Transitional Reinsurance Important Dates
- November 15, 2015*: Employers must report the number of covered lives to HHS through www.pay.gov no later than this date.
- January 15, 2016: The first installment of payment for the reinsurance fee is due no later than January 15, 2016. This cost is $33 per covered life for the first installment. Employers may also opt to pay the full payment at this time, which is $44 per covered life.
- November 15, 2016: If paid in two installments, the second portion of the reinsurance fee is due no later than November 15, 2016. This cost would be $11 per covered life.
Transitional Reinsurance Fee Form
CMS released the form that health insurers and plan sponsors of self-funded major medical plans may use to report the number of persons enrolled in their health plan. HHS and the IRS will use this enrollment count for determining the amount the health insurer or plan sponsor owes under the Transitional Reinsurance Program fee.
Persons submitting the form must generally follow these steps:
- Go to http://www.pay.gov
- Register using the link at the top of the page.
- Log-in using the details provided during the registration process.
- Type “transitional reinsurance” in the search bar, and click through to the enrollment form.
- Enter the necessary billing contact information (and back-up contact information).
- On page 2, select whether the fee will be paid in two installments or all at once. Plans have the option to pay: (1) the entire 2015 benefit year contribution in one payment no later than January 15, 2016 reflecting $44.00 per covered life; or (2) in two separate payments for the 2015 benefit year, with the first remittance due by January 15, 2016 reflecting $33 per covered life, and the second remittance due by November 15, 2016 reflecting $11 per covered life. NOTE: While the first payment is not due until January 15, 2015, on the last page where you will input the banking information, you will need to indicate a date to pay the first installment. If you do not choose a date, one will be chosen for you that may be earlier than January 15.
- Select the year to which the payment relates (here, 2015).
- Enter the participant enrollment count. Plans should count participants enrolled during the first nine months of 2015 using the actual method, snapshot method, or Form 5500 method. You will be asked to confirm the enrollment count in a separate line. The form will automatically populate the amount owed based on the enrollment count.
- Complete the necessary acknowledgments and select “Continue” to finalize the submission.
- Upload the supporting documentation.
- Complete payment information, including the date the first (or total) amount should be withdrawn from the account. The fee will automatically be withdrawn from the account, so make sure to have the appropriate account information ready. Employers may need to check with their bank to make sure the payment will go through.**
As a reminder, the fee only applies for major medical coverage, and the insurer is responsible for paying the fee for fully insured.
What coverage is subject to the fee?
“Major Medical” plans are subject to the fee, but there are a number of nuances to that definition. Specifically, HHS defines a major medical plan as “health coverage which may be subject to reasonable enrollee cost sharing, for a broad range of services and treatments including diagnostic and preventive services, as well as medical and surgical conditions provided in various settings, including inpatient, outpatient and emergency room setting.”
HHS also prepared a list of plans that are not subject to the fee:
- Benefits exempt under the ACA
- Health Reimbursement Arrangements that are integrated with the health plan
- Health Savings Accounts
- Health Flexible Spending Accounts
- EAPs, disease management and wellness programs
- Stop-loss and indemnity reinsurance policies
- Military Health Benefits
- Tribal Coverage
Also, employers do not need to count employees whose Medicare coverage is Primary to the employer’s health plan. This means employer retiree plans that supplement Medicare coverage will not be subject to the fee. Early-retiree programs, however, are typically secondary to Medicare, and therefore the fee will be assessed to these programs.
Calculation of Reinsurance Fees
Actual Count. For fully-insured plans, the carrier would add up the number of lives covered for each day of the first nine months of the calendar year (called the “benefit year” in the proposed regulations), and divide that number by the total count of days in those nine months. Self-funded plans can use the same calculation.
Snapshot Count. Insurers using this method would add the totals of lives covered on a date (or more dates if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the calendar year, provided that the dates used for the second and third quarters must be within the same week of the quarter as the date used for the first quarter, and divide that total by the number of dates on which a count was made. For this purpose, the same months must be used for each quarter (for example, January, April and July). Self-funded plans can also use a variation of this method, called the Snapshot Factor Method, using the same measurement date criteria, and would count employees with coverage other than single coverage as covering 2.35 persons. In other words, instead of having to count each covered life specifically, self-funded sponsors would multiply the number of employees with coverage other than self-only by 2.35 to account for the count of covered spouses and dependents and add that to the total number of employees with self-only coverage to get their total count.
Form 5500. Finally, the sponsor may look to the participants reported on the Form 5500. The Form 5500 does not report dependents though -- only employees. So, for plans with dependent coverage, the plan sponsor must add together the number of reported participants on the first and last day of the plan year (while this seems like over-counting, the regulations clarify this inflated count is intended to reflect those dependents not reported on the Form). For plans without dependent coverage, the plan sponsor can simply add the two numbers then divide by two.
For employers who sponsor multiple group health plans, they must use the same counting method to report them, as they are treated as a single reinsurance payment. They are not, however, required to use the same count method from one plan year to the next.
The Department of Health and Human Services along with the Centers for Medicare and Medicaid Services recently released further examples of the various counting methods.
The newly released examples also allow for an aggregate reporting for plan sponsors with both a fully insured and self-funded health plan option. Under this form of aggregate reporting, the plan sponsor must use the actual count, snapshot count, or snapshot factor method. However, while this is allowed, it could prove difficult to coordinate with the carrier who would be filing for the fully-insured plan.
If an employer sponsors a fully-insured group health plan that the carrier is reporting on separately and a self-funded plan that they, as the plan sponsor, must report on, they are not required to use the same count method as the carrier uses for the fully-insured plan.
Payment of Fees and Supporting Documentation
The fees will be based on the covered lives count, which is to be submitted to HHS no later than November 15th of each year via www.pay.gov. HHS will in turn notify the “contributing entity” (insurance carrier for fully-insured plans, plan sponsor for self-funded plans) of the amount owed upon submission to pay.gov. In addition, entities will have to submit supporting documentation via pay.gov as well. They recently released the format that this information needs to be in. In addition to the formatting instructions, CMS has released additional resources to assist employers in creating their supporting documentation. A supporting documentation job aid and job aid manual can be found on CMS’s website under the “2014 Supporting Documentation Job Aid Template” section of the Reinsurance Contribution page towards the bottom of the page. The job aid will create the file need once the information is properly filled in if the steps in the job aid manual, found just below the template, are followed. Employers who are both the reporting and contributing entity will only have one line on their file. As of the date of this notice, there is not an updated template for the supporting documentation. In the event that one is released, Assurance will let you know.
Lastly, while employers will not have to pay the fee upon submitting their information, they will be required to provide their bank account number that will be used to make the payment on the date(s) they select- depending on whether they are paying in two parts or one.
Again, fully-insured plans will have this submitted and paid through the insurance carrier. Self-funded plans utilizing a TPA will want to ensure their TPA will be completing this process for the plan sponsor. Self-funded plans that do not use a TPA are responsible for submitting the reinsurance themselves. Ultimately, the responsibility to make sure that the fee is paid falls on the plan sponsor, who is usually the employer.