Changes Proposed to Transitional Reinsurance Fee

The transitional reinsurance fee under the Affordable Care Act will be collected in two installments instead of one, according to proposed regulations issued by the U.S. Department of Health and Human Services (HHS) on December 2, 2013.  This program was designed to provide funding to insurers that incur high claim costs for enrollees in the individual marketplace and will be funded by fees from insured and self-funded plans for 2014, 2015, and 2016.

Originally, the reinsurance fee was to be payable for the calendar years 2014, 2015, and 2016 in the January that follows each year.  Under the proposed regulations, the fee would be collected in two installments—the first to fund the transitional reinsurance program and the second to reimburse the U.S. Treasury.  For 2014, $52.50 of the $63 per covered life fee is allocated to the first installment and $10.50 to the second.  The first installment would be due within 30 days of HHS’s notice of the amount of fee owed, which HHS would provide in response to the contributing entity’s notice to HHS of its covered lives, due by November 15.  HHS is expected to provide the fee notice in December of each year.

For example, for 2014, the first installment would be invoiced in December 2014 and due in January 2015.  The second installment would be due within 30 days of HHS’s notification to the covered entity of the second installment amount.  HHS expects to give notice of the second installment amounts due during the fourth quarter of each year following the year for which payment is being made.  For example, for 2014, the second installment would be invoiced and paid during the fourth quarter of 2015.

The proposed fee for 2015 is $44 per covered life; HHS has not yet proposed the 2016 fee.

HHS also proposes in these regulations, for 2015 and 2016 only, to exclude self-funded plans that are self-administered from paying the fee.  The regulations explain that excluded self-administered plans are those that do not use a third-party administrator for core administrative processing functions, such as adjudicating, adjusting, and settling claims, and processing and communicating enrollment information to plan participants and beneficiaries.  This exemption will likely be of limited benefit to employer-sponsored health plans, which typically use a third-party administrator for claims or enrollment services.

If you have questions about the reinsurance program, call ASR Health Benefits at (616) 957-1751 or (800) 968-2449.