MISSA increases annual Health Fund collection fee for MOH
Posted 2/28/10
Effective October 1, 2009, the Administration will receive an additional $60 thousand a year from the Ministry of Health (MOH). This is the result of an initiative by the MISSA Administrator, who met with representatives of MOH last December 2009.
Prior to her meeting with the MOH officials, the MISSA Administrator sent Health Secretary Justina Langidrik a formal request for MOH to increase its administrative fee of 3.5% (for the first $4 million Health Fund annual collections or a maximum of $140 thousand a year) to a fixed collection fee of $300 thousand per annum. This is in line with the Administration’s goal to supplement its tax collections with other sources of revenue to mitigate the impact of a huge cash deficit the Administration is anticipating in the coming fiscal year.
Of the $1 million average administrative expenses MISSA spent annually, 68%-69% is comprised of salaries and benefits of the 31 employees working for the Administration, 4 (or 13%) of whom are directly connected with the Retirement Fund, while the remaining 27 personnel are performing functions for both Retirement and Health Funds. If MISSA will apply proportionately the cost of salaries and benefits, it will translate to about $200,100 being the share of MOH per annum. This does not include the $103,300 additional annual share of MOH for other administrative costs like legal fees, utilities, equipment and supplies. This calculation provided the Administration with the basis for the increase.
In response to the Administrator’s request for an increase in collection fee, the MOH officials made a counter offer to increase it to $200 thousand a year, instead of $300 thousand. As the MISSA Administrator is aware of the current financial problems that MOH is facing, she said that she will elevate the issue to the MISSA Board. Subsequently, the MISSA Board approved the new annual fee of $200 thousand.
To document the new agreement, an addendum to the existing Administrative Agreement signed in 2003 was signed by the MISSA Administrator and Secretary Langidrik.
When the Marshall Islands Health Fund Act of 2002 was enacted into law by the Nitijela, the responsibility for the administration and oversight of the Health Fund and its programs as set out under the Social Security Health Fund Act 1991 was transferred to the Ministry of Health Services (MOH). Prior to 2002, MISSA administered the Health Fund.
The Administration’s aggressive collection efforts in the past several years have directly benefited MOH as one third (1/3) of all contributions collected by MISSA goes to the Health Fund. The said amount is a big help to MOH as it is being used in the implementation of the ministry’s health programs in the country.
From January 2004 through July 2009, MISSA has collected $33.45 million or an average of $5.84 million annually for the Marshall Islands Health Fund, while MOH has paid the Administration a total of $840 thousand representing 3.5% collection fee for the first $4 million collected every year as set forth in the Administrative Fee Agreement signed in 2003.