Title February 2014: ACA: Everything You Need to Know about the Transitional Reinsurance Fee Program

Transcription

1 Title February 2014: ACA: Everything You Need to Know about the Transitional Reinsurance Fee Program

2 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 Almost 30 years in business; 1,500 customers and growing

3 About our Speaker 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.

4 RCH Credits 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 that you used to register for this webinar Sent to you no later than 5pm PDT on 03/03/2014

5 Agenda 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?

6 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 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 plan year.

7 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) $26-28 in 2016 (subject to revision in the future)

8 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 , self-insured plans that also selfadminister 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 Employee Assistance Programs and Wellness programs

9 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 year, at $5.25 per month of coverage.

10 It s time for a poll 1 st Polling Question

11 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 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, This schedule repeats for 2015 and 2016 collection years.

12 Transitional Reinsurance Fee Program Calculations Four Safe-Harbor Methods for Calculating the Total Fee: The Actual Count Method your responsibility if you are this method is the most work but results in self-insured. the most In traditionally accurate calculation. It may be best for plans with heavy insured participant plans (e.g., through churn The Snapshot Method Remember: These calculations are only BC/BS, Aetna, UHC, Kaiser, etc.), your insurer does these calculations and makes the remittances. 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

13 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 It is expected that few employers will elect to use this method.

14 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 purposes.

15 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 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. Con: May overstate population for fee determination purposes.

16 Transitional Reinsurance Fee Program Calculations The Form 5500 Method: Step One: Determine number of year-end covered lives from most recent Form Step Two: Determine number of year-begin covered lives from that same 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. Con: May overstate your fee if plan participation is shrinking.

17 It s time for a poll 2nd Polling Question

18 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 Department of Labor) and is therefore payable from plan assets as a plan expense.

19 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 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 expressed concern that separate deductions may be ruled to be employee reimbursements of employer expenses and therefore may only be made POST-TAX, even if the premiums are being deducted pre-tax.

20 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 through the state and federal marketplaces (exchanges).

21 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: While the information comes from outside the system, an ad hoc report can be used to validate the headcounts by effective date.

22 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. Even better: whether the deduction is being passed on to the employees, OR just being accrued as a liability for later remittance to HHS, these values can be passed over to the general ledger to reflect the accrued cost to the organization.

23 It s time for a poll 3rd Polling Question

24 RCH Credits 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 that you used to register for this webinar Sent to you no later than 5pm PDT on 03/03/2014

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