As of January 1 of this year, the Affordable Care Act (ACA) required participation by companies in three risk-spreading programs that send payments to health insurance issuers to cover high-cost claimants and to spread the risk among health carriers. One of these risk programs is the transitional reinsurance program – a temporary program that’s in place from 2014 through 2016. While fees for this program are due in January 2015, plan participant enrollment numbers are due November 17 and there are three methods for counting plan participants that you should be aware of.
Who Has to Pay
All plans that offer minimum value are required to make a contribution towards the transitional reinsurance program. While health insurance issuers are responsible for making contributions on behalf of fully-insured health plans, self-insured groups are responsible for making their own contributions.
When Payments Are Due
Employers must report plan participant enrollment numbers to the Department of Health and Human Services by
November 17, 2014.
Contributions can be made in two installments that total $63.00 per participant enrolled in the plan.
- The first installment is due by January 15, 2015, for $52.50
- The second installment is due by November 15, 2015, for $10.50
- The entire amount may be paid by January 15, 2015, if the employer desires
While 2015 contributions will be $44 per plan participant, 2016 contributions have not yet been released.
Where You Can Pay
Payments can be made on Pay.gov using the ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.
Three Ways to Count Plan Participants
There are three methods that can be used to count plan participants (i.e., covered lives under the plan). Each employer can choose how it would like to report based on one of the following methods:
- Actual Count Method – this method uses the daily plan participant total divided by the number of days in the period. January through September of 2014 should be used for reporting.
- Snapshot Method – this method takes the average of a selected date in each of the three quarters of 2014. Each date should match in each quarter.
- Snapshot Factor Method – this allows a health plan to use a contract size of 2.35 for other than single coverage.
- Form 5500 Method – the plan can use the most recent form 5500 filings to determine how many plan participants to remit payment on. Add the first and last month’s lives together. Only the employee would be counted, not the number of covered lives.
The transitional reinsurance program has many complexities that are sometimes difficult to be aware of and learn. If your company needs help meeting the deadlines above or understanding what it needs to do to comply with the ACA, speaking with an insurance broker can help alleviate the pressure.
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