PPACA fees to eat 5 percent of premiumsNews added by Benefits Pro on April 24, 2014

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By Allison Bell

Managers of Harvard Pilgrim Health Care expect fees related to the Patient Protection and Affordable Care Act to amount to about 5 percent of the premiums a new plan will generate.

The company described how PPACA fees might affect costs in a rate filing for a family of new indemnity preferred provider organization plans an affiliate, HPHC Insurance Co. Inc., wants to sell in Connecticut.

The nonprofit, Massachusetts-based carrier hopes to start selling bronze, silver, gold and platinum PPO coverage in Connecticut's non-exchange small-group market in the third quarter.

HPHC is expecting to charge a base rate of $407.84 per member per month, with $319.08 going to pay claims and $84.67 to pay non-claim expenses. The company hopes to get $4.08 in operating profits per member per month.

Because the plans are new, HPHC cannot show how new PPACA mandates might affect costs.

The company shows that it expects to spend a total of 4.98 percent of premium revenue, or $20.34 per member per month, on PPACA fees, including 2.5 percent on the new PPACA health insurer fee; 1.35 percent on public exchange administrative fees, even though the plan will be sold off-exchange; 1.07 percent on a PPACA reinsurance program fee; 0.04 percent on a PPACA comparative effectiveness research program fee; and 0.02 percent on a PPACA risk-adjustment program user fee.

The company expects agent and broker commissions to amount to 4 percent of premium revenue, or $16.31 per member per month.

Originally published on BenefitsPro.com
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