Health care reform requires health insurance issuers and self-insured group health plans to pay a transitional reinsurance fee in 2014, 2015 and 2016. For 2014, the fee will be $63 per covered life. Insurers will pay the fee for fully-insured plans, but plan sponsors will have to pay the fee for self-funded plans.
The fee is due on major medical plans. It does not have to be paid on stand-alone dental or vision plans, retiree medical plans that pay secondary to Medicare, health reimbursement arrangements, health savings accounts or flexible spending accounts.
The number of covered lives on which the fee is due can be calculated using one of the following methods:
- Participant count on most recently filed Form 5500 (beginning of plan year plus end of plan year);
- Adding total number of all covered lives for each day of first 9 months of calendar year, divided by days in first nine months;
- Total number of covered lives on any date during first three quarters, divided by dates used;
- Counting self-only coverage on quarterly dates and assigning the self-only coverage the number 2.35 covered lives.
Employers with self-funded plans should prepare for the transitional reinsurance fee, which could be costly for those with high plan participation.
