The Affordable Care Act requires contributions to be paid by health insurance issuers and self-funded group health plans to fund a Transitional Reinsurance Program in place from 2014 to 2016. The program then pays insurers in the individual market that cover high risk individuals. The Department of Health and Human Services (HHS) establishes standards to determine high-risk individuals, a formula for payment amounts, and the contributions required of insurers, which must total $25 billion over the three years.
The reinsurance fee is a transitional fee to stabilize the individual market. The fee will be assessed on a per capita basis for both fully insured and self-funded members.
The fee funds a reinsurance program for high cost claimants in non-grandfathered individual market plans, both on and off the Exchange.
When does the fee go into effect?
The fee is effective Jan. 1, 2014. Contributing entities must begin making payments on an annual basis, and the first payment is due Jan. 15, 2015.
Is this fee permanent or temporary?
The reinsurance fee is established as a temporary fee for the three years from 2014 to 2016.
Does the fee apply to fully insured groups and self-funded groups?
Yes. The fee applies to both fully insured and self-funded groups.
Who is expected to pay the fee?
The fee applies to both fully insured and self-funded business.
For fully insured customers, (UnitedHealthcare) will pay the fee. UnitedHealthcare will collect the Transitional Reinsurance Fee through premium rates, when approved by the state. UnitedHealthcare will start progressively incorporating the Transitional Reinsurance Fee beginning Feb. 1, 2013, as renewals or new business cases begin and state regulatory approvals are received. The fees are prorated, so they are spread over 12 months.
Self-funded plans must fund the Reinsurance Fee.
Can states also collect fees in addition to what the federal government will collect under the reinsurance fee?
Yes. State reinsurance assessments, however, which would be in addition to the federal assessment, have not yet been determined.
Are groups exempt based on size?
No. There is no exemption for small group health plans.
Are non-profit entities (for example, a Catholic diocese) exempt from the reinsurance fee?
8/22/12: No. The reinsurance fee does not contain an exception for church plans, such as a Catholic diocese. TPAs are required to pay the fee on behalf of the self-funded plan.
What are the dollars collected going to be used for?
The fee funds a reinsurance program for high claimants in non-grandfathered individual market plans both on and off the Exchange.
Which types of entities does the fee apply to?
The fee applies to "contributing entities," which means a health insurance issuer, or a third party administrator on behalf of a self-insured group health plan, that offers one or more of the following plans or products:
Health plans for active employees (private and public sector)
Retiree health plans
Individual market plans, including student health plans
Executive medical plans
What types of coverage are excluded from the fee?
The following are not impacted:
Medicare Advantage plans
Part D prescription drug benefits
Medicare supplement coverage that meets the requirements of section 1882(g)(1)
Stand-alone vision and dental (FI and ASO)
Coverage for specified diseases or hospital indemnity coverage
Accident only coverage
What is the financial impact of the fee?
The reinsurance fee is a per member per month assessment of approximately $5, which will vary by state.