The Patient Protection and Affordable Care Act (ACA) created new fees for covered health plans, including transitional reinsurance program fees (TRP Fees) that are designed to stabilize premium increases that are expected to occur in individual health insurance markets as a result of the coverage of high-cost individuals. Health insurance issuers and self-insured group health plans offering major medical coverage that is subject to the TRP Fees are required to register for the first of the TRP Fees by November 15, 2014, and the first installment of the TRP Fees must be paid no later than January 15, 2015. On October 24, 2014, the Centers for Medicare & Medicaid Services (CMS) issued the ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form that must be completed in order to register for the initial TRP Fees by the November 15, 2014 deadline. Employers with group health plans that offer major medical coverage should:
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with respect to each self-insured major medical plan they have that is subject to the TRP Fees, verify that the required registration for the TRP Fees will be done by the November 15, 2014 deadline either by (1) the self-insured health plan (e.g., the plan administrator for the plan), or (2) by a third party administrator or administrative-services only contractor that has agreed to do such registration on behalf of the self-insured health plan; and
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with respect to each insured major medical plan they have that is subject to the TRP Fees, confirm that the insurer will be making the required registration for the TRP Fees by the November 15, 2014 deadline for such plan.
Who is Responsible For Paying TRP Fees and Doing the Required Registration?
The following contributing entities generally are required to pay TRP Fees for health plans offering major medical coverage that are subject to the TRP Fee requirements:
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health insurance issuer;
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self-insured group health plans;
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group health plans that have both an insured coverage option and a self-insured coverage option; and
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multiple group health plans that are maintained by the same plan sponsor, and that collectively provide major medical coverage for the same covered lives simultaneously.
The definition of self-insured health plan will change after the first year that TRP Fees are owed, and will exempt certain self-insured group health plans that self-administer the benefits in those plans. If an employer has hired a third party administrator or an administrative services-only contractor to do claims processing, claims adjudication or enrollment for its self-insured health plan, this exemption generally will not apply. Certain collectively bargained multiemployer plans and Taft-Hartley plans that are self-administered may benefit from this exemption, but that exemption will not exempt those plans from owing the TRP Fees for 2014.
If an employer has an insured health plan that offers major medical coverage that is subject to the TRP Fees, the insurer is responsible for doing the required registration for the initial TRP Fees by November 15, 2014. If an employer has a self-insured health plan that is subject to the TRP Fees, that self-insured health plan will be responsible for ensuring that the required registration for the initial TRP Fees is done by November 15, 2014 (e.g., by having the plan administrator do such registration), but is allowed to have a third-party administrator or administrative-services only contractor do such registration on the plan’s behalf if that administrator or contractor will agree to do so.
What is Major Medical Coverage?
Major medical coverage, for purposes of the TRP Fees, is generally defined as a catastrophic plan, an individual or small group market plan that is subject to certain actuarial value requirements, or health coverage for a broad range of services and treatments provided in various settings that provides certain minimum value. There are several exemptions from the definition of major medical coverage, including, but not limited to, the following:
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plans that only provide prescription drug benefits;
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plans that only provide "excepted" benefits (examples include a stand-alone dental plan and a stand-alone vision plan);
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a health flexible spending account;
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a health reimbursement arrangement that is "integrated" with certain other health coverage;
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health savings accounts;
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wellness plans, employee assistance plans, and disease management plans, as long as such plans do not provide major medical coverage; and
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stop-loss insurance coverage.
How Much Are the TRP Fees?
The TRP Fees will be owed for three years, and will be as follows:
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2014 – $63 per covered life;
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2015 – $44 per covered life; and
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2016 – the applicable amount has yet to be specified.
In order to compute the amount of the TRP Fees owed in a particular year, the number of applicable covered lives during the benefit year for the contributing entity’s major medical coverage(s) must be identified. Covered lives generally includes all persons receiving coverage under a health plan, including, but not limited to, a covered employee or retiree, and his or her spouse or dependent(s). Guidance has been issued on the requirements that will apply when determining who must be counted as a covered life, including certain exceptions that could apply.
The regulations provide five permitted counting methods for determining the number of covered lives: (1) the actual count method; (2) the snapshot count method; (3) the snapshot factor method; (4) the Member Months or State Form method; and (5) the Form 5500 method. On July 17, 2014, CMS issued a helpful memorandum that describes how each of these counting methods work. A copy of that memorandum is available at http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Downloads/Examples-of-Counting-Methods-for-Contributing-Entities.pdf.
When Are the 2014 TRP Fees Owed?
Although registration for the 2014 TRP Fee is due by November 15, 2014, no part of the 2014 TRP Fee is required to be paid any earlier than January 15, 2015. A contributing entity has two payment options with respect to payment of the 2014 TRP Fee:
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Pay In Two Installments – a contributing entity can choose to pay the 2014 TRP Fee in two installments, with the first installment of $52.50 per covered life required to be paid by no later than January 15, 2015, and the second installment of $10.50 per covered life required to be paid by no later than November 15, 2015; or
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Pay In One Installment – a contributing entity that wishes to pay the 2014 TRP Fee in one installment must pay $63 per covered life by no later than January 15, 2015.
What Must Be Done By November 15, 2014 In Order to Register For the 2014 TRP Fee?
The ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form (Form) that was issued by CMS on October 24, 2014 will need to be completed and submitted by a contributing entity for the 2014 TRP Fee no later than November 15, 2014. The Form is available on the Pay.gov website at https://www.pay.gov, and will require a contributing entity to, among other things:
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Designate the Payment Option – the payment option for the 2014 TRP Fee selected by the contributing entity (i.e., whether the 2014 TRP Fee will be paid in two installments or one installment) must be designated on the Form;
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Specify the Number of Covered Lives – the annual enrollment count of covered lives that will be used when determining the amount of the 2014 TRP Fee must be specified on the Form; and
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Submit Supporting Documentation – appropriate supporting documentation must be submitted.
To assist contributing entities in making this registration, CMS issued an ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form Manual (Manual). The Manual is designed to enable a contributing entity, or a third party administrator or administrative services-only contractor acting on behalf of a contributing entity, to complete all of the steps required for registering for payment of the 2014 TRP Fee. The Manual provides step-by-step instructions for completing the Form and submitting the appropriate supporting documents, and is available at http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Downloads/RIC_FormManual_102014_v1.pdf.
In order to ensure that this November 15, 2014 registration deadline is met, employers with group health plans that offer major medical coverage that will be subject to the TRP Fees should verify that the necessary information about covered lives has been assembled or is in the process of being assembled, and that the appropriate entity has taken or will be taking all steps necessary to comply with such deadline. The appropriate entity for a self-insured health plan subject to the TRP Fees will either be (1) the self-insured health plan (e.g., the plan administrator of the plan), or (2) a third party administrator or administrative-services only contractor that has agreed to make the registration on behalf of the self-insured health plan. An employer with such a plan should not assume that a third party administrator or an administrative services-only contractor will be doing such a registration on behalf of the plan, as some third party administrators and administrative services-only contractors have indicated they will not do such registrations. If an employer with such a plan has not discussed with its third party administrator or administrative services-only contractor who will be doing the November 15, 2014 TRP Fees registration, it should do so as soon as reasonably possible in order to make it clear who will be handling that registration. The appropriate entity to comply with the November 15, 2014 registration deadline for an insured health plan that is subject to the 2014 TRP Fees will be the insurer.
A contributing entity electing to pay the 2014 TRP Fees in two installments will need to submit two Forms. Registration for the 2015 TRP Fees will need to be done by November 15, 2015, and registration for the 2016 TRP Fees will need to be done by November 15, 2016 (assuming, of course, no exemption applies with respect to such TRP Fees).