Recently regulations were published regarding new taxes brought on by the Patient Protection and Affordable Care Act, or PPACA. Information provided by Blue Shield sheds some light on what the taxes are and more importantly, who they will affect.
The first tax (discussed here) is the “Health Insurer Tax”. The purpose of this tax is to help fund some of the subsidies that will be provided to those unable to afford the full cost of purchasing insurance. These individuals will range from 100-400% of the Federal poverty line, provided that they purchase insurance on one of the government-run exchanges. The cost of the tax will be directly passed to customers of most insurance plans with a few uncommon exceptions (i.e. self insured plans, government plans, etc…). The cost of the tax will be based on premiums currently being collected and is estimated to be about a 2.3% increase in premium for Blue Shield members. It is likely that other carriers will maintain a similar increase to pay for the tax when it is imposed upon them (and you!) at the beginning of next year, 2014.
The second tax is called the “Transitional Reinsurance tax” and is intended to help balance the cost of insuring high-risk individuals on the public exchanges. The individual mandate as spelled out in PPACA will require that everyone buy insurance, including those who are at high-risk for health problems. High-risk translates to high cost for the insurer, which in this case will be the state exchange. Blue Shield estimates this cost to be passed on to its members at the rate of about $63/year per member. While this figure has specifically been calculated for Blue Shield members, the cost will likely be similar for other insurers. As detailed on the fact sheet, funds collected during the first 3 (2014-2016) years will pay the cost of the first 5 (through 2018). Plans excluded from this tax are again few and far between; exempted plans include standalone dental and vision, and some Medicare plans.
West Coast Group Benefits will begin updating our blog regularly with the details of the various taxes and fees imposed by PPACA, and of course how you will be affected. A recent article in the Wall Street Journal details the general assumption of premium increases that will come when PPACA is more fully enforced beginning January 1, 2014.
