Transitional Reinsurance Fee: Counting Methods and Submission

Andrea Esselstein, JD Health Care Reform Advisory Services

Team Leader

Luke Clark Senior Consultant

Group Benefits

Prepare for the Transitional Reinsurance Fee Deadline & Avoid Overpaying through the Best Alternative Method

AGENDA

Overview of Fee

Understanding the Process

Methods to Compute Fee

Transitional Reinsurance Fee Overview

Step-by-Step Process

TRANSITIONAL REINSURANCE FEE

• Intent: Help stabilize premiums for coverage in the individual

health insurance market during the first three years of operation

of the Health Insurance Exchanges (Marketplaces)

• Amount: $25 billion to be collected for the three-year period

from 2014 - 2016

• Plans Subject to the Fee:

– Major Medical Coverage

– Retiree Medical Coverage

(Primary, i.e., when not Secondary to Medicare)

– COBRA Coverage

• Responsibility for Payment:

– Insurer for fully-insured plans; group health plan for self-

insured coverage

3

OVERVIEW

Transitional Reinsurance Fee

Process Overview

Pay.gov: Steps

1. Register at Pay.gov

2. Complete the “ACA Transitional Reinsurance: Annual Enrollment Contributions

Submission Form”

3. Upload Supporting Documentation (e.g., Contributing Entity identifying information,

annual enrollment count) in a Comma-Separated Value (CSV) File

4. Enter Banking Information & Schedule Payment

Completion of the Form is Considered Notification to the Contributing Entity of

the Annual Reinsurance Contribution Amount Due for Each Payment Type

METHODS TO COMPUTE FEE

1. Actual Count Method

2. Snapshot Count

3. Snapshot Factor

4. Form 5500

2014 Fee is $63 Times the Number of Covered Lives (Covered Lives: Employees, Spouses Dependents & Retirees)

– 2015 fee per covered live per year is reduced to $44

– 2016 fee has not been announced (expected to be less than 2015)

6

Allowable Methods

TRANSITIONAL REINSURANCE FEE

Methods #1-3 Calculate Lives Based On Enrollment

in the First Nine Months of a Calendar Year

Form 5500 Method Does NOT use this Criteria

Computation Methods: Similar to those used for the

Patient-Centered Outcomes Research Institute (PCORI), but

Not Exactly the Same

COMPUTATION

BASICS

7

ACTUAL

COUNT

METHOD

TRANSITIONAL REINSURANCE FEE

• Add the total number of covered lives for each day of the first

nine months of the benefit year, then divide that total by the

number of days in those nine months.

8

SNAPSHOT

COUNT

METHOD

TRANSITIONAL REINSURANCE FEE

• Add the total number of covered lives of reinsurance

contribution enrollees on any date (or more dates, if an equal

number of dates are used for each quarter) during the same

corresponding month in each of the first three quarters (for

example March, June and September) of the calendar year,

and divide that total by the number of dates on which a count

was made

– Date used for the second and third quarters must fall

within the same week of the quarter as the corresponding

date used for the first quarter

9

TRANSITIONAL REINSURANCE FEE

• Add the total number of covered lives of reinsurance contribution enrollees on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the calendar year (that is, March, June and September), and dividing that total by the number of dates on which a count was made

– Date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter

• The number of lives covered on a date is calculated by adding (1) the number of participants with self-only coverage on the date, and (2) the product of the number of participants with coverage other than self-only coverage on the date and a factor of 2.35

SNAPSHOT

FACTOR

METHOD

10

SNAPSHOT

FACTOR

METHOD

TRANSITIONAL REINSURANCE FEE

11

TRANSITIONAL REINSURANCE FEE

• Oswald has assisted over 100 self-insured clients in the calculation of their Transitional Reinsurance Fee

– For ALL clients the Snapshot Factor Method produced the lowest number of covered lives, and therefore the lowest fee – usually at least 20% lower than any of the other 3 methods

– Reason: Ratio of members enrolled with non-single coverage to the number of subscribers

From the PCORI Regulations:

The 2.35 dependency factor reflects that all participants with coverage other than self-only have coverage for themselves and some number of dependents. The Treasury Department and the IRS developed the factor, and other similar factors used in the regulations, in consultation with Treasury Department economists and in consultation with plan sponsors regarding the procedures they currently use for estimating the number of covered individuals.

Ratio of Members To Employees Electing Non-single Coverage in the Oswald Book of Business Is 3.18:1

SNAPSHOT

FACTOR

METHOD

12

FORM

5500

METHOD

TRANSITIONAL REINSURANCE FEE

• For a plan offering more than self-only coverage (i.e.,

dependent or spousal coverage), add the number of

participants at the beginning and end of the plan year from the

most current Form 5500 (lines 5 and 6a - 6c)

• For a plan offering self-only coverage, perform the same

calculation, but divide this number by two

• May be used by all self-insured plans

• CAUTION: Note that the Number of Lives from Lines

5 & 6a – 6c may Include Counts for Non-medical

Benefits (especially for Groups using Wrap Plans)

SUBMISSION & PAYMENT

Transitional Reinsurance

Process Overview

Transitional Reinsurance Fee

Process Overview

Transitional Reinsurance Fee

Submittal Form

Page 1 & 2

Transitional Reinsurance Fee

Submittal Form

Page 2

Type of Payment:

• First Collection – Contribution for Program

Payments & Program Administration Funds

– Deadline: January 15th after the

Applicable Benefit Year

• Second Collection – Contribution for General

Fund of the US Treasury

– Deadline: November 15th after the

Applicable Benefit Year

– Requires the Filing of a Duplicate Form

and the Supporting Documentation

Type of Payment

Transitional Reinsurance Fee

Submittal Form

Page 2

• Invoice

– Only select ‘Invoice’ if the Contributing

Entity receives a formal invoice notice from

CMS

– Step-by-step instructions for filing an

Invoice are in Section11: Invoice Filing of

this document

• Resubmission – File Attachment

• Only Method for Payment of Invoices is ACH

Debit Transaction on Pay.Gov.

Most Plan Sponsors Will Not Be Checking The

Invoice or Resubmission Boxes

Type of Payment

Transitional Reinsurance Fee

Submittal Form

Filing Steps

Information is Auto-completed

After Verification of

Enrollment Count is Entered

Transitional Reinsurance Fee

Submittal Form – Lower ½ of Form

Filing Steps

Line are Not Completed

Unless the Plan Sponsor

Checked this as an

Invoice-type Payment.

Almost All Users May

Ignore this Portion

“Supporting

Documentation” is the

CSV File Created from

CMS: RIC_JobAid102114

Transitional Reinsurance Fee

Supporting Documentation

Snapshot of CSV File

PAYMENT PROCESS

22

TYPES

OF

CONTRIBUTING

ENTITIES

• Types of Contributing Entity for whom you are submitting

the Annual Enrollment Count.

• Value must be one (1) of the following:

– Value ‘HII’ = Health Insurance Issuer

– Value ‘SI’ = Self-Insured

– Value ‘SISA’ = Self-Insured, Self-Administered

– Value ‘MGHPS’ = Multiple Group Health Plan (Aggregate

Reporting)

– Value ‘MGHPM’ = Multiple Group Health Plan (Separate

Reporting)

– Value ‘OTHER’ = Other type

Transitional Reinsurance Fee

Submittal Form

Filing Steps

Payment Must Be Made Using

the Automated Clearing House (ACH)

Method

Transitional Reinsurance Fee

Visit the Links Below on the Oswald Webinar OnDemand

Web Page to Assist with the Transitional Reinsurance Fee Process

Manual: Instructions for Completing the Excel File

Entities and Counting: Explanations of the Counting Methods

Job Aid: The Excel File Providing the Entity Name and Enrollment Count

25

Thank you for joining us!

Contact information:

Luke Clark, Senior Consultant

lclark@oswaldcompanies.com