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Does the health insurance provider fee impact group health insurance rates?

What is the Health Insurance Provider Fee? And will it impact my 2018 group health insurance rates?

The Affordable Care Act (ACA) imposes several fees and taxes on different types of health plans. One of those is the Health Insurance Provider (HIP) Fee, which first took effect in 2014. The HIP Fee applies only to health insurers. It is intended to help fund federal and state-run Marketplaces (Exchanges). The fee amount is an allocation among affected insurers to raise a revenue target amount. For instance, for 2014 the target amount was $8 billion which was allocated to the insurers based on each one’s prior year’s share of total earned health insurance premium. For most health insurers, it represented approximately 2% to 2.5% that year. The revenue target amount increased after 2014 and now averages 3% to 4% of premiums. 

Insurers are responsible for paying the fee, but they factor the expense into the premiums they charge to their policyholders. So although employers do not pay the fee directly, it does affect the premiums they pay for group health insurance. 

For purposes of the HIP Fee, “health insurance” includes individual and group policies for medical, dental, vision, and others. Self-funded multiple employer welfare arrangements (MEWAs) that provide health benefits are treated as insurers. On the other hand, self-funded group health plans and multi-employer plans (e.g., union trusts) are exempt from the fee.

Lastly, the law was amended to provide a one-year moratorium from the HIP Fee for calendar year 2017. The fee resumes, however, for 2018 so health insurers are taking this into account for their 2018 renewal rates. The HIP Fee is expected to add approximately 3% to 4% to 2018 renewal rates. 

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Source: ThinkHR

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