Q&A with Brandon Long
Employers will face new fees in health care reform program
Q: I understand health care reform requires certain reinsurance payments from health insurance issuers and self-insured medical plans. Can you explain?
A: Yes. The Affordable Care Act established a three-year transitional reinsurance program from 2014 to 2016. This program is funded by contributions from health insurance issuers and self-insured group health plans, including employer health plans. According to proposed rules that were issued a few months ago, the Department of Health and Human Services (HHS) currently estimates the fee will be $63 times the number of covered lives, or $63,000 for an employer with a self-insured medical plan with 1,000 covered lives. Additional fees will be due for 2015 and 2016.
Q: What is the purpose of the reinsurance program and the reinsurance fee?
A: Premium tax credits and other insurance reforms effective next year are expected to increase the number of individuals with health insurance coverage, particularly in the individual market. Health care reform created certain premium stabilization programs, including the transitional reinsurance program to help offset the risk associated with these new and previously uninsured enrollees.
Q: What types of coverage are subject to the reinsurance contribution fee?
A: Major medical coverage. Stand-alone vision and dental plans, health savings accounts, health reimbursement arrangements, and health flexible spending accounts generally would not be subject.
Q: When will the first payment likely be due?
A: It appears the first payment, for 2014, will be due in January 2015. A self-insured, self-administered group health plan without a third-party administrator or contractor would make its reinsurance contributions to HHS directly.
PAULA BURKES, BUSINESS WRITER