As we near the end of 2017, medical insurers are faced with including the Health Insurance Providers Fee back into their rates on plans that renew on January 1, 2018. This fee has been included in plans since 2014 with the implementation of the Patient Protection Affordable Care Act (PPACA). It is designed to help fund the federal and state marketplaces and exchanges and was first implemented on insurers at $8 billion in 2014. The fee has since steadily increased each year. Therefore, to help insurers stabilize rates on their plans to keep rates in a more competitive position, a moratorium was placed on the fee for the 2017 calendar year. This exclusion had the desired outcome for the insurers as the fee for 2017 was scheduled to be $13.9 billion.
The Health Insurance Providers Fee is scheduled to return in 2018 and is estimated to cost $14.3 billion. Since this fee will be built into the premiums that employers pay, health insurers have concern with how this will impact the rates and plan designs they offer businesses.
What can employers expect from this?
The return of the fee will add roughly 3% on fully insured plans to the overall premium costs which will be a pass-through fee from the insurance companies that will hit the total premium cost for employers. Because of this, we may see insurers adjust plan designs by leaning out benefits to offset the fee impact. In the past, we have seen similar scenarios where renewing medical plans had changing benefits, such as deductibles and increasing out of pocket maximums. Doing so will maintain a competitive cost advantage to retain current business and attract new customers. Employers will need to be cognizant of not only their cost differences but also any plan changes at renewal.
One factor that could have an impact is the potential repeal/replacement of the Patient Protection and Affordable Care Act (PPACA). If Congress successfully passes legislation to amend the PPACA, the Health Insurance Providers Fee may be permanently dissolved. However, if legislation is passed later in the year, insurers may have already priced this into their 2018 rates and employers may not see the impact to their rates until 2019.