Plans will pay 3.5% of premiums in federal exchanges

December 13, 2012

New guidelines from HHS reveal a fee equal to 3.5% of premiums for plans participating in federal exchanges.

When the Department of Health and Human Services (HHS) produced new guidance for health plans participating in insurance exchanges, there’s no doubt plan executives started doing a little math in their heads.

Any plan that qualifies and sells its products in the federally operated exchanges will pay a participation fee of 3.5% of premiums, according to the HHS filing. The actual dollar amount is nearly impossible to estimate right now because there are still so many variables to play out over the next several months.

Many of the up-and-coming features of healthcare reform force fees, taxes and costly administrative burdens on insurers. However, the assumption is that plans will benefit from new business so they must pay to participate in the fed’s readymade marketplace.

Private insurance exchanges and health information exchanges-the data hubs that have been inching along in recent years-also charge fees to participants. It’s the typical funding model.

And it works both ways.

In Minnesota, for example, the current state-subsidized plan for low-income families that don’t qualify for Medicaid is funded in part by a 2% tax paid by providers. It covers 148,000 individuals, and only those who are of low or moderate income and have been uninsured for at least four months qualify.

Go back to the Managed Healthcare Executive eNews newsletter.