Taxes and Fees
The Affordable Care Act imposes new taxes and fees designed to fund many of the health care system changes. Many directly impact employer groups and health insurance companies like Health Net.
Analysis
This annual fee will fund premium subsidies for the health insurance marketplaces and Medicare expansion. It applies to health insurers, health maintenance organizations and entities providing insurance under government programs (e.g., Medi-Cal).
| Provision | Effective date | Applicable to | Impact | Products affected |
|---|---|---|---|---|
Health insurance tax is an annual fee to help fund premium subsidies for the health insurance exchanges and Medicaid expansion. |
January 1, 2014, and beyond |
Insured plans, including health insurers, HMOs and plans providing insurance under government programs such as Medicaid, Medicare Advantage and Medicare Part D. |
The fee is based on the net premiums written during the preceding calendar year (for example, the tax due in 2014 will be based on the net premiums written in 2013). |
All “covered entities,” which include any entity providing health insurance for any U.S. health risk, including medical, dental, vision, behavioral health, and pharmacy plans, the Federal Employees Health Benefit plan, and Medicare Advantage and Part D prescription plans. Examples of entities and plans exempted from the fee: self-insured groups, governmental entities, Medicare Supplement plans, specific disease insurance, hospital-only indemnity insurance, and long-term care insurance. |
Transitional Reinsurance Risk Pool Assessment Fee is an annual fee that will support the transitional reinsurance program established by each state. The intent of the program is to help stabilize premiums and minimize the effects of adverse selection in the individual exchange market.
|
January 1, 2014, through 2016 |
Insured plans and self-insured plans2 |
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These fees apply to commercial insured and self-insured plans, including grandfathered and non-grandfathered plans. Excludes standalone dental and vision plans, Medicare Advantage and Medicare Part D plans, Medicare Supplement plans, Medicaid, and CHIP plans. |
Patient-Centered Outcomes Research Institute (PCORI) fees will fund the Patient-Centered Outcomes Research Institute which was established as part of ACA to provide key information that will directly benefit patients by helping them make better health care decisions. Tasked with researching the effectiveness of medical treatments – and the associated risks and benefits – the intent of PCORI’s research is to help improve health care delivery outcomes by helping patients gain a better understanding of the care options available to them, as well as the science supporting those options. |
October 1, 2012, through September 30, 2019 |
Insured plans and self-insured plans |
The total amount to be collected across all health insurers and self-insured plans is based on each plan’s average number of covered lives:
|
These fees apply to commercial insured and self-insured plans, including grandfathered and non-grandfathered plans. |
1In the state of Oregon, an additional Oregon Reinsurance Fee has also been considered (estimated $4.00 per member per month).
2In December 2013, HHS proposed regulations that would exempt self-insured group health plans from the reinsurance contributions in 2015 and 2016. This exemption does not apply to self-insured plans that use third-party administrators (TPAs) for adjudication, claims adjustment, processing, communication, and other core administrative functions.
Impact to Health Net employer groups
Health Net is making the necessary adjustments to new business and renewal rates. Health Net's allocation of ACA-related fees to a client group's final premium will vary by group based upon the anniversary date of the policy and any differences between initial proposed and final sold rates/plan design.
Since the policy periods for new and renewal business may include revenue and enrollment from two different calendar years, Health Net has elected to prorate, or smooth, the Health Insurance and Reinsurance Contribution fees over the full 12-month policy period by applying a constant load factor for these fees over the 12-month period. This proration, or smoothing, eliminates the need for off-cycle rate changes and stabilizes contributions and plan selections for the group and enrollees.
In the event additional federal or state legislative guidance or regulatory requirements emerge that result in a modification of the estimated impact of the benefit mandates, taxes or fees, Health Net reserves the right to further adjust its premium schedule.
