Transitional Reinsurance Fee
ACA establishes a transitional reinsurance program to help stabilize premiums for coverage in the individual market during the first three years of implementation. Beginning January 1, 2014, reinsurance programs will include three key elements: HHS will administer the program; health insurers of fully-insured and plan sponsors of self-funded group health plans will be required to pay reinsurance fees to HHS, and; HHS will use the fees to make reinsurance payments to health insurance issuers in the individual market for high-cost claims (note: reinsurance will be available for both on-Exchange and off-Exchange individual policies other than grandfathered policies). Reinsurance payments will be a specified coinsurance amount for claims incurred above an attachment point and below a reinsurance cap.
HHS estimates the fee for 2014 could be as much as $63.00 per covered life. Plan sponsors and issuers must submit covered life information by December 19, 2014 (delayed from the original date of November 15, 2014). HHS will send invoices based on this information, which must be paid by issuer sand plan sponsor in two parts ($52.50 by January 15, 2015 and the remaining $10.50 by November 15, 2015). One payment of $63.00 is allowed if made by January 15, 2015. An estimate for the 2015 plan year is $44.00, with $33.00 payable in January 2016 and the remaining $11.00 payable in late 2016.
For each year in the three-year period, HHS will issue an annual notice specifying the required reinsurance fee and the applicable reinsurance parameters (the coinsurance rate, the attachment point and the reinsurance cap). For 2014, HHS has indicated that:
- the reinsurance fee will be as high as $63 per covered life; and
- the coinsurance rate will be 80%; the attachment point will be $60,000; and the reinusrance cap will be $250,000.
Transitional Reinsurance Fee Hot Topics & FAQs
- Transitional Reinsurance Fee Delay
The Department of Health and Human Services has delayed the submittal deadline of employer enrollment counts for 2014 to administer the fees owed under the Transitional Reinsurance program to 11:59 pm on December 19, 2014. The original deadline under the program was November 15, 2014. The deadlines for payments of the two part of the fee (January 15, 2015 and November 15, 2015) remain the same.
The Transitional Reinsurance Fee, paid by insurers for insured medical plans and by plan sponsors of self-funded plans, was instituted by ACA to help stabilize premiums for coverage in the individual health care market during the first three years of operation of the Federal and State Public Exchanges.
- Transitional Reinsurance Fee Deadline for Employers Approach in November
Plan sponsors and issuers must register and report covered life information by November 15, 2014 via pay.gov for the Transitional Reinsurance Fee. The Department of Health and Human Services (HHS) will send invoices based on this information by December 15, 2014, for $52.50 of the $63.00 owed per covered life in 2014. Insurers and plan sponsors of self-funded plans must pay the fees within 30 days. The remaining $10.50 per covered life will be invoiced in the fourth quarter of 2015 and is payable later in that same quarter. In recent guidance, the Centers for Medicare & Medicaid Services (CMS) is allowing an option to make a single combined payment for the full $63.00 times the number of covered lives payable by January 15, 2015.
American Fidelity Assurance Company does not provide tax or legal advice.