Self funded health plans face a rapidly approaching compliance deadline of January 15, 2015 relative to the Affordable Care Act’s so called “transitional reinsurance fee”. A previous post addressed the various reinsurance (or bailout) programs devised in the ACA (click – http://sstevenshealthcare.blogspot.com/2014/01/acas-insurance-company-bailouts.html).
These programs are sometimes referred to as the “Three R’s”, which are:
The first of these reinsurance/bailout programs – the [temporary] reinsurance program – is funded by virtually ALL health insurance plans (e.g., individual, group, fully insured, self funded) through the assessment of a fee/tax. Fully insured plans owe the tax, but do not have to worry about counting/collecting/remitting. Self funded plans however, are responsible for all of the aforementioned. So, here’s the scoop on determining the amount of your organization’s tax, along with when, and how to submit it….
For 2014, the amount of the transitional reinsurance fee is $63 per covered MEMBER, per year (PM/PY). Note that this breaks down to $5.25 per member, per month. Also note the term “member” includes ALL covered members of the plan…employee, spouse, and children. In 2015 the amount reduces to $44 PM/PY, and the estimated amount for 2016 is $25-$30 PM/PY.
IMPORTANT: Affected employers are required to report the number of covered/affected member lives by NOVEMBER 15, 2014 via – https://pay.gov/public/home
Training sessions designed to assist employers are being offered/provided by CMS through November 15, 2014. To find out more about these sessions, click – https://www.regtap.info/
Affected employers have the option of paying their 2014 fee in installments, or in a lump sum. If the later, the required amount is due no later than January 15, 2015. If the former, the first installment (of $52.50 PM/PY) is due no later than January 15, 2015; and the second installment (of $10.50 PM/PY) is due no later than November 15, 2015.
The ACA’s regulations allow for a variety of methods to determine each affected employers PM/PY fee. The simplest of these methods is the so called “snapshot method”. Using this method, the average number of covered members on which to base the fee is found by adding the total number of covered employees on January 1, April 1, and July 1 of each year, dividing that number by three, and multiplying by the appropriate fee amount. For example, for 2014:
The federal government promises a “streamlined membership and contribution” process, through which employer’s remit their transitional reinsurance fee. A dedicated website (click – https://pay.gov/public/home) provides a secure, web based portal employers use to report and submit their required tax.
For a more detailed overview of the transitional reinsurance fee, and the process of remitting the required fee/tax, click here – http://www.cigna.com/assets/docs/about-cigna/informed-on-reform/reinsurance-assessment-fact-sheet.pdf