New insurance fee is expected to cost $63 a year for most

Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's
By RICARDO ALONSO-ZALDIVAR Published: December 11, 2012
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Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

“Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multimillion-dollar assessment without getting anything back for it,” said employee benefits lawyer Chantel Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says the fee will be levied for three years starting in 2014 and is designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers won't be able to turn away the sick as of Jan. 1, 2014.

The program “is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all,” the Obama administration says. An accompanying media fact sheet issued Nov. 30 referred to “contributions” without detailing the program's total cost and scope.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those thresholds also face an additional 3.8 percent tax on investment income.