CARSON CITY, Nev. (AP) — The board overseeing Nevada's health insurance exchange has approved a fee schedule designed to make the program self-sustaining by 2015, when federal support is set to expire.
Nevada's Silver State Exchange expects to charge fees that will average 1.7 percent of average premiums.
That compares with an exchange charge of 3.5 percent of average premiums at the exchanges to be run by the U.S. Department of Health and Human Services (HHS), Jon Hager, the executive director of the Silver State Exchange, said Thursday at a Silver State Exchange board meeting.
The Patient Protection and Affordable Care Act (PPACA) lets states run their own PPACA exchanges, or Web-based health insurance supermarkets, or let HHS provide exchange services for their residents.
Gov. Brian Sandoval, R, proposed that Nevada run its own exchange. State lawmakers approved the proposal in 2011.
The Nevada exchange must support itself and cannot draw cash from the general fund, Sandoval says.
Hager said the difference between the user fee rate that the Silver State Exchange will charge and the federal exchange rate will save Nevada consumers about $3.2 million.
PPACA calls for the federal government to pick up most of the PPACA exchange costs in 2014, but introducing the fee in the first year will help the Silver State Exchange generate about $10 million in revenue and help the exchange build up reserves that can be used to run the program when federal funding expires, officials said.
Health insurance plans that don't include dental coverage will be charged $4.95 per month. Those that include dental will be assessed $5.31, while the fee for stand-alone dental coverage will be 36 cents.
The exchange board set fees for 2014 only, though rates are anticipated to increase in following years. Officials project fees for medical policies will to rise to about $8 per policy, per month, by 2017.
Nevada's insurance exchange received preliminary approval from the federal government this month.
Enrollment will begin in October, with policies taking effect Jan. 1.
Officials estimate 118,000 people will sign up for insurance using the exchange.
Scott Kipper, Nevada's insurance commissioner, questioned what will happen if the fees don't generate enough to operate the exchange.
"What would be done to get the exchange whole in that event?" he asked.
Hager said the exchange could ask to borrow money from the state general fund; it could "beg, plea" to the Legislature and governor's office; or it could adjust rates.
"I think we have enough buffer in these rates to make sure that doesn't happen," Hager said.
One insurance industry representative asked whether carriers would be required to pay insurance premium taxes on the fees. Carriers pay taxes on the dollar amount of policies written in the state.
Hager said the fees under existing law would be included for tax calculations, but added the exchange has submitted a bill draft request for the upcoming Legislature to exempt them from insurance premium taxes.