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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The insurance fee was overlooked as employers focused on other costs in the law, such as fines for medium and large firms that don't give coverage.

“This kind of came out of the blue and was a surprisingly large amount,” said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, Young said, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to workers don't see why they have to pay for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

The fee will be assessed on all “major medical” insurance plans, including those provided by employers and those bought individually by consumers. Large employers will owe the fee directly, because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out in 2017 unless Congress — with lawmakers searching everywhere for revenue to reduce federal deficits — decides to extend it.



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