Self-funded employers should register on www.Pay.gov beginning this fall to become familiar with the site and complete the reinsurance contribution submission process. Pay.gov is a web-based application where employers can report and submit the required membership data elements. Registration on Pay.gov is required in order to complete the reinsurance process.
Although PPACA's "Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” is not yet available on Pay.gov, self-funded employers can begin the process of collecting the information needed to complete the Form and supporting documentation, along with its data elements such as Reporting Entity Legal Business Name and Reporting Entity Federal Tax Identification Number (TIN).
... You may recall that the Affordable Care Act (the “ACA” or “Obamacare”) added a couple of new fees for health plans, including the transitional reinsurance fee. We haven’t yet seen any acronyms for the transitional reinsurance fee (the “TRF”, anyone?), so we will simply refer to it as the fee or call it by its full name. You may have noticed that the Department of Health and Human Services (“HHS”), the agency responsible for implementing and collecting the fee, prefers to refer to it as a “contribution.”
“Contributing entities” — including health insurance issuers and self-insured group health plans offering major medical coverage — are required to pay the fee. So, if you have a self-insured major medical health plan, you’ll need to pay the fee (or arrange for the plan’s third party administrator to pay the fee on behalf of the plan). If you have a fully-insured health plan, then the insurance carrier will pay the fee.
The fee is owed with respect to any major medical plan. A major medical plan is one that provides minimum value, as defined under the ACA’s employer shared responsibility rules. The fee will not be assessed on the following types of health plan arrangements: (1) stand-alone dental or vision plans, (2) retiree medical plans that provide benefits secondary to Medicare, (3) health reimbursement accounts (HRAs) that are integrated with major medical coverage, (4) health savings accounts (HSAs), (5) health flexible spending accounts (FSAs), (6) employee assistance plans (EAPs), (7) wellness programs, or (8) prescription drug-only plans.
As mentioned above, the fee will be due for calendar years 2014, 2015 and 2016 only, which is good because unlike the paltry POCRI fee of $1 per covered life, the transitional reinsurance fee is a whopping $63 per covered life in 2014. The amount due for 2015 will be $44 per covered life. The fee amount for 2016 will be announced in a future year. For 2015 and 2016 only, a self-insured major medical plan that does not utilize a third-party administrator (other than for prescription drugs) will not be subject to the fee.
For self-insured group health plans, a plan sponsor may elect to count covered lives in one of four ways:
- Adding the total number of covered lives (employees, dependents, retirees, COBRA qualified beneficiaries, etc.) for each day of the first nine months of the calendar year, and then dividing by the total number of days in those first nine months.
- Adding the total number of covered lives on any date (or multiple dates) during the same corresponding month in each of the first three quarters of the calendar year, and then dividing that by the total number of dates used. For example, you could look at the number of covered lives on the 1st day of each the first month of each calendar quarter (January 1, April 1, and July 1), and divide by three. Alternatively, you could look at the number of covered lives on the 15thday of each of the first two months of each quarter (so January and February 15th, April and May 15th, and July and August 15th), and divide by six. The date(s) used for the second and third quarters must fall within the same week of those quarters as the corresponding date used for the first quarter.
- A variation on the bullet point above: using the same quarterly dates, count each participant with self-only coverage as “1 covered life” and each participant with some other type of coverage as “2.35 covered lives.” This 2.35 becomes a proxy for the actual number of covered lives under a coverage level other than self-only coverage.
If your major medical group health plan has both fully-insured and self-insured options, provided you are separately tracking covered lives, you can use any of the methods above to determine the covered lives for your self-insured options. Health insurance carriers are required to use one of the methods in the first two bullet points when calculating their required fee.
- Use the participant count reported on the most recently filed Form 5500. For this purpose, you are required to add the number of participants as reported at the beginning and end of the year, and treat the sum of those two numbers as your total covered lives. Using this method allows you to ignore dependents, who are not considered “participants” that must be reported on the Form 5500. There is a special rule for plans that only offer self-only coverage, which allows the plan to divide the beginning and ending participant count by two. If you sponsor a small plan that is not required to file a Form 5500, then it appears this option is not available.
To pay the fee, the first step is to go to Pay.gov and access the “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.” [Note: As of the date of this publication, the form was not yet available.] You will enter the total number of covered lives on this form, designate the counting method used, list the names of the plans being covered by the form, and provide any other required information. The HHS will then auto-calculate the amount of the transitional reinsurance fee due for the year based on the number of covered lives reported, and notify the contributing entity of the amount due. The contributing entity must pay the fee in two installments. The chart below highlights the relevant reporting and payment deadlines.
Key Deadlines for 2014 - 2015
- No later than November 15, 2014: Submit annual enrollment count
- No later than January 15, 2015: Remit first installment of fee of $52.50 per covered life
- No later than November 15, 2015: Remit second installment of fee of $10.50 per covered life
If the plan sponsor pays the fee (or has the plan’s third party administrator make the payment on its behalf), then the plan sponsor may treat the payment as an ordinary and necessary business expense, which may be deductible. If there is a trust associated with the plan (such as a VEBA), then the fee is considered a permissible plan expense, which may be paid with trust assets if the terms of the trust agreement so allow. ...
