On Friday, June 20, the Centers for Medicare and Medicaid Services (CMS) conducted its first webcast on the mechanics of collecting and remitting the Transitional Reinsurance Fee (TRF) that will apply later this year.
The TRF is imposed upon insurers and sponsors of self-insured plans by the Affordable Care Act (ACA). It aims to collect $25 billion from insurers and employers over three years to create a backstop for insurers covering high-risk individuals through the public health insurance exchanges, or “marketplaces,” authorized by the ACA. For 2014, the tax is generally $63 per covered life ($5.25 per month). The TRF is payable by insurers on behalf of insured major medical plans and by employers (or other plan sponsors) on behalf of self-funded major medical plans. However, a third-party administrator (TPA) may, but is not required to, pay the fee on behalf of the self-insured plans it administers.
As we discussed in an Alert in June, CMS indicated that an on-line process will be available at www.pay.gov to offer a “one-stop” resource for registration, submission of headcount and payment to CMS. Either the self-insured plan sponsor or the plan’s TPA can complete the reinsurance contribution process, including payment, on behalf of the self-funded plan. Whichever entity does so will be required to complete these steps:
- Register on pay.gov, so payment can be made when the time comes.
- Enter the plan’s enrollment data in a yet unveiled on-line form called the “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.”
- Prior to the submission of the form:
- Attach “supporting documentation.”
- Attest to the accuracy of the information.
- Schedule payment for early 2015.
A TPA can register and provide one TRF submission for all of its clients. Alternatively, the TPA can register separately for each of its self-funded clients and separately submit for each client. Whichever entity – employer or TPA – completes the registration and submission process will be the entity that will also make payment to CMS.
Will TPAs Coordinate Data Submission and Payment for Their Customers?
CMS has clearly indicated that TPAs are not required to coordinate the data collection, submission and payment on behalf of their customers. We hope that most TPAs (including insurers acting on behalf of self-insured plans pursuant to an “administrative services only” contract) will do so, but there are some steps in the TRF process that may cause TPAs trepidation, including attesting – likely under penalties of perjury – to the accuracy of the information they receive from the employer, and paying CMS on behalf of the plan. With respect to payment, the TPA will either have to pay the fee on behalf of the plan and then recoup it from the plan sponsor or, more likely, have the sponsor provide the TRF payment to the TPA in advance.
Have Questions about TRF?
You can submit written questions to CMS via its training website. Answers to all questions submitted will be posted in the FAQ section of the CMS website. You also can learn more about the TRF process by attending future webcasts. The next one is scheduled for July 14.
Postscript: Final Rules Allow Orientation Period in Conjunction with 90-Day Waiting Period
The federal agencies have issued final rules that allow an “orientation period” of up to one month to be applied before the start of a health plan waiting period. Recall that the ACA, as a general rule, limits health plan waiting periods to 90 days. The waiting period typically begins when the employee becomes eligible for coverage. Employers with waiting periods calling for coverage to begin on the “first of the month following 90 days” had already amended their plans to substitute “first of the month after 60 days.” The final rules, which leave the proposed waiting period regulation largely unchanged, could effectively allow an employer to get back to a “first of the month following 90 days” by installing a one-month orientation period before the beginning of a “first of the month following 60 days” waiting period.
Lockton Comment: Employers that use an orientation period before the start of a 90-day waiting period will still remain vulnerable to play-or-pay penalties if affordable, minimum value coverage is not offered to each new full-time employee by the first day of the fourth full calendar month of employment. For more information, please see the Spring 2014 edition of Compliance News.