- Executive Summary
The health care reform law includes a temporary “Reinsurance Assessment” – a total of $25 billion to be collected from 2014 through 2016. Most of the money will be used to fund a reinsurance program, which is intended to lessen the impact of adverse selection in the individual market.
The assessment is scheduled to raise $12 billion in 2014, with reductions in each of the next two years -- to $8 billion in 2015 and $5 billion in 2016. (For the specifics, please see the link to Cost and Payment Details.)
- What Employers and Plans are Affected by the Reinsurance Assessment?
Insurers and HMOs are required to pay the fee. So too are employers with self-funded major medical plans.
The fee applies to all insured and self-funded individual and group major medical plans that are commercially funded.
- HMO, Network, PPO and OAP
- Guaranteed Cost or Shared Returns including Minimum Premium
- California Maximum Premium plans
- AEB plans in Alabama and Texas
- Group retiree medical plans covering individuals who are not eligible for Medicare or for whom Medicare is the secondary payer
- Active employees age 65+
- Pre-65 retirees
- Administrative Services Only (ASO) expatriate plans
- Short-Term Abroad (STA) expatriate plans
- What Employers and Plans are Exempt from the Reinsurance Assessment?
The reinsurance assessment applies only to major medical plans. The following types of plans are not subject to the reinsurance assessment:
- Stand-alone pharmacy and behavioral health plans
- Stand-alone dental and vision plans
- Hospital indemnity and specified disease plans
- Private Medicare, Medicaid, CHIP, state and federal high-risk pools and basic health plans
- Retiree-only plans for 65+ where Medicare is the primary payer
- Health Savings Accounts (HSAs)
- Flexible Spending Accounts (FSAs)
- Employee Assistance Plans (EAPs), disease management programs and wellness programs
- Stop-loss and indemnity reinsurance policies
- Military health benefits
- Indian Health Service coverage
- Insured expatriate coverage
- Who is Responsible for Administering Payment of the Reinsurance Assessment?
If your plan is insured, you will not need to do anything. Your insurer or HMO is responsible for paying the fee based upon the number of covered lives.
For self-funded plans, the assessment is the responsibility of the employer.
- How is Cigna Assisting Self-funded Employers?
Previously, the Department of Health and Human Services (HHS) published regulations stating that self-funded group health plans must register in the Health Insurance Oversight System (HIOS) and obtain a HIOS ID number, which was required for the reinsurance fee submission. However, it was confirmed that HIOS will no longer be used in the reinsurance submission process.
Instead, Cigna's current understanding is that there will be a streamlined membership and contribution process through www.pay.gov. All contributing entities, e.g. the employer or insurer making the contribution, will be required to register on pay.gov, including self-funded employers.
All contributing entities must also access and populate a form on pay.gov, titled “ACA Transitional Reinsurance Program Annual Enrollment and Contribution Submission Form,” to report the annual counts as well as upload supporting documentation. The form’s availability will be announced at a later date, and Cigna will communicate as soon as it becomes available.
Cigna is developing plans to support self-funded employers in understanding the process and their responsibilities to pay the fee. We will not be able to complete the process on behalf of clients, but we will support them by providing resources, information and client service representatives to answer their questions.
In addition to client service support and the opportunity to ask questions, Cigna will also assist clients by supplying the membership information they will need to report and calculate their fee using the snapshot method.
More Information on the Snapshot Method
The regulations provide several methods for calculating the average number of covered lives used to determine the reinsurance fee. Cigna will use the “snapshot” method for our insured clients and for the membership reports and calculations we provide for self-funded clients.
Under the snapshot method, the average number of covered lives is determined by counting the total number of lives covered on January 1, April 1 and July 1 of each year and dividing that total by three. The fee is determined by multiplying the average number of covered lives by the annual fee amount, which will be split into two installments.
California Network plans
If you offer Network (Point-of-Service) plans to individuals in California, special circumstances may apply. Click here to learn more.
- Cost and Payment Details
- $63 per member per year (PMPY) in 2014
- The 2014 fee will be paid in two installments. The first installment of $52.50 per average covered life is due no later than January 15, 2015. The second installment of $10.50 per covered life will be due in the fourth quarter of 2015.
- Both installments of the fee can be paid all at once, but no later than January 15, 2015 for the 2014 payment.
- $44 PMPY in 2015
- The fee will be paid in two installments of $33.00 and $11.00. The first installment is due in late January/early 2016, and the second installment will be due in the fourth quarter of 2016.
- Estimated $25-$30 PMPY in 2016 (end of Reinsurance Assessment)
When is it first due?
- The 2014 fee is confirmed at $63 per person, with scheduled collection in two installments: The first installment of $52.50 per average covered life is due no later than January 15, 2015. The second installment of $10.50 per covered life will be due in the fourth quarter of 2015.
- Insured: Insurer pays (included in premium)
- Self-funded: Employer pays
Is the Assessment tax-deductible? Yes.
- $63 per member per year (PMPY) in 2014
- The Reinsurance Assessment… Just the Facts