The Transitional Reinsurance Fee (Benefit Minute)
Section 1341 of the Affordable Care Act (ACA) established the transition reinsurance program. Its purpose is to stabilize premiums in the individual market due to changes mandated by ACA (including elimination of medical underwriting and pre-existing condition exclusions). The program will collect contributions from group health plans to fund reinsurance payments to insurers in the individual market, administrative costs of the reinsurance program and the General Fund of the U.S. Treasury. This is a three year program that runs from 2014 to 2016.
Health insurance issuers and self-insured group health plans offering major medical coverage are required to contribute to the reinsurance program (Contributing Entities). Group health plans that do not provide minimum value, post-65 retiree health plans, health reimbursement arrangements, health savings accounts, health flexible spending accounts and standalone dental/vision coverage are not subject to reinsurance contributions. Health plans that are self-insured and self-administered (i.e., do not use an administrator for enrollment or claims processing) must make reinsurance contributions for 2014 only.
The reinsurance contribution rate for 2014 is $63 ($5.25/month) per enrolled individual, including dependents. The reinsurance contribution can be made in two installments with the first installment ($52.50 per enrollee) due January 15, 2015 and the second installment ($10.50 per enrollee) due November 15, 2015. Alternatively, the full contribution can be made in January 2015. The estimated contribution rate for 2015 is $44 per enrolled individual, and the rate for 2016 is expected to be lower.
For fully-insured group health plans, the health insurance issuer is responsible for the submission process and payment. For self-insured plans, the plan sponsor is responsible. A self-insured plan may use a claims administrator to complete the submission process and make the payment on behalf of the plan, if the claims administrator agrees to do so. The DOL has advised that paying required contributions under the reinsurance program would constitute a permissible plan expense for purposes ERISA because the payment is required by the plan under the Affordable Care Act. A plan sponsor of a self-insured health plan that pays the reinsurance fee may treat the contributions as ordinary and necessary business expenses.
The basic steps in the reinsurance contribution submission process, which must be completed by November 15, 2014 are:
- Set up an account in Pay.gov
- Complete the contribution Form
- Upload supporting documentation
- Enter payment information
HHS is using Pay.gov for the contribution submission process. Pay.gov allows external parties to submit forms and make payments online to federal government agencies. Reporting Entities (including health insurers, self-insured group health plans and claims administrators acting on behalf of group health plans) are required to register for a Pay.gov account by creating a user profile that includes both user information (for a specific individual) and company information.
Once the Pay.gov account is set up, the “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” must be completed. This Form requires information for a billing contact and billing address, as well as the name and contact information for three submitter contacts who can discuss information submitted on the Form and supporting documentation. The Form also requires the annual enrollment count, determined using one of the approved counting methods, and whether the Form is being submitted for the first installment, the second installment or the combined payment. If the contribution is going to be made in two installments, the Form and supporting documentation must be submitted twice (once for each payment). The Reporting Entity must also confirm that the annual enrollment count matches the enrollment count in the supporting documentation. Finally, an authorizing official for the Reporting Entity must certify that the data being submitted is true, correct and complete. The Form is not yet available on Pay.gov.
The supporting documentation consists of a CSV file with one row for each Contributing Entity. The data fields for the CSV file are available on www.regtap.info (registration required) and include information about the Contributing Entity and the annual enrollment count. The supporting documentation does not identify enrollees.
The last step in the submission process is scheduling the required payment. Payment of reinsurance contributions may only be made on Pay.gov using an ACH payment. Only one bank account may be entered on a Form; therefore, if a Reporting Entity is submitting contributions on behalf of several Contributing Entities with different bank account information, a separate Form is required for each. The payment must be scheduled for a date that is on or before the applicable reinsurance contribution deadline.
For fully-insured group health plans, the insurer will be responsible as both the Reporting Entity and the Contributing Entity. Self-insured group health plans should work with their claims administrator to collect the information needed to complete the Form, inquire whether the claims administrator will act as the Reporting Entity and determine the payment process. If the claims administrator will not be the Reporting Entity, then the group health plan should begin the process by setting up a Pay.gov account.