An Employer Asks…What Is The Reinsurance Assessment Fee?

Written by Joanna Morrow

Joanna Morrow, Principal and Founder of Employer Benefits & Advice, is an employer consultant and advocate who has worked in the employee benefits industry for over two decades. She works diligently to help employers overcome obstacles in their business by sharing her expertise in Human Resources, Benefits & Compensation, Process Mapping, Risk Management and ERISA/DOL/IRS compliance. She is a licensed life and health insurance professional in the State of Arizona and is an active member of the National Association of Health Underwriters (NAHU).

An Employer Asks . . . What Is The Reinsurance Assessment Fee?

As of January 1st, 2014 individuals previously refused health insurance by carriers due to high risk factors or chronic medical conditions were allowed to purchase health insurance on the open market. This was the most significant of the insurance mandates introduced by the ACA because it meant that insurance plans could no longer deny individuals coverage for having a pre-existing health condition.

Insurance companies balked in response and claimed that it was going to cost millions of dollars to cover all of these additional customers, most of whom it was expected posed significant risk. In an effort to remedy the situation and appease the health insurers, the government agreed to create a slush fund over a three year period using dollars collected from employer health insurance premiums. These fees were formally named the Reinsurance Assessment Fees and were intended to relieve insurers of the sudden financial burden associated with taking on unfavorable risk in the individual market.

How much are the fees?

The Reinsurance Assessment Fees are assessed for every man, woman, and child covered on your employer-sponsored health insurance plan and are as follows:

  • In 2014, the fee was $63 per covered life for the year or $5.25 per month
  • In 2015, the fee is $44 per covered life for the year or $3.67 per month
  • In 2016, the fee is $27 per covered life for the year or $2.25 per month

Who is required to pay the fee?

If your medical plan is fully insured, the fee is already built into your premium rate and is being remitted on your behalf. However employers with self-funded plans are responsible for submitting their enrollment counts and the fee to the federal government. The ACA does allow a third-party administrator (TPA) to collect the fee and/or submit it for payment on behalf of a client, but the TPA is not required to provide these services. Check with your insurance professional to determine what applies in your case.

When is the deadline for paying the reinsurance fee?

So that HHS knows employers are remitting the correct amount owed, employers are required to report ahead of time, a head count of the number of people covered on the plan. The deadlines for submitting enrollment counts to the U.S. Department of Health and Human Services (HHS) are:

  • Dec. 5 in 2014
  • Nov. 16 in 2015
  • Nov. 15 in 2016

Where do I make my payment?

Here are the steps employers should take to pay the Reinsurance Assessment Fee in a timely manner:

1 – Register: Employers must register at Pay.Gov. Visit: https://www.pay.gov/public/registration

2 – Complete contribution form prior to the deadlines outlined above. Employers need to:

  • Enter the average number of members in your health plan for the first nine months of the calendar year on the contribution form provided at Pay.gov. (If you don’t know the average number of lives your insurance professional will). Some TPAs will send you the information you need in the month prior to the deadline.
  • The contribution form, “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form,” is available on Pay.gov at: https://www.pay.gov/public/form/start/70746962
  • The form requires information for a billing contact and billing address, as well as the name and contact information for plan sponsor contacts. The form will automatically calculate the contribution amount(s).

3 – Enter your payment information:

This is similar to any other online bill payment process. Employers should schedule a payment date by selecting “Type of Payment” based on your preference on when to make the contribution. The first installment deadline is Jan. 15, 2016, and the second installment deadline is Nov. 15, 2016.I will say that unless it is going to cause significant cash flow issues for the company, it is going to be easiest for most to just pay the fee in full by the deadline of the first installment (January 15th) and be done with it.

On the Payment Page, employers will select:

  • the payment date
  • enter the account holder name
  • select type of account (checking or savings)
  • enter the bank routing number and
  • submit the bank account number