Additional Guidance on Transitional Reinsurance Program Payments

The Department of Health and Human Services (HHS) has provided additional guidance regarding the calculation and payment of the contributions that will be due from employer-sponsored plans under the transitional reinsurance program, as part of proposed regulations covering benefit and payment parameters under PPACA.

The transitional reinsurance program is intended to help stabilize premiums in the individual market during the first three years that the state-based Exchanges are in effect (2014, 2015 and 2016).  The program will be funded based on contributions from health insurance issuers and third-party administrators on behalf of self-insured group health plans.  To determine the amount of the contributions, HHS will set a national contribution rate each year; the amount that each contributing entity must pay will be determined based on all covered enrollees of that entity. 

The proposed regulations provide more detail on the process for calculating and paying the transitional reinsurance program contributions.  In particular, the proposed regulations provide the following information on the projected 2014 rates, payment responsibility, applicable coverage, and counting covered lives:

  • 2014 Rates: The national contribution rate for 2014 is estimated at $5.25 per month per covered life, for a total of $63 per covered life for 2014.
  • Responsibility: With respect to self-insured group health plans, the plan is liable for the reinsurance contributions, but a third-party administrator or an administrative-services-only contractor may be utilized to transfer the reinsurance contributions.          
  • Applicable Coverage: The contributions must be made for “major medical coverage”.  In particular, a health reimbursement arrangement (HRA) that is integrated with a group health plan is excluded from reinsurance contributions; a health savings account (HSA) and a flexible spending arrangement (FSA) are excluded from reinsurance contributions.  Wellness programs and employee assistance programs that do not provide major medical coverage are excluded from reinsurance contributions, as are group health plans that consist solely of excepted benefits.
  • Counting Covered Lives: The methods allowable for self-insured group health plans to determine the average number of covered lives mirror the methods available under the Patient-Centered Outcomes Research Trust Fund rule, with some modifications for timing.

Comments on the proposed regulations are due on December 31, 2012.

Today’s post was contributed by Jessica R.R. Faith

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