Section 1341 of the Affordable Care Act established a transitional reinsurance program to stabilize premiums in the individual market inside and outside of the Marketplaces. The transitional reinsurance program will collect contributions from contributing entities to fund reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans, the administrative costs of operating the reinsurance program, and the General Fund of the U.S. Treasury for the 2014, 2015 and 2016 benefit years.
All group health plans (grandfathered and non-grandfathered) that provide minimum value are required to pay this fee. There are a few exceptions for the following:
• Health reimbursement arrangements (HRAs) that are integrated with other coverage.
• Health savings accounts (HSAs).
• Health flexible spending accounts (Health FSAs).
• Coverage that is secondary to Medicare.
• Excepted benefits, such as stand-alone dental and vision plans.
• Prescription drug coverage.
• Employee assistance plans (EAPs).
• Long-term care coverage.
For 2014, the total fee due was $63 per covered life. This fee is broken down into 2 payments: (1) $52.50 due by January 1, 2015; and (2) $10.50 due by November 15, 2015.
For 2015, the total fee due is $44 per covered life. This fee is broken down into 2 payments: (1) $33 due by January 1, 2016; and (2) $11 due by November 15, 2016.
For 2016, the total fee due is $27 per covered life.
If a plan would like to make the entire payment can be made at one on the January 15th due date.
The covered life count is based on the 9-month time period from January 1 through September 30 and can be calculated in 1 of 4 ways*:
1. Actual count method: add the total number of lives covered for each day of the first nine months of the benefit year and divide that total by the number of days in those nine months.
2. Snapshot count method: add the total number of covered lives on any 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 (e.g., March, June and September) of the benefit year, and divide that total by the number of dates on which a count was made. The date(s) used for the second and third quarters must fall within the same week of the quarter as the corresponding date(s) used for the first quarter.
3. Snapshot factor method: add the total number of covered lives on any 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 benefit year, and dividing that total by the number of dates on which a count was made. The date(s) used for the second and third quarters must fall within the same week of the quarter as the corresponding date(s) used for the first quarter. In addition, the same months must be used for each quarter (i.e., March, June and September).
Under this method, the number of lives covered on a date is calculated by adding: (1) the number of participants with self-only coverage on the date and (2) the product of the number of participants with coverage other than self-only coverage on the date and a factor 2.35.
4. Form 5500: The number of covered lives for the most current plan year is calculated based upon the “Annual Return/Report of Employee Benefit Plan” filed with the Department of Labor (Form 5500) for the last applicable time period. For purposes of this counting method, the number of lives covered for the plan year for a plan offering only self-only coverage equals the sum of the total participants covered at the beginning and end of the plan year, as reported on lines 5 and 6(a)-(c) of Form 5500, divided by 2. The number of lives covered for the plan year for a plan offering self-only coverage and other than self-only coverage equals the sum of the total participants covered at the beginning and the end of the plan year, as reported on lines 5 and 6(a)- (c) of the Form 5500. (Can only be used by self-funded plans that have filed a Form 5500 for the prior plan year.)
Each method may produce a different covered life count. As such, it may be worth exploring all 4 options and seeing which method produces the lowest number. (Covered life count should be rounded to the nearest 100th – example. 261.45). In addition, a different counting method can be used each year.
*Secondary Coverage Exception: Any member that has coverage under a plan, and that coverage is secondary, does NOT need to be counted and reported on.
All covered life reporting and payments for the TRF will take place through www.pay.gov. Plan Sponsors are welcome to register on this site and submit the required information on their own or request RCI do this on their behalf. (FYI - information used in the registration process will be used to pre-populate the TRF Form.) If a Plan Sponsor elects to have RCI submit the TRF on their behalf, there will be a nominal fee charged to the client as a result of the time involved.
The TRF Form (called “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form”), is located on www.pay.gov and will need to be completed by November 15. The following information will be required as part of this Form:
This Form will need to be submitted TWICE: once for the payment due by January 15 and again for the payment due by November 15. However, both submissions must be done by November 15. For a combined payment, only one Form needs to be submitted.
The Form does not need to be completed in one session. A Plan Sponsor can start the Form, stop, and then come back later and finish it as long as it’s submitted before the due date of November 15.
If, for any reason, bank account information changes before the ACH takes place, www.pay.gov will need to be updated as soon as possible. If the payment is not made on time, an invoice will be mailed out and Federal debt collection procedures will begin.
The government realizes that some banks may have an ACH Debit Block (also known as “ACH Positive Pay” or “ACH Fraud Prevention Filter”). If the bank being used for the ACH has a block, YOU MUST CONTACT YOUR BANK and have the Agency Location Code (or the ALC+2 value) added. For the Reinsurance Contribution process the ALC+2 is 7505008015. If you do not do this, the payment will not go through.
For fully-insured plans, the insurance carrier is responsible for the covered life submission and payment of the Transitional Reinsurance Fee.
For self-funded plans, the Plan Sponsor is responsible for the payment of the Transitional Reinsurance Fee. However, a Third Party Administrator (TPA) may submit the covered life count and the payment information on behalf of the Plan Sponsor*.
If a plan changed from self-funded to fully-insured (or vice versa) during the 9-month counting period:
*In most cases, the Plan Sponsor is the employer.
For questions about this process, feel free to contact your Account Manager with RCI at (308) 635-2260 or (800) 795-7772.