Last Updated:September 16 @ 06:33 pm

Another hidden Obamacare fee is revealed

By Ricardo Alonso-Zalvidar

WASHINGTON (AP) - Your medical plan is facing an unexpected expense, so you probably are, too. It's a new, $63-per-head fee to cushion the cost of covering people with pre-existing conditions under President Barack Obama's health care overhaul.

The charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies, employers say. Most of that is likely to be passed on to workers.

Employee benefits lawyer Chantel Sheaks calls it a "sleeper issue" with significant financial consequences, particularly for large employers.

"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a multi-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.

Based on figures provided in the regulation, employer and individual health plans covering an estimated 190 million Americans could owe the per-person fee.

The Obama administration says it is a temporary assessment levied for three years starting in 2014, designed to raise $25 billion. It starts at $63 and then declines.

Most of the money will go into a fund administered by the Health and Human Services Department. It will be used to cushion health insurance companies from the initial hard-to-predict costs of covering uninsured people with medical problems. Under the law, insurers will be forbidden from turning away the sick as of Jan. 1, 2014.

The program "is intended to help millions of Americans purchase affordable health insurance, reduce unreimbursed usage of hospital and other medical facilities by the uninsured and thereby lower medical expenses and premiums for all," the Obama administration says in the regulation. An accompanying media fact sheet issued Nov. 30 referred to "contributions" without detailing the total cost and scope of the program.

Of the total pot, $5 billion will go directly to the U.S. Treasury, apparently to offset the cost of shoring up employer-sponsored coverage for early retirees.

The $25 billion fee is part of a bigger package of taxes and fees to finance Obama's expansion of coverage to the uninsured. It all comes to about $700 billion over 10 years, and includes higher Medicare taxes effective this Jan. 1 on individuals making more than $200,000 per year or couples making more than $250,000. People above those threshold amounts also face an additional 3.8 percent tax on their investment income.

But the insurance fee had been overlooked as employers focused on other costs in the law, including fines for medium and large firms that don't provide coverage.

"This kind of came out of the blue and was a surprisingly large amount," said Gretchen Young, senior vice president for health policy at the ERISA Industry Committee, a group that represents large employers on benefits issues.

Word started getting out in the spring, said Young, but hard cost estimates surfaced only recently with the new regulation. It set the per capita rate at $5.25 per month, which works out to $63 a year.

America's Health Insurance Plans, the major industry trade group for health insurers, says the fund is an important program that will help stabilize the market and mitigate cost increases for consumers as the changes in Obama's law take effect.

But employers already offering coverage to their workers don't see why they have to pony up for the stabilization fund, which mainly helps the individual insurance market. The redistribution puts the biggest companies on the hook for tens of millions of dollars.

"It just adds on to everything else that is expected to increase health care costs," said economist Paul Fronstin of the nonprofit Employee Benefit Research Institute.

The fee will be assessed on all "major medical" insurance plans, including those provided by employers and those purchased individually by consumers. Large employers will owe the fee directly. That's because major companies usually pay upfront for most of the health care costs of their employees. It may not be apparent to workers, but the insurance company they deal with is basically an agent administering the plan for their employer.

The fee will total $12 billion in 2014, $8 billion in 2015 and $5 billion in 2016. That means the per-head assessment would be smaller each year, around $40 in 2015 instead of $63.

It will phase out completely in 2017 - unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits - decides to extend it.

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7 Comments

  1. jrm57Comment by jrm57
    December 11, 2012 @ 11:38 am

    As with Social Security, the government is going to tap into this money. Instead of going down, it’s going to go up. Watch as the government rapes the medical funds as it has and still is raping Social Security and Medicare and anything else they can get their hands on.

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  2. BillzillaComment by Billzilla
    December 11, 2012 @ 11:44 am

    So much for “free” health insurance for all!

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  3. diamondjimComment by diamondjim
    December 11, 2012 @ 12:11 pm

    “It will phase out completely in 2017 – unless Congress, with lawmakers searching everywhere for revenue to reduce federal deficits – decides to extend it.”

    Fat chance of it phasing out. And this is just the tip of the iceberg. Every month some new tax, fee, or whatever pops out of that monstrosity of a bill they had to pass to find out what was in it.

    The larger problem though, is that lawmakers are not looking for revenue to reduce the deficits. They are looking for more revenue to SPEND! Pork-barrel pandering is how they stay in power! I wants my Obamaphone, food stamps, subsidized housing, free health care, etc., etc. Gimme that and you get my vote!

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    • jrm57Comment by jrm57
      December 11, 2012 @ 12:33 pm

      hat’s basically what I was saying. You said it better. But the only way to stop this is to get rid of everyone in congress and the white house. We the people need to organize and march in there, grab every one of them, hold our own trials, and punish them. And we need to elect honest people to replace all of them, people like ourselves. If your net worth is more than half a million, you don’t qualify to be in government. And wipe out the access to lobbists and special interest groups, wipe out all contributions except from individuals and not more than one single contribution per year and not for more than $250 per year. Wipe out the tax code and simplify it. I did calculations and a 12.7% tax would suffice to run this country as it is. Make it an 8% tax code and get rid of the entitlements completely that are not necessary like welfare (People need to work and survive for themselves), phones, paying for their rent, electric, etc. It’s one thing to assist, but quite another to make it possible for them to not need to bother working. Right now, the average household takes in about $64,000 in tax free entitlements. That’s absurd. It does not pay to work with entitlements like that.

      Do a Google search for Iceland economy. They crashed in 2008. They did the opposite of what Obama did here and now they have a healthy thriving economy. They first took care of their people, and then they allowed banks to close and they also arrested and convicted bankers for fraud. Google it. It was in the news in the past couple of weeks. What they did there is what works and what needs to be done here. Pronto.

      There’s a lot of cr*p in government that needs to be house cleaned. And one more thing. We need the 28th ammendment which basically says politicians must live the same way as the people and they also must use the health insurance plans that the people use, and etc. Any laws they pass that they deem good for the people, they also must abide by. Google 28th ammendment too. That would put an end to all the pork barrel stuff and the special holier than thou class that the politicians put themselves in. What’s good for the goose is good for the gander – otherwise, don’t make the law, and don’t pass it.

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  4. gnafuComment by gnafu
    December 11, 2012 @ 12:39 pm

    More reason to get rid of the ObamaCare rag. Obama doesn’t really care about the uninsured – how to take money from those who work and give to those who don’t work is not in his plan. It’s how to Control The People. I hope everyone who voted for this president finds out the actual truth when they have to start paying for their health care; employed or unemployed. When everyone’s grandparents are denied health care and told they are too old – go home and die gracefully, let’s see how many real people agree with that kind of bs.

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  5. Pingback: Another hidden Obamacare fee is revealed - ALIPAC

  6. maximusprime1Comment by maximusprime1
    December 11, 2012 @ 4:02 pm

    Just asking.
    Since you said “head tax” is $63 per year per employee or if you are married does that mean the head tax is PER PERSON which means $126 per year for both.
    I wonder what other surprises are a coming.

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  7. haplyssComment by haplyss
    December 11, 2012 @ 7:51 pm

    What good does it do to make comments about anything Obama says or does. Everything he says or does is against the people and the Constitution. And nobody does anything about indicting Obama, trying and comvicting, and locking his A-s up.

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  8. Pingback: Another hidden Obamacare fee is revealed « Give Me Liberty

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