The Affordable Care Act (ACA) created a new fee for fully insured health plan providers and self-funded group health plans in order to fund a transitional reinsurance program for the first three years of exchange operation (2014 – 2016). The fee is paid by the health insurance carriers for fully insured, and by the plan sponsor/employer for self-insured plans. The purpose of the new fee is to help stabilize premiums in the individual market. “Contributing entities” that will pay the fee are required to submit their annual enrollment count to the Department of Health and Human Services (HHS) by November 17, 2014. For 2014, the annual fee is $63.00 per enrollee and the initial payment is due on January 15, 2015.
On October 24, 2014, HHS released the reporting form for the 2014 year. The deadline for submitting the enrollment count for 2014 is November 17, 2014. The participant count is based on the calendar year regardless of the plan year for the health insurance coverage.
The participant count can be calculated several ways:
Actual Count Method
• Add the number of covered lives (not employees) for each day of the month for the first nine months of 2014 and divide that total number by the number of days in the first nine months of the calendar year
Snapshot Count Method
• Add the total number of covered lives (not employees) on any date during the same corresponding month in each of the first three quarters of the calendar year and divide by three
Snapshot Factor Method
• This method uses the employees broken down by coverage type as the base for the calculation. Add the total number of employees on any date during the same corresponding month in each of the first three quarters of the calendar year and divide by three. The number of lives covered is calculated by adding the:
o Number of employees with self-only coverage
o Number of employees with coverage other than self-only multiplied by 2.35
Form 5500 Method
• For a plan offering self-only coverage, the covered lives will equal the sum of the participants at the beginning and end of the plan year as reported on the Form 5500 divided by two
• If the plan offers both self-only and coverage other than self only, the covered lives will equal the sum of the participants at the beginning of the year and the end of the plan year reported on the Form 5500
The reporting of the covered lives is done online at www.pay.gov. This website will allow a company to register, submit the enrollment count and schedule the fee payment.