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Small Business Employee Benefits and HR Blog

Final Rule on ACA Reinsurance Fee Amounts and Payment Schedule

On March 5, 2014, the Department of Health and Human Services (HHS) issued a Final Rule on the reinsurance fee imposed under the Affordable Care Act (ACA). As detailed in the Final Rule, employers will be allowed to pay the controversial ACA reinsurance fee in two installments, and now have certainty on the amount of the fee during the second year of the three-year program.

ACA_reinsurance_fee

The ACA reinsurance fee is imposed on group health plans. If the plan is insured, the insurer pays the fee, and if the plan is self-insured, the plan itself pays the fee. The reinsurance fee applies in 2014, 2015, and 2016. However, for 2015 and 2016 only, self-insured and self-administered plans are exempt from the fees. 

ACA Reinsurance Fee Amounts for 2015

The reinsurance fee equals the yearly rate times the number of plan participants. The yearly rate is $63 for 2014, $44 for 2015, and to be announced for 2016.

The reinsurance fees are intended to generate $25 billion in revenues, and will be used to partially reimburse commercial insurers writing policies in public exchanges for individuals with high health care costs.

Previously, HHS had set the first-year fee at $63 per plan participant and had proposed a $44 fee for the second year. The Final Rule confirms the $44 fee for 2015. HHS has not proposed the amount of the fee for 2016, the third and last year of the program.

ACA Reinsurance Fee Payment Schedule

In the Final Rule, HHS confirmed that the fee may be paid in two installments to lessen the financial hit companies would take at the start of a new year.

For example, of the first year's $63 fee, employers may make a payment of $52.50 per participant by January 15, 2015, and a second payment of $10.50 during the fourth quarter of 2015.

The Final Rule is accessible via the Federal Registry.

To read more about how the ACA reinsurance fee impacts small group health plans, see: FAQ - How are Small Group Health Plans Impacted by the ACA?

Health Care Reform Checklist for Employers 2014