'Hidden' fees in Obamacare

Two hidden fees in the Patient Protection and Affordable Care Act include the Reinsurance Fee and Comparative Effectiveness Research Fee, both of which will be added to the cost of insurance premiums charged to employers and employees.

Reinsurance Fee

What: States are required to establish transitional reinsurance programs which will help stabilize premiums for exchange programs. If states opt of out this, the U.S. Department of Health and Human Services will step in on the states’ behalf and fund the program through this fee. It will be placed on health insurance issuers and third-party administrators of self-insured group health plans.

Costs: Nationally, gross fees are estimated to total $12 billion in 2014, $8 billion in 2015 and $5 billion for 2016. Fee details, including the amount of fees and how they will be paid, are not anticipated to be released until late 2013.

Who pays for it: All enrollees in a group health plan, including employees/retirees, spouses and dependents, are expected to pay the fee. Research now indicates plans with solely "excepted benefits," which include limited excepted dental and vision plans, would not be charged the fee. While the specifics of the fee have not been issued, it could be between $60 and $80 per capita annually in 2014.

Comparative Effectiveness Research Fee:

What: A Patient-Centered Outcomes Research Institute (PCORI) was created through the affordable care act to research health outcomes and assess clinical effectiveness, including benefits and risks associated with various medical treatments. The institute will be paid for by a trust fund, which will partially be funded through the comparative effectiveness research fee. 

Costs: In its first year, the fee will be $1 multiplied by the average number of people covered in the plan (which include dependents). The fee will increase to $2 multiplied in subsequent years, with the amount revisited annually. Plans operating on a calendar year will pay the fees for 2012 through 2018. Plans not set up on calendar years will have the fee applied to the first plan year that ended on Oct. 1, 2012, or after. The fees will then apply, ending before Oct. 1, 2019.

Who pays for it: Both insured and self-insured health plans that cover accident and health will pay the fee. Health insurers will pay the fee for their insured population. Self-insured plans will pay the fee through the plan sponsor, which is the employer for plans under the Employee Retirement Income Security Act (ERISA). The sponsor is the trustee for voluntary employees' beneficiary association (VERBA). Separately insured dental and vision benefits would not be required to pay the fee as well as government programs, including Medicare. However, Medicare supplemental self-insured plans may be subjected to the fee.

Additional requirements: Plan sponsors (primarily employers) must establish a reasonable method for calculating the average number of lives covered and stick to it for the plan year. The three options allowed include: an actual count of enrollees, a snapshot or using the Form 5500.