Transitional Reinsurance Due November 15

Under the Affordable Care Act, group health plans must pay an annual fee to fund the Transitional Reinsurance Program ("Program"), designed to help stabilize premiums in the individual health insurance market.

For 2016, the fee is $27 annually per covered life and applies to self-funded plans. A covered life includes all individuals covered by the self-funded plan, including employees, spouses, dependents, and those enrolled in COBRA. 

Timing:
The fee will be collected by the federal government on an annual basis. As such, each health plan must submit an annual enrollment count of the plan's average number of covered lives to the Department of Health and Human Services ("HHS") via the website www.pay.gov by November 15, 2016 and pay the fee no later than January 15, 2017.

The 2016 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form is available via www.pay.gov.

Calculating Average Covered Lives:
The regulations provide a choice of the following methods to determine the average number of covered lives. These methods are very similar to those for calculating the PCORI fee, except that these methods are based on the first three quarters of a calendar year (as opposed to all four quarters of a plan year, the foundation of the PCORI fee).

  • Actual Count Method - Calculate the sum of the lives covered for each day of the first nine months of the year and divide that sum by the number of days in the first nine months;
     
  • Snapshot Method - Add the total number of covered lives on any date during the same corresponding month in each of the first three quarters (for example January 1, April 1 and July 1) of the calendar year, and divide that total by the number of dates on which a count was made;
     
  • Snapshot Factor Method - This method is the same as the aforementioned Snapshot Method, except that for each given date, add the number of covered employees with self-only coverage and the number of covered employees with coverage other than self-only and multiply that latter number by 2.35; or
     
  • Form 5500 Method - This method is based on a formula that includes the number of participants actually reported on the Form 5500 for the applicable self-insured health plan for the last applicable plan year. In particular, the average number of lives covered under a plan offering only self-only coverage equals the sum of total participants covered at the beginning and the end of the plan year, as reported on the Form 5500, and divided by 2. However, the average number of lives covered under a plan offering coverage for employees and their dependents equals the sum of total participants covered at the beginning and the end of the plan year, as reported on the Form 5500. 


If you have any questions about this information please contact your IPS Advisors consultant or email ipsadvisors@ipsadvisors.com

The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.

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