ACA: Transitional Reinsurance Fee • October, 2016

Deadlines Begin in December: The Transitional Reinsurance Fee
(TRF) is one of several fees and taxes required under the Affordable Care Act. This particular fee applies to all medical plans, including individual and group plans as well as fully-insured and self-funded plans.

Which employers must comply? While insurance companies must register fully-insured medical plans and remit the fees to the government, employers who offer self-funded medical plans must do this on their own.

The Purpose of the Fee
The funds collected by the TRF are used to help stabilize the individual medical insurance market.  On 1.1.2014 the Affordable Care Act did away with pre-existing condition waiting periods and health underwriting.  The TRF was instituted in the event that only a few insurance carriers ended up with the majority of the sickest patients.

The Fee Amount
This TRF is accrued over three years: 2014, 2015, and 2016. For 2014, the fee was $5.25 per member per month. For 2015, it was $3.67 per member per month. The fee for 2016 will be $2.25. 2016 will be the last year the fee is imposed.

The definition of “member” is every employee, spouse, and child enrolled on your group medical plan(s). This also includes retirees under age 65 and COBRA members enrolled on your group medical plan(s). There are three different methods for calculating your average number of members: Actual count, snapshot, and Form 5500. .

Deadlines
11.15.2016
Register on www.pay.gov. Complete the Contribution Form, Upload supporting documents

1.15.2017
Contact your bank re: ACH Schedule payment

11.15.2017
If you chose 2-payment method, make your 2nd payment

We recommend the snapshot method.  If you would like to review these methods please contact your GHB agent.

Snapshot of Members
This method requires you to choose the same “date” in each of the first three quarters of 2016.  For example, January 15, April 15, July 15.  You can either 1) take the number of members each of these days and divide by three or 2) take the number of single-only enrollees plus 2.35 times the number of non-single enrollees and divide by three.  It is better to use method #2 if you have a high average of dependents enrolled on your medical plan.

Payment
For fully-insured medical plans, the insurance company is tasked with registering the plan with the government, and remitting the fee.  For self-funded plans, the employer will need to provide the necessary information and pay the fee.  While third party administrators are allowed to complete this process for an employer, most have not been willing to take on this role.

Self-funded plans must register at www.pay.gov by November 15th if not already registered (you should only enroll once per TIN). This is also the deadline for completing the required form and uploading supporting documentation. Payment is due by January 15th.

A “Gotcha”
The government is requiring that the fee be paid via ACH transfer from your business banking account. Since most banks block ACH transfers from business accounts, you will need to proactively call your bank to unblock your account.

  • They will ask you for the ALC+2 code
  • This is 7505008015 for the TRF program
  • BE CAREFUL! If you do not change the date of payment, they will pull the money from your account the NEXT BUSINESS DAY.

This article is provided for informational purposes only. Please contact your attorney and/or accountant to determine if this information may affect your business. © 2015 GHB Insurance

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