Update on ACA Health Plan Fees

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Recent legislation affects several types of health plan fees under the Affordable Care Act (ACA). Some fees are eliminated, while a minor one that was scheduled to expire will be coming back to life.

For quick reference, here are the highlights:

Patient-Centered Outcomes Research Institute (PCORI) Fee

The ACA created the PCORI fee to help fund studies on clinical effectiveness and health outcomes. It is a small annual fee (less than $3 per enrollee per year) that is imposed on health plans that include medical benefits. It was scheduled to expire after 2019, but it is now been extended for another 10 years.

For insured plans, the carrier handles the PCORI fee. For self-funded plans, however, the employer is responsible for calculating, reporting and paying the PCORI fee. Payment for each plan year is due no later than July 31 of the following year.

Cadillac Tax

Cadillac tax is the nickname for another health plan tax that was part of the ACA. It was designed to be a 40 percent excise tax on the value of employer-sponsored health plans that exceeded certain thresholds. The intent was to reduce the demand for high-cost coverage (aka “Cadillac” coverage). Although the tax was originally scheduled to take effect in 2018, Congress delayed it several times and it never took effect. It has now been fully repealed.

Health Insurance Provider (HIP) Fee

The HIP fee is collected from health insurance providers and HMOs based on a percentage of premiums, including premiums for medical, dental, and vision insurance. The fee began in 2014 and has been estimated to add three or four percent to premium rates. Congress suspended the fee for 2017 and 2019, and now has repealed it for all years after 2020. The HIP fee applied only to insured plans. Self-funded employers were not affected.

Get It All

ThinkHR customers can find a wealth of information about the ACA by logging on to Comply.

Kathy Berger

Kathy Berger is ThinkHR’s principal benefits consultant. She is a Certified Employee Benefits Specialist (CEBS) with over 25 years of experience working with brokers and employers. Kathy uses her extensive knowledge of ERISA, HIPAA, the ACA, and other benefits laws and regulations to assist our clients with practical information in clear language.

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