Transitional Reinsurance Program

November 5, 2015

in Misc.

The Transitional Reinsurance Program is a three-year program that began in 2014 and continues through 2016, which was established by the Affordable Care Act to stabilize premiums in the individual market both inside and outside of the health insurance Marketplaces (“Exchanges”). The program requires employers sponsoring certain self-insured plans to make contributions to support payments to individual market issuers that cover high-cost individuals.

Who Is A Contributing Entity?
Health insurance issuers and certain self-insured group health plans offering “major medical coverage” that is part of a commercial book of business are considered contributing entities.

For the purpose of reinsurance contributions, “major medical coverage” means:

  •  A catastrophic plan;
  • An individual or a small group market plan subject to the actuarial value requirements under section 156.140; or
  • Health coverage for a broad range of services and treatments provided in various settings that provides minimum value.

Plans that do not offer “major medical coverage” generally do not have to pay these fees.
Exceptions
Contributing entities are not required to make contributions on behalf of coverage listed in section 153.400(a)(2), which generally includes:

  • Self-insured group health plans or health insurance coverage that consists solely of excepted benefits;
  • Health reimbursement arrangements that are integrated with self-insured group health plans or health insurance coverage;
  • Health savings accounts;
  • Health flexible spending arrangements;
  • Employee assistance plans, disease management programs, or wellness programs that do not provide major medical coverage.

For 2015 and 2016, self-insured plans that do not use a third-party administrator to perform its claims processing, claims adjudication, and enrollment functions also do not have to pay these fees, according to a final rule issued by the U.S. Department of Health and Human Services (HHS).

How Does A Contributing Entity Make Reinsurance Contributions?
To successfully complete the reinsurance contribution process, contributing entities (or third-party administrators or administrative services-only contractors on their behalf), must register on Pay.gov.
Using Pay.gov, the contributing entity (or third party administrators or administrative services-only contractors on their behalf) will access the 2014 “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” to enter the annual enrollment count for the 2014 benefit year and will access the 2015 “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” (with corresponding manual) to enter the annual enrollment count for the 2015 benefit year. Please note that there is a specific Form for each benefit year.
The ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form will auto-calculate the annual contribution amount to be remitted based on the annual enrollment count and the contributing entity will then schedule payment for the calculated reinsurance contributions on the payment page.
Special Update: An FAQ from the Centers for Medicare & Medicaid Services (CMS) explains why certain group health plans received an email requesting information regarding their reinsurance contribution submission, even though such plans had already submitted a reinsurance contribution. The FAQ also provides instructions on how to respond to such requests.

What Are The Payment Options?
For the 2015 benefit year, CMS will offer contributing entities the option to pay: (1) the entire 2015 benefit year contribution in one payment, no later than January 15, 2016 reflecting $44.00 per covered life; or (2) in two separate payments for the 2015 benefit year, with the first remittance due by January 15, 2016 reflecting $33.00 per covered life, and the second remittance due by November 15, 2016 reflecting $11.00 per covered life.
For the 2014 benefit year, CMS offered contributing entities the option to pay: (1) the entire 2014 benefit year contribution in one payment, no later than January 15, 2015 reflecting $63.00 per covered life; or (2) in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life.

Key Deadlines

Key Deadlines - 2014 Benefit Year

Key Deadlines - 2014 Benefit Year - 2

2015 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form Available on Pay.gov

Tax Treatment of Contributions
A sponsor of a self-insured group health plan that pays Reinsurance Program contributions may treat the contributions as ordinary and necessary business expenses, subject to any applicable disallowances or limitations under the Internal Revenue Code. This treatment applies whether the contributions are made directly or through a third-party administrator or administrative services-only contractor.

Additional Information
Regulations
HHS Notice of Benefit and Payment Parameters for 2015
CMS Fact Sheet
IRS FAQs

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