Client Alert: Transitional Reinsurance Fee – Deadline to Submit Initial Enrollment Count Extended Until December 5

Fraser Trebilcock Employee Benefits Attorney Health Care Law HIPAA

[NOTE: Deadline below extended until December 5, 2014 (originally November 15, 2014). In releasing this announcement, CMS stated: “We have received requests for an extension of the deadline for contributing entities to submit their 2014 enrollment counts for the transitional reinsurance program contributions under 45 CFR 153.405(b).  The deadline has now been extended until 11:59 p.m. on December 5, 2014.  The January 15, 2015 and November 15, 2015 payment deadlines remain the same.”

Although we realize the November 15th deadline has already passed, the announcement was just released this weekend.

For more information, please see Click Here

Section 1341 of the Affordable Care Act provides for the Transitional Reinsurance Program from 2014 to 2016.  The program is designed to reduce costs of high-risk enrollees, thereby reducing premiums for enrollees in the individual market and to ensure market stability.

Significantly, self-funded group health plans and health insurance issuers offering major medical coverage must make reinsurance contributions on behalf of their enrollees.

The fee for the first year of applicability is $63 per covered life, and the enrollment count must be reported to the Department of Health and Human Services by November 15, 2014 [EXTENDED UNTIL 11:59 P.M. ON DECEMBER 5, 2014]. To submit the annual enrollment count and remit the contribution amount owed for the Transitional Reinsurance Program, please use this LINK.

For self-funded group health plans, four methods are available to determine the number of covered lives:

  • Actual count
  • Snapshot Count
  • Snapshot Factor
  • Form 5500

For more information as to these enrollment count methods, click HERE.

Although self-funded group health plans are responsible for the reinsurance contributions, they may elect to use a third party administrator or administrative services-only contractor for submission of enrollment data and the transfer of the reinsurance contributions.

HHS will offer two options to pay: (1) the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or (2) in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life.

The IRS has stated that sponsors of self-insured group health plans that pay Reinsurance Program contributions may treat the contributions as ordinary and necessary business expenses, subject to any applicable disallowances or limitations under the Code.  For this and other tax treatment of these reinsurance contributions, click HERE.

For more information about the program, click HERE.

This content serves solely as a general summary of the transitional reinsurance fee program.

For more information on this issue, please contact Elizabeth H. Latchana at 517.377.0826 or Elizabeth Latchana is an accomplished attorney, specializing in employee health and welfare benefits. Recently recognized for her outstanding legal work, she was selected by some of Michigan’s leading lawyers for inclusion in The Best Lawyers in America 2014 for Employee Benefits (ERISA) Law. Ms. Latchana has taken a prominent role in educating and advising organizations on the ever-evolving law, that may well be the largest change ever to health care in the United States, commonly known as health care reform. Her expertise also includes ERISA, COBRA, Cafeteria Plans, Wrap Plans, Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs).