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ACA Transitional Reinsurance Program Fees

Posted on March 14th, 2013

The U.S. Department of Health and Human Services (HHS) released final regulations on March 1, 2013 about the Transitional Reinsurance Program. This new program will require insurance companies and some employers to fund a program that will provide partial reimbursements to commercial insurers that provide coverage to high risk individuals.

Individual health insurance coverage will be "guarantee issue" starting in 2014 when insurance companies can no longer base rates or eligibility on medical history. This change is expected to significantly increase the number of people that enroll in individual coverage.

Many of these individuals have pre-existing conditions and have been denied individual coverage in the past. The Transitional Reinsurance Program is designed to help insurance companies that insure more high risk individuals offset some of their claims experience.

The Transitional Reinsurance Program will start in 2014 and will be in place for 3 years. It is intended to raise over $25 billion during this time period.

HHS estimates that a $63 fee per participant will be needed to fund the program in the first year. The actual fee will be based on health plan enrollment information that will be filed later this year.

Insurance companies will be required to pay the fees on behalf of all fully insured plan participants. Employers that provide self-funded coverage will be required to pay the fees on behalf on all plan participants.

 
Note: The materials contained within are provided for informational purposes only and do not constitute legal or tax advice.
 

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