Be Aware of Hidden Obamacare Fees Effective in 2014

Be on the lookout for these three “hidden” fees being added to the cost of health insurance plans due to Obamacare.

Health Insurance Industry Fee

This is being collected on all FULLY INSURED Medical and Dental plans effective 1/1/2014. The fee varies depending on the market share of each carrier, but the typical cost is 1% of the total premium on HMO plans and 2% of total premium on your PPO plans. For example, if your premium for your medical insurance is $500,000 per year and the cost for your dental program is $100,000, then the total additional fee is $12,000 if you have PPO plans.  This is being collected by your insurance carrier and is payable to the IRS.

Reinsurance Assessment

This fee is part of a complex risk assessment system put in place to stabilize premium in the individual market. It is temporary, with fees collected in 2014, 2015 and 2016. The fee is $63 per enrollee (member) per year on all fully- insured and self-insured plans. This fee is payable to The Department of Health and Human Services (HHS). It is paid by the insurance carrier for fully insured plans and by the plan sponsor for self-funded plans.

Patient-Centered Outcomes Research Institute (PCORI) Comparative Effectiveness Research Fee

The ACA established a Patient -Centered Outcomes Research Institute that is charged with identifying the effectiveness of various forms of medical treatment. Monies collected are used to fund research on the effectiveness of medical treatments and prescription drugs. The fees are $1 per covered life for FY2013, $2 per covered life for FY2014 and FY2015-2019 will be indexed. This is an annual fee on all fully-insured and self-insured plans. Insurers and plan sponsors are responsible for paying the fee which is treated like an excise tax by the IRS. A federal excise tax return (Form 720) must be field by July 31 of the calendar year immediately following the last day of the plan year. In the case of fully-insured coverage, the insurance carrier is responsible for filing and paying the PCORI fee and will be rolled into the premium. As the plan sponsor, self-funded employers must complete form 720 and pay the fee directly to the IRS.