As described in a previous article, employers will be assessed a new “transitional reinsurance fee” beginning in 2014 and continuing through 2016. Both employer sponsors of self-funded health plans and insurance companies will have to pay the fee, which is intended to help the Exchanges pay for coverage of high-risk individuals in the individual markets.
The Department of Health and Human Services issued final regulations describing the calculation of the transitional reinsurance fee.
The regulations confirm that in 2014, the fee will be $63 per covered life ($5.25 per month) under a plan providing major medical coverage. The fee does not apply to Medicare programs or plans of excepted benefits, such as prescription-only coverage, dental-only coverage or vision-only coverage. It is also not assessed on HRAs, FSAs or HSAs.
The guidance provides a choice of methods for calculating the fee. In all instances, COBRA participants have to be taken into account.
- Actual Count Method. The plan can use an actual count method which calculates the number of lives during the first three months of the year.
- Snapshot Count Method. The plan can select representative dates in each of the first three quarters of the year for counting purposes.
- 5500 Method. The plan can use the Form 5500 participant count, recognizing that all covered lives are counted, not just employees.
Plan sponsors and insurers must report to HHS the number of covered lives by November 15 each year. A notice of fee liability will be issued by December 15, and payment of the fee will be required within 30 days.
