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Applicable contributing entities who have registered with Pay.gov for the payment of their 2016 transitional reinsurance fee should be reminded that a scheduled payment will be made from the assigned bank account on 11/15/2017 for employers who chose to remit the fee in two installments.  For these employers, $5.40 per covered life will be deducted from the bank account on 11/15/2017.  This will be the last payment of the Transitional Reinsurance Fee.

 

Background

The transitional reinsurance fee is an ACA fee paid to the Transitional Reinsurance Program, which aims to help stabilize the insurance premiums in the individual Marketplace. The program is temporary and 2016 is the final year for the fee.

 

Who must pay the transitional reinsurance fee?

  • For self-insured plans, the health plan (or the employer) is the “contributing entity” responsible for paying the fee. However, the plan may choose to use a third-party administrator to make the payment on its behalf.
  • If the self-insured plan is also self-administered and they do not use a third-party administrator for core administrative functions (e.g., claims processing, adjudication, or enrollment), then they are excluded from paying the transitional reinsurance fee.
  • For fully-insured plans, the health insurance carrier is the “contributing entity” responsible for paying the fee, although the cost may be passed on to the employer.

 

What types of health plans are subject to the transitional reinsurance fee?

Only plans that provide major medical coverage are subject to the transitional reinsurance fee. Major medical coverage is defined 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. Therefore, the following types of plans are excluded from the transitional reinsurance fee: excepted benefits health plans (e.g., stand-alone dental and vision plans); prescription drug-only plans; HRAs that are integrated with a group health plan; HSAs; FSAs; and EAPs, wellness programs, and disease management programs that do not provide major medical coverage.

 

How much is the transitional reinsurance fee?

The fee is $27.00 per covered life in 2016.

 

How is the fee remitted and when is the deadline?

For the 2016 benefit year, contributing entities must have registered on Pay.gov by 11/15/16. The contributing entity should have scheduled the payment by entering banking information and selecting to either pay the entire 2016 contribution of $27.00 per covered life in one payment by 1/17/2017, or in two separate payments, with the first remittance of $21.60 per covered life due 1/17/2017 and the second remittance of $5.40 per covered life due 11/15/2017.

 

Action Item

For employers who chose to schedule two separate payments for the 2016 benefit year, the second payment of $5.40 per covered life will be paid from the applicable bank account by 11/15/17. Such employers should ensure that the bank account contains the necessary funds for the scheduled payment.

 

More Information

The CMS website provides details on the transitional reinsurance program.  Any questions may also be e-mailed to reinsurancecontributions@cms.hhs.gov.

The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.

Joanna Castillo– Joanna is the Client Compliance Manager for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Joanna enjoys live music, college football, travel, and walking her dog in Golden Gate Park.