The following Update addresses Section 1341 of the Affordable Care Act established a transitional reinsurance program to stabilize premiums in the individual market inside and outside of the Marketplaces. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered, Affordable Care Act-compliant reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 benefit years.
How it Applies
This fee on health plans totals $25 billion, which will be collected over the three-year period from 2014 through 2016. The majority of the money will be used to fund a reinsurance program, which is intended to lessen the impact of adverse selection in the individual market. The fee applies to both insured and self-funded commercial major medical plans effective January 1, 2014 and ends with the last fee payment on January 1, 2016.
Fully-Insured employers will have this fee included in either their monthly fixed premium rates from the carrier or included as a separate line item on their carrier invoices. The carriers submit on behalf of their fully-insured clients.
Self-Funded employers are required to report a count of lives covered to the Health and Human Services during the fourth quarter of the respective filing year. The ACA enrollment and contributions submission form is provided online only through www.pay.gov.
What is the fee?
For the 2014 benefit year, HHS offered contributing entities the option to pay:
- the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or 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.
For the 2015 benefit year, HHS will offer contributing entities the option to pay:
- the entire 2015 benefit year contribution in one payment no later than January 15, 2016 reflecting $44.00 per covered life; or
- 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 2016 benefit year, HHS will offer contributing entities the option to pay:
- the entire 2016 benefit year contribution in one payment no later than January 17, 2017 reflecting $27.00 per covered life; or
- in two separate payments for the 2016 benefit year, with the first remittance due by January 17, 2017 reflecting $21.60 per covered life, and the second remittance due by November 15, 2017 reflecting $5.40 per covered life.
2016 is the last year self-funded employer plans will be required to submit the Reinsurance Fee in accordance to the three year benefit filing fee requiring under the Affordable Care Act.
How does CBIS assist clients?
For those Self-Funded clients that would like assistance from CBIS, as in the past year’s reporting and payments, CBIS will provide the Average Number of Covered Lives enrolled and calculate the Reinsurance Fee.
What are Covered Lives?
Covered lives are all covered individuals, both employees and their dependents. For example, an employee who has family coverage including a spouse and two children would be counted as four covered lives.
What is the process self-funded employers must follow to pay the reinsurance fee?
There is a streamlined membership and contribution process through http://www.pay.gov. Pay.gov is a secure, web-based application that serves as the portal where employers can report and submit the required membership data elements. Registration on pay.gov is required in order to complete the reinsurance process.
As part of the membership and contribution process, a contributing entity, e.g. the employer or insurer making the contribution, can begin to collect the data, calculate their annual enrollment count and prepare the supporting documentation.
Additionally, a reporting entity will need to complete the following steps:
- Access and complete the form on pay.gov, titled “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.” A copy of this form has been included in the email communication for client’s reference and use.
- Upload the supporting documentation (this would be the same .CSV format file from last year with the updated numbers).
- Enter payment information (e.g. payment date and banking information).
- Self-funded employers should also contact their bank to have the ALC+2 value added to allow for automatic debits
What if after receiving the snapshot report clients have questions?
Please feel free to contact your dedicated CBIS Account Representative and they will assist with any questions as well as provide additional guidance and clarification if needed.
Information contained in this Important Updates—In The Know & How It Applies is not intended to render tax or legal advice. Employers should consult with qualified legal and/or tax counsel for guidance with respect to matters of law, tax and related regulations. Creative Benefits & Insurance Solutions provides comprehensive benefits advice and administrative services with respect to all forms of employee benefits, risk management, property & casualty, workers’ compensation, staffing insurance and human resources services. For additional information about our services, please contact us at (586) 992-0404 or email us at firstname.lastname@example.org.