The Transitional Reinsurance Fee (TRF) applies to fully insured and self-funded major medical plans for 2014, 2015, and 2016. The purpose of the fee is to provide funds to help stabilize premiums in the individual insurance market in view of uncertainty about how the Patient Protection and Affordable Care Act (ACA) would affect claims experience.
While insurers are responsible for reporting and paying the fee on the policies they issue, the fee will generally be passed on to the employer. Plan sponsors of self-funded plans (or their representatives) must report and pay the fee to the federal government at www.pay.gov.
Please see below for more information. The following FAQ is an excerpt of a Team BIM/UBA ACA Advisor. For a complete a copy of the FAQ and TRF Filing Instructions, please email your Team BIM representative.
Q: What plans does the TRF apply to?
A: All plans that provide primary major medical coverage to employees or retirees owe this fee. Major medical coverage includes medical plans that provide minimum value (that is, have an actuarial value of 60 percent or more) and all medical policies provided through the Marketplace. If the employer uses multiple separate plans or policies that collectively provide major medical coverage, one fee is due on that combined coverage.
The fee does not apply to:
- Medical coverage if the employer or retiree plan is secondary
- Medical coverage that does not provide minimum value, such as a “skinny” plan
- Stand-alone dental and vision plans (stand-alone means these benefits are elected separately from medical, or the benefits are provided under separate insurance policies from the medical coverage)
- Life insurance
- Short- and long-term disability and accident insurance
- Long-term care
- Health flexible spending accounts (FSAs)
- Health savings accounts (HSAs)
- Health reimbursement arrangements (HRAs)
- Hospital indemnity or specified illness coverage
- Employee assistance programs (EAPs) and wellness programs that do not provide major medical coverage
- Stop-loss coverage
Q: Does the fee apply to all types of plan sponsors?
A: There are no exceptions for small employers. There are no exceptions for government, church or not-for-profit plans. Grandfathered plans owe this fee. Union plans must pay the fee on their covered members. However, self-funded plans that are self-administered (that is, they do not use a third party vendor to process claims or eligibility) are exempt from the filing and fee for 2015 and 2016.
Q: Who must pay this fee?
A: The fee must be determined and paid by:
- The insurer for fully insured plans
- The plan sponsor of self-funded plans (this is typically the employer for a single-employer plan and the board or committee for a multiemployer plan). The plan’s third-party administrator (TPA) may assist with the calculation and pay the applicable fee on behalf of the plan sponsor.
Q: When is the TRF filing due?
A: The TRF filing is due by December 5, 2014, November 16, 2015, and November 15, 2016. (The due date is the same for both calendar year and non-calendar year plans.) Originally, the 2014 filing was due on November 15, 2014, but that deadline was extended.
Q: When is the fee due?
A: Employers and insurers may pay the fee in one installment, by January 15, 2015, January 15, 2016, and January 17, 2017, or in two installments each year. If paid in installments, the larger installment will be due January 15, and the smaller installment will be due the following November 15. For example, if the 2014 fee is paid in installments, $52.50 per person will be due January 15, 2015, and $10.50 per person will be due November 15, 2015.
For the 2014 benefit year, the second payment was due no later than November 15, 2015.
For the 2015 benefit year, it can be paid in one payment, due by January 15, 2016, or in two payments, the first by January 15, 2016, and the second by November 15, 2016. Although the fees are due in January 2016 and November 2016, information and payment scheduling is due by November 16, 2015.
For the 2016 benefit year, it can be paid in one payment, due by January 17, 2017, or in two payments, the first by January 17, 2017, and the second by November 15, 2017. Although the fees are due in January 2016 and November 2016, information and payment scheduling is due by November 15, 2016.
Q: How much is the fee?
A: The annual fee was $63.00 per covered life for 2014. The fee was $44.00 per covered life for 2015. The fee is $27.00 per covered life in 2016.
The fee is based on covered lives (that is, employees, retirees, and COBRA participants and covered spouses and children).
Q: How is the fee calculated?
A: Plan sponsors of self-funded benefits have several options to calculate the number of lives on which the fee is based. The snapshot factor method may only be used if all plan options are self-funded. Results should be rounded to the nearest hundredth:
- Actual Count Method – Count the covered lives on each day of the first nine months of the calendar year, and divide by the number of days in the first nine months. This average number will be multiplied by $27.00 to determine the fee for 2016.
- Snapshot Count Method – Determine the number of covered lives on dates during the first three quarters of the calendar year, and divide the total by the number of dates on which a count was made. The measurement date must be the same corresponding month in each quarter, and dates for the second and third quarters must be in the same week of the month as was used for the first quarter. An entity may use more than one measurement date per quarter if an equal number of dates are used for each quarter.
- Snapshot Factor Method – Determine the number of covered employees, retirees, and COBRA participants on dates during the first three quarters of the calendar year who have self-only coverage and the number who have other than self-only coverage. The measurement date must be the same corresponding month in each quarter, and dates for the second and third quarters must be in the same week of the month as was used for the first quarter. An entity may use more than one measurement date per quarter if an equal number of dates are used for each quarter. Also multiply the number of employees, retirees, and COBRA participants with other than self-only coverage by 2.35 to approximate the number of covered dependents (rather than actually counting them), and add that to the number of employees, retirees, and COBRA participants with self-only coverage. Divide the total by the number of dates on which a count was made
- Form 5500 Method – Determine the number of participants at the beginning and end of the plan year as reported on the most recent Form 5500.
- If dependents are covered, add the participant count for the start and the end of the plan year (to approximate the total number of covered employee and dependent lives).
- If dependents are not covered, add the participant count for the start and the end of the plan year and average the result
- The Form 5500 must be filed by October 15 to use this optio
Q: How is the fee paid?
A: The fee will be reported and paid through www.pay.gov. When the entity reports the number of covered lives (by November 15) the employer will provide account information and choose a payment date. The fee will be electronically withdrawn by the government on the chosen payment date.
Q: How is the filing made?
A: The filing is made through www.pay.gov. The filing process was operational as of October 24, 2014, and the 2016 Submission Form was made available on October 3, 2016. The Centers for Medicare & Medicaid Services (CMS) has provided an in-depth step-by-step manual which was most recently updated on April 27, 2016. It has also provided a job aid to assist with the file layout and other technical aspects of the required supporting documentation. The process allows for the plan sponsor to directly file and pay just for its own plan, or to have a third party file and pay on behalf of multiple plans. This makes some parts of the process redundant in certain situations. Essentially, the process is:
- If the Reporting Entity does not yet have a pay.gov account, it must register at www.pay.gov.
- Once registered, the entity completes the “ACA Transitional Reinsurance: Annual Enrollment Contributions Submission Form.” It is important to note that there is a specific form for each benefit year.
Q: Is additional help available?
A: Yes, help is available from several places:
- The Transitional Reinsurance Program webpage: http://www.cms.gov/CCIIO/Programs-and-Initiatives/Premium-Stabilization-Programs/The-Transitional-Reinsurance-Program/Reinsurance-Contributions.html
- The Transitional Reinsurance Program Support Mailbox: Reinsurancecontributions@cms.hhs.gov
- Pay.gov website: https://www.pay.gov
- Pay.gov Customer Support: 800-624-1373 (Option #2), or 216-579-2112 (Option #2), or email pay.gov.clev@clev.frb.org
- HHS has scheduled multiple call-in sessions for users with questions. Register at https://www.regtap.info.
Q: Is there a quick reference guide for due dates?
A: Yes. The 2016 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form’ (2016 Form) was available via https://www.pay.gov/ on Monday, October 3, 2016.
Key reinsurance contribution deadlines for the 2016 benefit year:
Key reinsurance contribution deadlines for the 2015 benefit year:
Key reinsurance contribution deadlines for the 2014 benefit year:
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This information is general and is provided for educational purposes only. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors. |
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