As if healthcare didn’t cost enough already, a new fee is set to kick in shortly for health insurers. And it looks like it could trickle down to employers.
The healthcare reform law contains a little-known provision that imposes a fee on insurance issuers and plan sponsors of self-funded health plans to help fund the Patient-Centered Outcomes Research Institute.
According to the research institute’s website, it was created to “conduct research to provide information about the best available evidence to help patients and their health care providers make more informed decisions. PCORI’s research is intended to give patients a better understanding of the prevention, treatment and care options available, and the science that supports those options.”
When it kicks in
The first to be hit with the fee will be those with a plan/policy year ending between Oct. 1, 2012 and Oct. 1, 2013.
The initial fee will be one dollar multiplied by the average number of “covered lives” under the plan/policy during the year.
The “number of lives” covered by a healthcare plan include employees, former employees participating in the plan as well as participants’ spouses, dependents and other beneficiaries.
For plan/policy years ending on or after Oct. 1, 2013, the fee will be increased to two dollars multiplied by the average number of covered lives, and it may increase further on or after Oct. 1, 2014.
The fee is scheduled to be imposed until 2019.
Applying the fee
The Internal Revenue Service just proposed regulations pertaining to the application of the impending fee.
They lay out:
- Who’s exempt, namely government programs like Medicare, Medicaid and CHIP
- Methods insurers and self-insured employers may use to calculate the average “number of lives” covered under a healthcare plan during a plan year, and
- Procedures for paying the tax.
The DOL is also said to be “considering permissible funding sources” for the fees.
Translation: Insurers may be able to pass the cost on to employers and plan participants.