How should insurers pay their PPACA fees?

A team at the National Association of Insurance Commissioners (NAIC) is trying to figure out how health insurers should get the cash to pay their Patient Protection and Affordable Care Act (PPACA) fees.

The team -- the Health Care Reform Regulatory Alternatives Working Group -- has come up with five ways insurers could handle the fact that the new PPACA fees are supposed to kick in on Jan. 1, 2014.

The working group has described the options in a rough draft of a discussion paper posted on the Health Actuarial Task Force section of the NAIC's website.

The NAIC created the working group to give regulators from states that are skeptical about PPACA a way to share ideas about how to cope with the law.

The discussion paper drafters used estimates from the American Action Forum, a group that opposes PPACA, in the paper draft.

The new PPACA fees could cost health insurers $20 billion in 2014 -- an amount equal to about 3 percent of their revenue, the drafters said, citing the American Action Forum figures.

The drafters talked only about the mechanics of how insurers should handle the fees, not their views about whether insurers should have to pay the fees.

Because the PPACA fees resemble excise taxes, "it seems legitimate for an insurer to include such fees in the premium," the drafters wrote in the paper. "Then the question is when an insurer should reflect the fees in the premium."

The drafters list the following options:

  • Have insurers file rates that extend for the entire 12-month policy year. An insurer could include a portion of the PPACA fees payable in 2014 starting on the policy anniversary in 2013.
  • Have insurers file rates that extend for the entire 12-month policy year, with no inclusion of PPACA fees in 2013. Let the insurers bill for PPACA fees separately starting Jan. 1, 2014.
  • Have insurers file rates that extend for the entire 12-month policy year. Don't let insurers include PPACA fees in the 2013 premium rates but let the insurers have their rates change to reflect the new fees on Jan. 1,  2014. 
  • Have insurers file rates that extend only until Dec. 31, 2013, with no  inclusion of PPACA fees. Require the insurers to submit new filings for rates effective on  Jan. 1, 2014.
  • Prohibit insurers from including PPACA fees in their rates until the first policy anniversary that occurs on or after Jan. 1, 2014.

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