Taxes and Fees

Health insurance tax is an annual fee to help fund premium subsidies for the health insurance exchanges and Medicaid expansion.

• Effective Date: January 1, 2014, and beyond
• Applicable to: Insured plans, including health insurers, HMOs and plans providing insurance under government programs such as Medicaid, Medicare Advantage and Medicare Part D.
• Impact:
  • We expect the impact of the 2014 Health Insurance Tax to be approximately 2.47% of premium. For 2015, we expect health insurer tax to be approximately 3.49% of premium.
  • The total amount to be collected across all health insurers is set at:
    • $8 billion in 2014
    • $11.3 billion in 2015
    • $11.3 billion in 2016
    • $13.9 billion in 2017
    • $14.38 billion in 2018
    • 2019 and forward – The threshold for total fees to be collected will increase annually thereafter based on premium growth.
  • 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).
• Products affected: 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.

• Effective Date: January 1, 2014, through 2016
• Applicable to: Insured plans and self-insured plans²
• Impact:
  • We expect the Transitional Reinsurance Risk Pool Assessment fee to be about $5.25 per member per month based on 2014 membership.¹For 2015, the transitional reinsurance tax is estimated at $3.67 per member per month.
  • The total amount to be collected across all health insurers and self-insured plans is set at:
    • $12 billion in 2014
    • $8 billion in 2015
    • $5 billion in 2016
    • Funds collected for benefit years 2014–2016 will be used for reinsurance payments through 2018.
• Products affected: 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.

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.

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.

• Effective Date: October 1, 2012, through September 30, 2019
• Applicable to: Insured plans and self-insured plans
• Impact: 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:
  • $1 multiplied by the average number of covered lives for plan or policy years ending on or after October 1, 2012, and before October 1, 2013.
  • $2 multiplied by the average number of covered lives for plan or policy years ending on or after October 1, 2013.
  • The fee increases after October 1, 2014, are based on a formula that takes into account the increase in the per capita amount of national health expenditures.
  • Health Net will pay the PCORI fees in accordance to ACA provisions for its insured clients as required by law.
  • For self-insured groups, payment of all applicable PCORI fees are the employer group’s responsibility.
• Products affected: These fees apply to commercial insured and self-insured plans, including grandfathered and non-grandfathered plans.