What to Expect With New Healthcare Reform Laws

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On January 1, 2014 many provisions will take effect in regards to the Patient Protection and Affordable Care Act.  The new laws will incorporate many taxes and fees.  As insurance advisors, Allied wants to inform you on what to expect with the upcoming healthcare reform.  Our information comes from estimates generated by HAP.

Based on the latest information from the government, HAP estimates that premiums will increase by almost 7% due solely to taxes.  Additionally, there will be fees for each member of the program totaling approximately $66.00 per member per year.  The additional taxes and fees are spelled out in more detail below. 

Expense increases for 2014 due to Healthcare Reform:

Health Insurance Premium Tax:  1.5-2.5 % of Premium.  This is an excise tax to help fund the provisions of the PPACA.

Transitional Reinsurance Program: $5.25 PMPM.  This is a temporary program intended to stabilize premiums.  This will help to control the introduction of high-risk individuals, so that their claims do not change premiums for others. 

Patient Centered Outcomes Research Institute Fee: $2.00 PMPY.  This will fund the PCORI, which will produce and promote research on clinical effectiveness to help patients and their health care providers make more informed health care decisions.

Risk Adjustment User Fee: $1.00 PMPY.  There will be an annual assessment of a risk management program that will transfer funds from plans with membership that is healthier than average to those with membership that is less healthy than average.  This will reduce the impact of adverse selection. 

Exchange User Fee: 3.5% of Premium.  This will involve an assessment on insurers for all plans sold through a health insurance exchange.

Health Insurance Claims Assessment: 0.9% of premium.  This tax is applied to certain health insurance claims paid for services provided on or after January 1, 2012.  The funds generated by this will support Michigan’s Medicaid program.

These are a few of the changes that will occur due to the Healthcare reform laws that have been progressing in recent years.  As Insurance Advisors, we like to keep our clients up to date with changes that will affect them and their insurance premiums.  This reform will bring many changes, but these are just a few taxes that we wanted to highlight, so that you understand where some of the increased premiums are coming from.