The Affordable Care Act (ACA) required an ACA Exchange to be self-sustaining beginning January 1, 2015. To fund their ongoing operations, the statute and implementing regulations suggested that an Exchange may impose “user fees” on the health insurance issuers selling health plans through the marketplace.
HealthCare.gov and “User Fees”
Currently, there are 36 States that utilize the Exchange operated by the Department of Health and Human Services (HHS) (i.e., HealthCare.gov). Consistent with the statute and implementing regulations, HHS has opted to impose “user fees” on health insurance issuers operating in those States that rely on HealthCare.gov to fund the Exchange’s operations.
For plans years 2014 to 2019, the “user fee” charged by HHS to fund HealthCare.gov was 3.5 percent. For plan years 2020 and 2021, HealthCare.gov’s “user fee” was reduced to 3 percent. In recently proposed regulations (which may be finalized any day now), HHS has lowered this “user fee” to 2.25 percent for 2022.
State-Based Exchanges Using HealthCare.gov and “User Fees”
There are some States that are operating their own State-based Exchange, but these States are still using HealthCare.gov as their enrollment and eligibility determination platform (and these States also use HealthCare.gov’s call center).
Starting in 2017, these States were required to pay a 1.5 percent “user fee.” By 2021, the “user fee” increased to 2.5 percent. HHS recently proposed to reduce this “user fee” to 1.75 percent for 2022.
What Are HealthCare.gov’s “User Fees” Used For?
Let’s start with what they are NOT used for. For example, functions related to the ACA’s “risk adjustment” program and operations associated with calculating and paying the ACA’s premium subsidies are NOT funded by the “user fees.”
However, costs related to Exchange information technology (IT), health plan review, management and oversight, eligibility and enrollment determination functions including the call center, and consumer information and outreach are considered “user fee”-eligible costs for HealthCare.gov.
For those States that only use HealthCare.gov as their enrollment and eligibility determination platform (where these States conduct their own health plan certification reviews and consumer information and outreach), the “user fee” is still used for things like IT and call center functions.
In the case of a State that relies on HealthCare.gov to perform ALL its Exchange functions, the chart below should give you some perspective on how much money the “user fees” generate for HHS.
Should HealthCare.gov’s “User Fees” Be Increased or Reduced?
Some organizations argue that HHS should actually increase the “user fees” back to 3.5 percent – or at a minimum, keep the “user fees” at 3percent – and use any excess “user fees” to fund things like education, consumer outreach, and to further improve HealthCare.gov’s IT.
Others – including HHS – have argued that the “user fees” are passed-through to the consumer, thereby increasing the premiums that Exchange planholders are required to pay. By lowering the “user fees,” HHS would be lowering the premiums for Exchange plans.
Although both sides have valid arguments, it is difficult to predict where HHS will land on the “user fee” percentages for 2022. As stated, we are expecting final regulations any day now that will answer this question for us.