Best’s Briefing: U.S. Health Insurers’ First-Quarter 2014 Earnings Hit by Affordable Care Act

Business Wire


Many health insurers’ first-quarter 2014 results were negatively impacted by inclusion in their income statement of the entire annual industry fee assessed under The Patient Protection and Affordable Care Act (ACA), according to a Best’s Briefing. The briefing, titled “U.S. Health Insurers’ First-Quarter 2014 Earnings Hit by Affordable Care Act,” states that the fee, which is to assist the government in funding the additional costs that it will incur under the ACA, was offset by only one quarter of premiums in the first-quarter statutory statements. It begins at $8 billion in 2014 and increases gradually until 2018, when it will reach $14.3 billion.

The industry fee is assessed to insurers based on their percentage of health insurance premiums written (commercial, individual, Medicare Advantage and Medicaid managed care) compared with the total industry for the prior year. It should be noted that many insurers have increased premiums to offset the cost, but the fee will cause expenses to increase when compared with prior years. Per the American Action Forum, it is estimated that the fee will result in premium increases for the average insured individual of $60-$160 per person in 2014 and $260 for the average family. The National Association of Insurance Commissioners required health insurers to expense the 2014 fee, which will be paid in September, in the first-quarter statutory statements rather than accruing the fee quarterly.

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