April 19, 2016
Section 9010 of the Affordable Care Act (ACA) charges a fee to each covered entity engaged in the business of providing health insurance. This is known as the Health Insurance Provider Fee ("Fee"). The Consolidated Appropriations Act of 2016, passed late last year, suspended collection of this Fee for the 2016 calendar year and due in 2017 ("2017 Fee Year"). As a result, health insurance issuers are not required to pay the Fee in 2017.
The Fee is part of administrative costs for health insurance plans. Because the Fee is not being collected for the 2017 Fee Year, administrative costs for fully insured health plans in all impacted markets are expected to be adjusted appropriately to account for the moratorium. Consequently, because the Fee is typically reflected in a health plan's insurance premiums, depending upon the plan's renewal date, plan sponsors may see adjustments in either their 2016 or 2017 rates.
Under the recent legislation, the moratorium applies to the payment that would be due in the 2017 calendar year based on 2016 data. The Fee amount that would have been collected in 2017, but for the moratorium, is $13.9 billion.
The legislation is limited to one year. The moratorium has no effect on the fee amount for the 2018 fee year.
With regard to single risk pool filings in the individual and small group markets, administrative costs are one of the permissible plan-level adjustments to the index rate. The 2017 plan adjusted index rate is expected to be adjusted downward to account for the moratorium of the Fee where appropriate.
Questions and Answers have been published on the IRS' website to address the 2017 moratorium, which are available at https://www.irs.gov/Businesses/Corporations/Health-Insurance-Provider-Fee-2017-Moratorium-Questions-and-Answers.
CMS' Center for Consumer Information and Insurance Oversight has issued frequently asked questions (FAQs) on the 2017 moratorium, which are available at https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FINAL_9010_FAQ_2-29-16.pdf.
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