Individual Insurance Cost Hikes Stemming From ACA Likely.

Accompanying the release of a study from the nonpartisan Society of Actuaries which projected increases in the medical costs of individual health policies across the country next year, HHS Secretary Kathleen Sebelius acknowledged Tuesday that the Affordable Care Act may contribute to some insurance premium hikes next year.

Reuters (3/27, Mason, Morgan) reports that on Tuesday, HHS Secretary Kathleen Sebelius admitted that premiums could rise next year for individuals buying health insurance, especially for men and young adults. Sebelius attributed the possible increases to "shifting" in the market due to the full implementation of the Affordable Care Act. She said, "Women are going to see some lower costs, some men are going to see some higher costs. It's sort of a one to one shift. ... Some of the older customers may see a slight decline, and some of the younger ones are going to see a slight increase." The article notes that Sebelius' comments come as many fear rising health costs due to the law, and on the same day as the release of a study from the Society of Actuaries which estimated individual insurance premiums will rise 32% over the next three years.

The Wall Street Journal (3/27, Radnofsky) "Washington Wire" blog reports that Sebelius also said, "These folks will be moving into a really fully insured product for the first time, and so there may be a higher cost associated with getting into that market. But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they're spending." 

Study Projects Medical Costs Will Rise For Individually Insured. The AP(3/27, Alonso-Zaldivar) reports that a report from the Society of Actuaries estimates that insurance companies "will have to pay out an average of 32 percent more for medical claims on individual health policies under President Barack Obama's overhaul. ... That's likely to increase premiums for at least some Americans buying individual plans." The AP adds, "While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers." The AP adds that the report "could turn into a big headache for the Obama administration at a time when many parts of the country remain skeptical about the Affordable Care Act."

Affordable Care Act Taxes effective January 1, 2014

The Affordable Care Act (ACA) requires that taxes be collected in order to fund certain provisions of health reform. Beginning January 1, 2014, there are two new taxes that will go into effect. We are providing a summary of those taxes below, as well as a convenient fact sheet you can download for your reference and to share with your clients.

Purpose of these ACA Taxes

Health insurer tax – to help fund premium subsidies for certain individuals and families purchasing coverage through health insurance exchanges.

Transitional reinsurance tax – to help stabilize premiums and the cost of high-risk individuals entering the individual market in each state's health insurance exchange.

Blue Shield Market Impact

Employer Groups of 51 or more employees Blue Shield's fully-insured large group (51+) customers will see the health insurer tax (about 4%) AND transitional reinsurance tax included in their 2014 rates beginning with renewals released in February 2013. The amount owed for the tax as of January 2014 will be prorated over a 12-month period in their renewal rate. For example, if the group's contract renews in June, the amount owed for the tax as of January through May 2014 will be prorated by 12 months and will be reflected in the monthly rate, beginning June 2013. However, Blue Shield will reimburse these pro-rated taxes for groups that term in 2013. For self-insured customers, plan sponsors are responsible for the transitional reinsurance contributions. Employer Groups of 50 or fewer employees The ACA taxes will be included in all new and renewing small group clients' dues/premium effective January 1, 2014, regardless of the client’s renewal date as addressed in the group's contract. Individual and Family Plan (IFP) members The ACA taxes will be included in dues and premiums for all Individual and Family Plan members beginning on January 1, 2014. by Sebelius