ACA REMINDER: Key Reinsurance Fee Dates Approaching
Beginning in 2014, the Affordable Care Act (ACA) established the following three risk-spreading programs to provide payments to health insurance issuers that cover higher-risk populations and to more evenly spread the financial risk carried by issuers: a transitional reinsurance program, a temporary risk corridor program and a permanent risk adjustment program.
The transitional reinsurance program is intended to help stabilize premiums for coverage in the individual market during the first three years of Exchange operation (2014, 2015 and 2016) when individuals with higher-cost medical needs gain insurance coverage. This program imposes a fee on health insurance issuers and self-insured group health plans.
For 2014, the annual contribution rate is $63 per enrollee per year, or $5.25 per month.
For 2015, the annual contribution rate will be $44 per enrollee per year, about $3.67 per month.
An issuer’s or plan sponsor’s reinsurance fee will be calculated by multiplying the number of covered lives (employees and their dependents) during the benefit year for all of the entity’s plans and coverage that must pay contributions, by the national contribution rate for the benefit year. Thus, the annual contribution in 2014 for a group health plan with 150 covered lives would be $9,450 per year (150 x $63 = $9,450).
As a reminder, the submission of annual enrollment count and schedule contribution is required no later than November 15, 2014.
If your health plan is currently fully-insured, this fee should already be built into your premium and your health insurance carrier will pay it on your behalf.
If your health plan is self-insured, you will need to work with your Third Party Administrator to ensure this fee is paid.
As always, if you have any questions about this or any other ACA legislation, do not hesitate to contact your GKG Account Manager.