Recently, the Department of Health and Human Services issued final rules related to the reinsurance fee included in the Affordable Care Act (ACA). These rules specify employers that are exempt from paying it.
For those of you not up on the latest ACA lingo, the reinsurance fee is imposed on group health plans to help pay for coverage in the individual market. The fee is equal to the annual rate ($63 in 2014, $44 in 2015, TBD in 2016) multiplied by number of covered individuals in the plan to be paid in two installments. There are several ways to calculate total covered lives so it is important to determine which method is most advantageous for your firm.
There has been a bit of confusion as to who is subject to the fee and who isn’t when considering self-insured plans.
The bad news: Nothing changes in 2014; Everyone pays the fee.
The good news: For 2015 and 2016, health plans that are self-funded AND self-administered will be exempt from paying the fee. (Note: very few organizations will fall into this category.)
The key to this ruling is the term “self-administered.” Plans are only considered self-administered if the core administrative functions (claims processing, claims adjudication and enrollment) are handled internally and not by a third party administrator (TPA). Self-insured plans that outsource core administrative functions to a TPA are not considered self- administered and are still subject to the reinsurance fee. However, self-insured plans that use TPAs, but not for core administrative functions may also be exempt from the reinsurance fee
For more information about the final rule and a better description of what is and isn’t considered self-administered, please visit the Federal Register page or contact us.
Got ACA questions? Our team is on the front lines monitoring what is going on in Washington, as well as, in the individual states and can help your business navigate these uncharted regulatory waters. Contact our team if you have questions and need a little ACA guidance.
Image credit: Ken Teegardin via flickr
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