Despite heavy criticism of the subsidization of Obamacare by employers, the feds are sticking to their guns. However, they are also willing to fire fewer bullets in recognition of the burden the health care law's reinsurance fee places on business.
In final rules outlining an employer's obligations with respect to the fee, the Department of Health and Human Services established specific fees for the first two years of the three-year program. It also agreed to allow employers to pay the fee in two payments, to lessen the financial hit companies would take at the start of a new year.
As outlined in the Patient Protection and Affordable Care Act, the fees are intended to generate $25 billion to be used to partially reimburse carriers writing policies in public exchanges for individuals with high health care costs.
Recommended For You
HHS set the first-year fee at $63 per plan participant, with a step down to $44 per in the second year. No fee has been set for the third year, 2016. The news here is the reaffirmation of HHS's $44 proposed 2015 fee.
Of perhaps larger import to employers is the bifurcation of the payments. HHS's ponderings of the payment schedule led it to determine that it would require a first, and larger, payment at the beginning of each fee program year. That payment will represent the employer's reinsurance payments and administrative expenses. A second payment, of monies earmarked for the U.S. Treasury, will be required to be made late in the year.
"The second installment covers the portion of the reinsurance contribution amount allocated to the payments for the U.S. Treasury to be paid for a benefit year," HHS said in announcing the two-part payment plan. "In the fourth quarter of the calendar year following the applicable benefit year, HHS would notify the contributing entity of the portion of the reinsurance contribution amount allocated for payments to the U.S. Treasury for the applicable benefit year. … A contributing entity would remit this amount within 30 days after the date of this second notification."
HHS noted in its discussion of the final rules that some employers had requested that they be able to pay the entire year's amount in one payment rather than two, either early or late in the year. Sorry, HHS said, we don't want your money in one big check.
"We recognize that the reinsurance collections provided for in the Affordable
Care Act will result in substantial upfront payments from contributing entities for the reinsurance program," HHS said in response to the notion. "Therefore, in consideration of the comments received, we are finalizing our proposal to collect contributions via two payments. We will not permit contributing entities to choose between collection schedules for operational reasons."
Rep. Pat Tiberi, R-Ohio, has introduced a bill aimed at repealing the fee. "It is simply outrageous that employers will be forced to pay the tax while they will get nothing in return," he has said.
Correction: An earlier version of this story incorrectly said HHS set the first-year fee at $63 per employee. It should have said per plan participant.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
