Title
Introductions
Bob Greene – Ascentis - Account Executive, Channels Heather Bansemer - Marketing Manager, Ascentis
Ascentis offers easy-to-use human capital management software including SaaS web-based solutions: HRIS, online payroll, recruiting, self service and timekeeping
Bob Greene
• 32 years in the HCM industry
• Member of the editorial board of IHRIM’s Workforce Solutions Review • Former Adjunct Lecturer in Human Resource Technology at Benedictine
University
• Bob’s education includes: IIT - Kent College of Law - ERISA and Employment Law concentration, Rutgers - Communications/English, and Cornell University,
Advance Placement Program – Mathematics.
This program has been submitted to HRCI and APA for approval.
• Once credits are approved, certificates will be processed
To earn RCH you must:
• Stay on the webinar for the full 60 minutes
• Be watching the webinar using your unique URL
Certificates of Completion
• Will be delivered electronically to email that you used to
register for this webinar
• Sent to you no later than 5pm PDT on 03/03/2014
What you’ll learn:
The Affordable Care Act:
Everything You Need To Know About the Transitional Reinsurance Fee Program
• What IS the Transitional Reinsurance Fee Program?
• How does it affect traditionally insured, as well as self-insured employers?
• What are the allowable calculation methods under the new law? • When are payments due?
• Can I pass the fees along to my employees?
• How can Ascentis help with complying with these new requirements?
What is the “Transitional Reinsurance Fee Program?”
The Transitional Reinsurance Fee Program:
• …was authorized by § 1341 of the Affordable Care Act to help
stabilize premiums in the individual healthcare market from 2014 through 2016.
• ACA § 1341(c)(1)(A) states that the purpose of the reinsurance contributions is “to help stabilize premiums for coverage in the individual market” during the first three years the individual Exchanges are in operation, “when the risk of adverse selection related to new rating rules and market changes is greatest.”
• The fee applies to all insured and self-funded “major medical”
plans.
• Fees are determined on a calendar year basis regardless of the
What is the “Transitional Reinsurance Fee Program?”
The Transitional Reinsurance Fee Program:
• …is designed to raise a total of $25 billion over three years: • $12 billion in 2014
• $8 billion in 2015 • $5 billion in 2016
• These amounts are equivalent to a “per-participant-per-year” TRF
fee of:
• $63 in 2014 (set) • $44 in 2015 (set)
What is the “Transitional Reinsurance Fee Program?”
What is a “major medical plan” subject to this fee (and
what is not?)
• Insured and self-insured plans that provide a broad range of
medical services. Note that ALL self-insured plans must pay this fee in 2014; for 2015-2016, insured plans that also
self-administer claims are exempted.
• Examples of plans EXCLUDED from the TRF payment obligation: • Standalone prescription drug, dental or vision plans
• HRAs and HSAs, even if integrated into a single HDHP (only the
underlying major medical plan pays)
• Health care flexible spending accounts
What is the “Transitional Reinsurance Fee Program?”
Which participants are counted in calculating the TRF
obligation?
• The fee is “per-participant;” not per-employee.
• e.g., for a plan covering an employee, their spouse and two
children for the entire year, the annual fee is $252 ($63 times 4 participants)
• Active plan participants, as well as COBRA continuees are included in the calculation.
• Those enrolled in Medicare can be excluded, even if also active in employer supplemental, or COBRA continuation coverage. • The calculation is made per-month for those not covered for a full
It’s time for a poll
What is the “Transitional Reinsurance Fee Program?”
When and how is the TRF paid?
• The fee is collected by the Department of Health & Human
Services (HHS). Originally remittance was to be quarterly. This was revised to:
• By November 15, 2014: Headcount information is due to HHS
for the first nine months (Jan – Sept) of 2014.
• By December 15, 2014: HHS bills covered entities (Happy
Holidays!)
• Within 30 days of bill receipt (e.g., January 15, 2015) covered
entities must pay $52.50 per participant.
• Remaining $10.50 per participant will be due some time in
December, 2015.
Transitional Reinsurance Fee Program Calculations
Four Safe-Harbor Methods for Calculating the Total Fee:
• The Actual Count Method
…this method is the most work but results in the most accurate calculation. It may be best for plans with heavy participant churn
• The Snapshot Method
• The Snapshot Factor Method
…this method may be best for plans with high percentages of large family participation
• The Form 5500 Method
…this method is the least work but also the least accurate Remember:
These calculations are only your responsibility if you are
self-insured. In traditionally insured plans (e.g., through
BC/BS, Aetna, UHC, Kaiser, etc.) , your insurer does
Transitional Reinsurance Fee Program Calculations
The Actual Count Method:
• Step One: Determine the actual number of lives covered on each
day from January 1 through September 30.
• Step Two: Total them.
• Step Three: Calculate the average of the above total. • Pro: Most accurate method
• Con: Most work
Transitional Reinsurance Fee Program Calculations
The Snapshot Method:
• Step One: Choose a single measurement date for each of the first
three quarters of the year. NOTE: the dates chosen in the second and third quarter must be within three days of the date in that quarter that corresponds to the date in the first quarter.
• Step Two: Total the covered lives on those three dates. • Step Three: Calculate the average of the above total. • Pro: Much less work than the actual method
• Con: May overstate your population for fee determination
Transitional Reinsurance Fee Program Calculations
The Snapshot Factor Method:
Steps are the same as for the Snapshot method, with the following modifications:
• Step One: Count separately all covered employees with single-only coverage, and all others (i.e., employee + spouse, employee + dependents, full family)
• Step Two: Multiply the employees with NON-single-only coverage times 2.35. • Step Three: Add the actual count of employees with single-only coverage to the
calculated count of all other covered employees.
• Pro: May reduce fees for employers with high percentages of large
covered dependent coverage in effect. May be the only option open to you if counts of covered dependents are not available.
Transitional Reinsurance Fee Program Calculations
The Form 5500 Method:
• Step One: Determine number of year-end covered lives from most
recent Form 5500.
• Step Two: Determine number of “year-begin” covered lives from
that same 5500. Note: data does not exist! It is presumed we can use ending lives from immediate prior year’s Form 5500 as a proxy.
• Step Three: Average the two figures.
• Pro: The least amount of work of any of the methods. May result
in the lowest fees for employers with growing plan participation.
It’s time for a poll
Transitional Reinsurance Fee Program Tax Treatment
Tax Treatment:
• The TRF has been determined to be an ordinary and necessary
business expense. It is therefore tax deductible.
• This is UNLIKE the PCORI (Patient-Centered Outcomes
Research Institute) fee already in effect, which has been ruled to be an excise tax and therefore NOT tax deductible.
• It is also a permissible plan expense under ERISA Title I (per the
Transitional Reinsurance Fee Program: Who Pays?
Passing the Fee On To Plan Participants:
• Some employers have made the determination that they will pass
these fees on to their plan participants.
• The “safest” way to do this was to incorporate the fees directly
into your new premium rates for 2014.
• Some employers may have elected NOT to do this, but rather to
pass the fee as a separate deduction from the employees’ pay.
• Care should be exercised! There has not been specific guidance on this issue by HHS/IRS/DOL, and in its absence, some ERISA attorneys have
And Another Thing! 2015 Cost-Sharing Limits Announced…
2015 Cost Sharing Limits Announced by HHS:
• On November 24, 2013, the HHS issued its 2015 Notice of Benefit
and Payment Parameters Proposed Rule.
• For non-grandfathered plans, the following increases to maximum
allowable deductibles and stop-loss (out of pocket maxima) were announced:
• Deductibles: for 2015, the maximum individual deductible rises from $2,000 to $2,150; the maximum family deductible rises from $4,000 to $4,300.
• Out of pocket maxima: for 2015, the maximum stop-loss rises from $6,350 to $6,750 for individuals, and from $12,700 to $13,500 for family coverage. • These amounts also represent the 2015 maxima for bronze coverage
How Ascentis Can Help
Transitional Reinsurance Fee:
For self-insured plan administrators, the biggest impact by far of the TRF program will be in the data required to calculate the fees owed:
• For the Actual Count Method:
• A full history of enrollments and effective dates of dependent coverage is maintained in the system and ad hoc reporting easily reports on this information.
• For the Snapshot and Snapshot Factor Methods:
• The full effective dating in the system, combined with point-in-time reporting, will allow the user to provide the three chosen effective dates and produce active lives headcount by plan.
• Counts can also be easily extracted by option elected to calculate dependents
• For the Form 5500 Method:
How Ascentis Can Help
Transitional Reinsurance Fee:
When it comes to passing these fees on to affected plan participants:
• In Payroll:
• Changes in plan contribution rates are governed by the HRIS/Benefits module, and will automatically update employee deduction values on their effective dates.
• Optionally, separate deductions can be established (presumably on a post-tax basis) for the actual fee based on the number of covered dependents.
• This forms a highly accurate basis for reporting, either for the Actual Count method, or as a comparison and double-check on the other calculation methods.
It’s time for a poll
This master class has been submitted to the APA and HRCI for approval.
• Once credits are approved, certificates will be processed
To earn RCH you must:
• Stay on the webinar for the full 60 minutes
• Be watching the webinar using your unique URL
Certificates of Completion
• Will be delivered electronically to email that you used to register for
this webinar
• Sent to you no later than 5pm PDT on 03/03/2014
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