Q: Our health insurance company added a surcharge for each participant in our health plan starting last month, January. This charge is not just on our employees but also on their dependents. What is the basis of the charge and can we pass it on to our employees?
A: The Affordable Care Act includes fees the insurance company must pay based on participants in the health insurance plan. Most insurance companies have been passing these fees on to employers. These fees were effective January 1 even if your plan year is not a calendar year plan. The fees listed below are for the current year. They will change on an annual basis until they end.
There is the Patient Centered Outcomes Research Institute (PCORI) fee which is $2 per participant (employee and all dependents). This fee was created to examine the health outcomes and appropriateness of various medical treatments by evaluating existing studies and conducting new ones. This fee is scheduled to end in 2019.
The Transition Reinsurance Program fee is $5.25 per month per participant (employee and all dependents). This fee is established in each state to help stablilize premiums for coverage in the individual market during the first three years the exchanges are operational. This fee is scheduled to end in 2016.
The final fee is an annual fee on Health Insurance Providers, which is 2.5% of total premium. This is a nondeductible excise tax applied to help finance the ACA.
The surcharges can be passed on to your employees in full or partially. The addition of these fees is not a reason for an employee or their dependent to drop coverage unless it is open enrollment in the dependent employer's plan.
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