Per Person Fee in PPACA Regulations

By Bonnie Bochniak
Vice President, Government Relations
MBPA/MFBA

January 2013 – Inside our nation’s new federal healthcare law, a $63-per-person annual fee will be charged to all health insurance plans beginning next year that will aid in financing the new law’s risk-adjustment mechanism.  The new law’s reinsurance provisions are an effort to lessen the cost of pre-existing conditions and the new community rating requirements that will impact all individual and small group health insurance markets in 2014. The question remains, who will be responsible for paying the fee?

The regulation states that all health insurance plans that cover up to 190 million Americans are subject to the fee.  So essentially, the fee will be assessed on all health plans, and it is possible that this cost might be passed onto the consumer.  The cost might be further passed onto each employee, in larger companies, as their liability will be much greater.

Revenue:
In 2014 the $63 per-person fee is estimated to bring in $12 billion dollars and decreasing each year, the fee will total $8 billion in 2015 and $5 billion in 2016. As the legislation reads today, the fee will decrease, and ultimately be phased out in 2017, unless extended by Congress.  Five billion dollars of the total collected amount will go towards offsetting the cost of early retirees on employer-sponsored insurance plans.

Where will this money go:
The revenue from the fee will be placed into a fund managed by the Health and Human Services Department (HHS).  It will be utilized to lessen the burden placed on the insurance companies from the initial unpredictable costs of covering uninsured citizens with medical conditions.  As under the law, by 2014, all insurers must accept all those that apply, regardless of their health and/or risk.

What’s next:
MBPA will keep you up to date as we receive more information on this regulation and many others that will impact your business and clients.  As always, please contact our government relations team for any questions.  By email at bbochniak@michbusiness.org or by phone: 586-393-8800.