One of the funding mechanisms for the health insurance exchanges is the implementation of the health insurer fee that will go into effect in 2014. I’ve seen this referred to as a health insurance provider fee (a bit confusing as it might lead people to believe that the fee is imposed on medical providers rather than insurers), a health insurance industry fee, and an ACA health insurance carrier fee, among others. But whatever you want to call it, the fee is an amount that will be collected from health insurance carriers starting next year, and the funds will be used to help pay for the state and federal health insurance exchanges.
The fee will generate $8 billion in 2014, and will increase each year up to $14.3 billion in 2018. After that, it will increase annually in line with health insurance premiums. Insurance carriers will be responsible for remitting their share of the fee, which is calculated based on the insurer’s total collected premiums from the prior year.
As is generally the case with any new fees or mandates that increase costs for insurance companies, this fee will be passed on to companies and individuals who purchase policies. However, it won’t necessarily be easy to determine how much the fee is impacting your health insurance premiums, since many carriers are expected to just roll the fee into their total premiums.
In Colorado, Rocky Mountain Health Plans has stated that they will be adding the health insurance provider fee as a separate line item on their bills in an effort to be as transparent as possible. They will begin collecting the fee next month (July 2013) in order to spread the fee over a longer time horizon and thus lessen the impact on next year’s premiums. Carriers can choose to wait to begin collecting the fee, but the total amount collected will be the same regardless: Roughly 2% – 2.5% of total premiums in 2014, and 3% – 4% of total premiums in future years. In the individual market, RMHP will be collecting $4.12 per member per month, for the rest of 2013. If you have a SOLO plan with RMHP and notice a line item on your bill labeled “Health Insurance Providers Fee”, now you’ll know what it is (be aware that the total collected is per member per month, so if you have a family of five on a RMHP policy, your bill will reflect a charge of $20.60/month starting in July). If you have coverage with another carrier, you’ll still be paying the fee (some carriers […]