Transitional Reinsurance Fee Assistance
Healthcare reform requires health insurers and self-funded group health plans to fund a Transitional Reinsurance Program from 2014 to 2016. The purpose of the program is to help offset the high medical costs of individuals enrolled in the non-grandfathered individual market. It is anticipated the individual market, which includes insurance purchased through the Health Insurance Exchange, will attract a disproportionate amount of individuals who have a tendency to incur high medical costs. Reinsurance contributions will help to offset these costs.
The Transitional Reinsurance Fee will amount to $5.25 per member per month, or $63 per member annually for 2014. This amount should decrease for the 2015 and 2016 assessments. Self-insured group health plans are responsible for remitting payment of the fee. Member totals of the plan (or plans) must be submitted to Health and Human Services (HHS) by November 15, 2014. These totals are based on the filed nine months of the calendar year. There is a choice as to whether to pay the assessed amount in one installment (all payment owed invoiced by December 15, 2014) or two installments (amounts separated with the reinsurance contribution invoiced December 15 and the amounts allocated to the US Treasury invoiced in the fourth quarter of 2015).
The fee imposed is based on the average number of lives covered under the plan for the filed nine months of the calendar year. Notably, this means not just employees covered under the plan, but dependents as well.
There are three available counting methods for the Transitional Reinsurance Fee:
- Actual Count Method;
- Snapshot Method
- Form 5500 Method.
Disclaimer: The information contained herein is not intended to be legal advice, and while every effort has been made to ensure that the content of this legislative summary is accurate, we makes no representations or warranties in relation to the information provided, and assumes no liability or responsibility for any acts or omissions based on this information. As always, we encourage you to consult with your own legal counsel prior to making any decisions regarding plan design or administration.