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Obamacare Pre-Existing Condition Fee To Cost Companies $63 Per Person

Posted by on Dec. 12, 2012 at 3:00 PM
  • 50 Replies

Obamacare Pre-Existing Condition Fee To Cost Companies $63 Per Person

By RICARDO ALONSO-ZALDIVAR 12/10/12 02:47 PM ET EST AP

WASHINGTON -- 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.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

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

The Obama administration says it is a temporary assessment levied for three years starting in 2014, 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 will be forbidden from turning 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 in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

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 this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide 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, said Young, 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 is an important program that 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 their workers don't see why they have to pony up 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.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's 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 completely in 2017 - unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits - decides to extend it.

by on Dec. 12, 2012 at 3:00 PM
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Replies (1-10):
pvtjokerus
by Ruby Member on Dec. 12, 2012 at 3:00 PM
4 moms liked this

Little by little all these cost will add up.....

LauraKW
by "Dude!" on Dec. 12, 2012 at 3:08 PM
6 moms liked this

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

pamelax3
by Gold Member on Dec. 12, 2012 at 3:09 PM

just one more bill to pay, willnot surprise me that these small "fees" keep coming up

pamelax3
by Gold Member on Dec. 12, 2012 at 3:10 PM
2 moms liked this

that fee by itself is not devastating, but you start adding all these fees together it will be for many employers

Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.


LauraKW
by "Dude!" on Dec. 12, 2012 at 3:11 PM
2 moms liked this

 Please list "all these fees" so we can discuss them.

Quoting pamelax3:

that fee by itself is not devastating, but you start adding all these fees together it will be for many employers

Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

 

 

pamelax3
by Gold Member on Dec. 12, 2012 at 3:16 PM

adding fees like these together if can be devastating to any employer. I feel pretty confident that there will be more fees to come. and as it stands employers will have to cover an employee or pay a fine once again you start adding all these items together it can be devastating to an employer  

Quoting LauraKW:

 Please list "all these fees" so we can discuss them.

Quoting pamelax3:

that fee by itself is not devastating, but you start adding all these fees together it will be for many employers

Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

 

 


LauraKW
by "Dude!" on Dec. 12, 2012 at 3:18 PM
1 mom liked this

 Please list "fees like these" so we can discuss them.

Quoting pamelax3:

adding fees like these together if can be devastating to any employer. I feel pretty confident that there will be more fees to come. and as it stands employers will have to cover an employee or pay a fine once again you start adding all these items together it can be devastating to an employer  

Quoting LauraKW:

 Please list "all these fees" so we can discuss them.

Quoting pamelax3:

that fee by itself is not devastating, but you start adding all these fees together it will be for many employers

Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

 

 

 

 

brookiecookie87
by Platinum Member on Dec. 12, 2012 at 3:18 PM
3 moms liked this


Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

This. This is entirely worth it if you think about the lives that will be saved and the kids/adults/elderly that will benefit from it.

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If they enforced bank regulations like they do park rules, we wouldn't be in this mess

LauraKW
by "Dude!" on Dec. 12, 2012 at 3:19 PM

 

Quoting brookiecookie87:

 

Quoting LauraKW:

 Is it an annual three year fee?  $63 per person, to decrease over the next two years, and then be eliminated?  That works out to roughly $2.42 per person over the course of a 12 month period assuming a bi-weekly payroll (26 checks per year).  Doesn't sound too devastating.

This. This is entirely worth it if you think about the lives that will be saved and the kids/adults/elderly that will benefit from it.

 Absolutely agree.

lizmarie1975
by Gold Member on Dec. 12, 2012 at 3:20 PM
7 moms liked this

I have private insurance through my company and, admittedly, I haven't paid too much attention to ACA.

Does this mean that people like myself who have insurance, and rarely use it outside of my yearly exams and my children's well child visits, will see my costs go up by $63/year so that people who have pre-existing conditions and need insurance but cannot get insurance...will actually be able to get covered by insurance? I'm ok with that.


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