly and indirectly by the research done at PCORI," said Bergner. "It will be a modest increase in costs but also a slight administrative burden due to the fact that insurers and employers will have to report to the government how many individuals they are covering under their health plans."
[See also: PwC report shows hospitals saw increased employee turnover]
The second fee, called the transitional reinsurance fee, will be imposed in 2014, 2015 and 2016 to find temporary reinsurance to help stabilize premiums in the individual market once exchanges are up and running and the ACA's insurance market reforms take effect.
According to Bergner, the temporary reinsurance fees are aimed primarily at raising funds to help insurers covering high-risk individuals buying health insurance during the first three years of the insurance market reforms and exchanges. The program will collect contributions from insurers and self-funded group health plans of $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016, plus a fee for administrative expenses. Bergner said this fee will be due at the end of 2014 and is estimated to be approximately $63 per covered person.
"In order to help keep the costs of insurance fees getting too high due to increased claims from more insured people, there's a way to spread high costs to a bigger group of people, which is the point of this fee," said Bergner. "This will help health insurance premiums stay lower."
Bergner said that in addition to budgeting ahead of time for these new fees, insurers and employers will want to make sure the correct administrative processes are in place in order to comply with the fees and not incur penalty fees.
[See also: PwC names top 10 healthcare issues for 2012]