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Transitional Reinsurance Fee: Counting Methods and Submission
Andrea Esselstein, JD Health Care Reform Advisory Services
Team Leader
Luke Clark Senior Consultant
Group Benefits
Prepare for the Transitional Reinsurance Fee Deadline & Avoid Overpaying through the Best Alternative Method
AGENDA
Overview of Fee
Understanding the Process
Methods to Compute Fee
Transitional Reinsurance Fee Overview
Step-by-Step Process
TRANSITIONAL REINSURANCE FEE
• Intent: Help stabilize premiums for coverage in the individual
health insurance market during the first three years of operation
of the Health Insurance Exchanges (Marketplaces)
• Amount: $25 billion to be collected for the three-year period
from 2014 - 2016
• Plans Subject to the Fee:
– Major Medical Coverage
– Retiree Medical Coverage
(Primary, i.e., when not Secondary to Medicare)
– COBRA Coverage
• Responsibility for Payment:
– Insurer for fully-insured plans; group health plan for self-
insured coverage
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OVERVIEW
Transitional Reinsurance Fee
Process Overview
Pay.gov: Steps
1. Register at Pay.gov
2. Complete the “ACA Transitional Reinsurance: Annual Enrollment Contributions
Submission Form”
3. Upload Supporting Documentation (e.g., Contributing Entity identifying information,
annual enrollment count) in a Comma-Separated Value (CSV) File
4. Enter Banking Information & Schedule Payment
Completion of the Form is Considered Notification to the Contributing Entity of
the Annual Reinsurance Contribution Amount Due for Each Payment Type
METHODS TO COMPUTE FEE
1. Actual Count Method
2. Snapshot Count
3. Snapshot Factor
4. Form 5500
2014 Fee is $63 Times the Number of Covered Lives (Covered Lives: Employees, Spouses Dependents & Retirees)
– 2015 fee per covered live per year is reduced to $44
– 2016 fee has not been announced (expected to be less than 2015)
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Allowable Methods
TRANSITIONAL REINSURANCE FEE
Methods #1-3 Calculate Lives Based On Enrollment
in the First Nine Months of a Calendar Year
Form 5500 Method Does NOT use this Criteria
Computation Methods: Similar to those used for the
Patient-Centered Outcomes Research Institute (PCORI), but
Not Exactly the Same
COMPUTATION
BASICS
7
ACTUAL
COUNT
METHOD
TRANSITIONAL REINSURANCE FEE
• Add the total number of covered lives for each day of the first
nine months of the benefit year, then divide that total by the
number of days in those nine months.
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SNAPSHOT
COUNT
METHOD
TRANSITIONAL REINSURANCE FEE
• Add the total number of covered lives of reinsurance
contribution enrollees on any date (or more dates, if an equal
number of dates are used for each quarter) during the same
corresponding month in each of the first three quarters (for
example March, June and September) of the calendar year,
and divide that total by the number of dates on which a count
was made
– Date used for the second and third quarters must fall
within the same week of the quarter as the corresponding
date used for the first quarter
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TRANSITIONAL REINSURANCE FEE
• Add the total number of covered lives of reinsurance contribution enrollees on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the calendar year (that is, March, June and September), and dividing that total by the number of dates on which a count was made
– Date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter
• The number of lives covered on a date is calculated by adding (1) the number of participants with self-only coverage on the date, and (2) the product of the number of participants with coverage other than self-only coverage on the date and a factor of 2.35
SNAPSHOT
FACTOR
METHOD
10
SNAPSHOT
FACTOR
METHOD
TRANSITIONAL REINSURANCE FEE
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TRANSITIONAL REINSURANCE FEE
• Oswald has assisted over 100 self-insured clients in the calculation of their Transitional Reinsurance Fee
– For ALL clients the Snapshot Factor Method produced the lowest number of covered lives, and therefore the lowest fee – usually at least 20% lower than any of the other 3 methods
– Reason: Ratio of members enrolled with non-single coverage to the number of subscribers
From the PCORI Regulations:
The 2.35 dependency factor reflects that all participants with coverage other than self-only have coverage for themselves and some number of dependents. The Treasury Department and the IRS developed the factor, and other similar factors used in the regulations, in consultation with Treasury Department economists and in consultation with plan sponsors regarding the procedures they currently use for estimating the number of covered individuals.
Ratio of Members To Employees Electing Non-single Coverage in the Oswald Book of Business Is 3.18:1
SNAPSHOT
FACTOR
METHOD
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FORM
5500
METHOD
TRANSITIONAL REINSURANCE FEE
• For a plan offering more than self-only coverage (i.e.,
dependent or spousal coverage), add the number of
participants at the beginning and end of the plan year from the
most current Form 5500 (lines 5 and 6a - 6c)
• For a plan offering self-only coverage, perform the same
calculation, but divide this number by two
• May be used by all self-insured plans
• CAUTION: Note that the Number of Lives from Lines
5 & 6a – 6c may Include Counts for Non-medical
Benefits (especially for Groups using Wrap Plans)
SUBMISSION & PAYMENT
Transitional Reinsurance
Process Overview
Transitional Reinsurance Fee
Process Overview
Transitional Reinsurance Fee
Submittal Form
Page 1 & 2
Transitional Reinsurance Fee
Submittal Form
Page 2
Type of Payment:
• First Collection – Contribution for Program
Payments & Program Administration Funds
– Deadline: January 15th after the
Applicable Benefit Year
• Second Collection – Contribution for General
Fund of the US Treasury
– Deadline: November 15th after the
Applicable Benefit Year
– Requires the Filing of a Duplicate Form
and the Supporting Documentation
Type of Payment
Transitional Reinsurance Fee
Submittal Form
Page 2
• Invoice
– Only select ‘Invoice’ if the Contributing
Entity receives a formal invoice notice from
CMS
– Step-by-step instructions for filing an
Invoice are in Section11: Invoice Filing of
this document
• Resubmission – File Attachment
• Only Method for Payment of Invoices is ACH
Debit Transaction on Pay.Gov.
Most Plan Sponsors Will Not Be Checking The
Invoice or Resubmission Boxes
Type of Payment
Transitional Reinsurance Fee
Submittal Form
Filing Steps
Information is Auto-completed
After Verification of
Enrollment Count is Entered
Transitional Reinsurance Fee
Submittal Form – Lower ½ of Form
Filing Steps
Line are Not Completed
Unless the Plan Sponsor
Checked this as an
Invoice-type Payment.
Almost All Users May
Ignore this Portion
“Supporting
Documentation” is the
CSV File Created from
CMS: RIC_JobAid102114
Transitional Reinsurance Fee
Supporting Documentation
Snapshot of CSV File
PAYMENT PROCESS
22
TYPES
OF
CONTRIBUTING
ENTITIES
• Types of Contributing Entity for whom you are submitting
the Annual Enrollment Count.
• Value must be one (1) of the following:
– Value ‘HII’ = Health Insurance Issuer
– Value ‘SI’ = Self-Insured
– Value ‘SISA’ = Self-Insured, Self-Administered
– Value ‘MGHPS’ = Multiple Group Health Plan (Aggregate
Reporting)
– Value ‘MGHPM’ = Multiple Group Health Plan (Separate
Reporting)
– Value ‘OTHER’ = Other type
Transitional Reinsurance Fee
Submittal Form
Filing Steps
Payment Must Be Made Using
the Automated Clearing House (ACH)
Method
Transitional Reinsurance Fee
Visit the Links Below on the Oswald Webinar OnDemand
Web Page to Assist with the Transitional Reinsurance Fee Process
Manual: Instructions for Completing the Excel File
Entities and Counting: Explanations of the Counting Methods
Job Aid: The Excel File Providing the Entity Name and Enrollment Count
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