Employer-sponsored plans that are secondary to Medicare are not subject to health reform’s expensive transitional reinsurance fee, nor are health flexible spending arrangements, health savings accounts and most health reimbursement arrangements.
On March 11, 2013, the U.S. Department of Health and Human Services published its final regulation on the transitional reinsurance fee, which takes effect on April 30, 2013. The fee provides funds to ensure that sick people can buy health insurance on the individual market even though they are high-risk folks.
Employers and plan sponsors of self-funded health plans and insurers offering group health policies have to pay into the reinsurance fund starting in 2014. The initial amount of this transitional reinsurance fee for 2014 will be $5.25 per month per covered person (or $63 a year for single coverage, $126 for an employee and spouse, $189 for an employee, spouse and one dependent, etc.) Rates for 2015 and 2016 will probably be adjusted.
Plans That Are Subject to the Fee
The regulation says that major medical coverage as health coverage “for a broad range of services and treatments including diagnostic and preventive services, as well as medical and surgical conditions provided in various settings, including inpatient, outpatient and emergency room settings.” Self-insured health plans are subject to the fee as well.
The fee applies to qualified beneficiaries receiving COBRA continuation coverage. If the plan is sponsored by a voluntary employees’ beneficiary association, it is subject to the fee, but the fee can be paid from the VEBA’s plan assets.
To the extent that a plan is self-funded, the plan sponsor is responsible for determining and remitting the fee to HHS as indicated below. To the extent that the plan is insured, the insurer is responsible for determining and paying the fee — not the plan sponsor. As indicated below, the fee is payable annually — not on a month-to-month basis.
Plans That Are Exempt from the Fee
It does not apply to benefits that are considered not to be major medical coverage, including Medicare secondary, HRAs that are integrated with group health plans, HSAs and health FSAs.
For the complete list of plans that are exempt from paying this fee, go here.