Similar to the past two years, the annual deadline for the 2016 transitional reinsurance fee is fast approaching. The Affordable Care Act’s (ACA) transitional reinsurance program was designed to help stabilize premiums in the individual market. I question how much stabilization there has been since individual marketplace premiums seem to be skyrocketing in all states.

Payment Due Dates

For 2016, the enrollment count submission is due by Tuesday, November 15, 2016. Plan sponsors must use the “2016 ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” on pay.gov to submit enrollment counts. The form calculates the contribution amount owed based on the 2016 rate of $27 per covered life. As in prior years, plan sponsors may make this payment in one payment due by January 17, 2017 or they can pay in two installments, the first of which is due by January 17, 2017 with a final payment due by November 15, 2017. The form will calculate the amount of payment due with each installment.

This should be the last year for the payment of this fee.  For three years- 2014, 2015 & 2016-insurers (insurers simply passed along this fee to fully insured employers) and sponsors of self-insured group health plans have had to make transitional reinsurance fee contributions. The fees were $63 per covered life for 2014, $44 per covered life for 2015 and for 2016, it is $27 per covered life.

The Process

The process is similar to last year.  Besides submitting enrollment counts for determining the 2016 reinsurance fee by November 15, 2016, if you staggered your payments for 2015, the second contribution for the 2015 reinsurance fee must be made by November 15, 2016. 

Plan sponsors submit covered lives data and make payments through pay.gov. The Centers for Medicare & Medicaid Services (CMS) also has information on its website and has released guides for the 2016 Reinsurance Contributions and 2016 Transitional Reinsurance Form.

Contribution Amounts

CMS uses the annual enrollment count to calculate an entity’s contribution amount due for the applicable year. There continues to be four counting methods- actual count, snapshot count, Snapshot factor, and Form 5500- available for plan sponsors (employer). Plan sponsors can continue to use different counting methods for each plan and they may also use a different counting method every year. Under all methods, except the Form 5500 Method, the number of covered lives for 2016 will be determined based on the first nine months of the 2016 calendar year. Again, the guides on the CMS website will fully explain these methods.

Any payment must be made using an Automated Clearing House (ACH) debit on pay.gov. Plan sponsors should ensure that they have sufficient funds in their account for this payment and that the automatic ACH debit will not be blocked by the bank. There are steps which can be taken to alleviate these concerns.