Summary of Employer PPACA Fees
Highlighted Employer PPACA Fees & Taxes Dec. 2012 Through 2014
January 2013
 Additional Medicare Fees. Under PPACA, effective January 1, 2013 employers must
withhold an additional tax of 0.9% on wages in excess of $200,000 that any of their
employees earn in a given calendar year.
More detail: Employer responsibility for new Medicare Fees.

Additional Investment Income Tax. A new Net Investment Income Tax goes into effect
starting in 2013. The 3.8% Net Investment Income Tax applies to individuals, estates and
trusts that have certain investment income above a threshold. The IRS and the Treasury
Department have issued proposed regulations on the Net Investment Income Tax.
Comments may be submitted electronically, by mail or hand delivered to the IRS. For
additional information on the Net Investment Income Tax, see IRS questions and answers.
o In the case of a taxpayer making a joint return or a surviving spouse, $250,000; in
the case of a married taxpayer filing a separate return, $125,000; and in any other
case, $200,000.

Medical Device Tax: The Internal Revenue Service (IRS) will administer new taxes
(permanent) for medical device manufacturers to help offset the cost of insurance
subsidies. All purchasers of medical devices from manufacturers must pay a 2.3% tax
beginning with sales on or after January 1, 2013. While the impact on employer cost is
difficult to forecast, employers should expect to see premium (or claims for a self-funded
plan) increase by 0.25% to 0.5%.
More detail: Final regulations.
July 2013
 Patient-Centered Outcomes Research Trust Fund ("PCORI" or the "Comparative Evidence"
Fund). PPACA provides for the establishment of a private, nonprofit corporation, the
Patient- Centered Outcomes Research Institute (the ‘‘Institute’’). Through research, the
Institute will assist patients, clinicians, purchasers, and policy-makers in making informed
health decisions by advancing the quality and relevance of evidence-based medicine
through the synthesis and dissemination of comparative clinical effectiveness research
findings.
o The fee imposed on an issuer of a health insurance policy and those imposed on
a plan sponsor of a self-insured health plan is $2 (one dollar in the case of policy
years ending before October 1, 2013) multiplied by the average number of lives
covered under the policy or plan. For policy or plan years ending on or after
October 1, 2014, the fee is increased based on increases in the projected per
capita amount of National Health Expenditures. The fee is to be reported and
paid by the issuer of the policy or plan sponsor for a policy or plan year no later
than July 31 of the year following the last day of the policy or plan year.
o Regulations were issued on 12/6/12 for plan years ending after 10/1/12. Fee is due
by July 31 following end of plan year. Fee applicable for 2012-2019.
o Fee is for each insured or self funded plan (other than EAPs, wellness plans, or
disease management plans).
o Fees included in premium on fully insured plans and have to be paid for self
funded plans.
 Note: Rx plus medical expense reimbursement plans count as two plans so
that the fee would be $4 (assuming 2014 rates) times the number of lives
(employees plus dependents) covered during the plan year.
For more detail: Federal Regulations on this topic.
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Summary of Employer PPACA Fees
January 2014
 Transitional Reinsurance Program Premiums (2014-2016). The transitional reinsurance
program's stated purpose is to stabilize premiums for individual health insurance
coverage as the
Health Insurance Exchanges are getting off the ground. To fund the effort, HHS will assess
per
capita fees on all health insurers and third-party administrators of group health plans,
which will
pass the costs on to plan sponsors and participants. There are no exceptions for
governmental or
church plan sponsors. Contributions are not required for plans or coverage that consist
solely of
excepted benefits, such as stand-alone dental or vision plans.
o The reinsurance assessment will be levied on a per-covered-life basis (employees
plus dependents) and be collected quarterly, with the first payment due January
15, 2014. Contribution amounts will be based on a per capita contribution rate,
which HHS plans to announce on or about December 2012. By law, the
reinsurance program must collect $12 billion for 2014, $8 billion for 2015 and $5
billion for 2016. Of the funds collected, a majority will be earmarked for
reinsurance payments ($10 billion in 2014, $6 billion in 2015 and $4 billion in 2016).
The program is set to expire after 2016.
o Although the final fee amounts won’t be available until March 2013, most experts
estimate they will be $70 to $90 per member per year — roughly 1.5% of total plan
costs (declining to around 0.5% of cost in 2016).
o HHS's official estimate on the fee is $63 per covered life.
For more detail: see this summary for the McDermott, Will & Emery firm summary.

Health Insurance Tax (HIT): Insurers must also pay a new health insurance tax to help with
the implementation cost of health care reform, although the tax is permanent. There will
be exclusions for employers with self-funded plans, governmental plans, plans sponsored
by nonprofits covering low-income populations and some union plans. The program is
scheduled to begin in 2014 with the first premium tax collected from insurers by
September 2015. Although they are not required to pay the fee, self-funded employer
plans will be affected to a lesser degree by increased stop-loss premiums, as those
insurers will be impacted.
o While estimates of the costs vary widely, they are expected to be approximately
2% to 3% of premiums in 2014, ultimately increasing to 3% to 4% of premiums.
o In an analysis conducted by Oliver Wyman for AHIP, the tax is estimated to
increase premiums on average by 1.9% to 2.3% in 2014, and by 2023 will increase
premiums 2.8% to 3.7%. The study estimates that for small groups,
 This will, on average, increase the cost to cover an individual by about
$2,800, and a family by about $6,800 over a 10-year period.
 Wyman concludes that individual market consumers, small employers, as
well as Medicare and Medicaid beneficiaries would all be subject to
increased premiums as a direct result of the tax.
Overall 2014 Projected Increase of 3.8% for a fully insured group. Or approximately $6 per member
(EE+Dep.)
Source: http://broker.uhc.com/articleView-10420
Government summary of all taxes: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions
Drafted by Craig Gottwals
Attorney at law, BB&T Insurance Services
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