Employers wrestling with how to budget for the additional costs associated with the 2010 health care reform law have one more cost to consider: the “transitional reinsurance program” fee. Barely discussed in the public forum up to now (probably because the amount per plan was not determinable), the government has clarified how this fee could impact employers sponsoring group health plans. It has issued proposed regulations estimating that the annual contribution rate to cover this fee for 2014 will be $63 per individual covered under a group health plan.
The fee is intended to help stabilize premiums in the individual insurance market for the three-year period 2014 through 2016 by giving transitional funding to insurers that incur high claims in the individual insurance market. Since health insurers cannot deny coverage or charge higher premiums to unhealthy or otherwise high-risk individuals to offset for the risk that the insurer will pay more in claims for such individuals, those insurers who cover such individuals essentially get a safety net. This transitional reinsurance program fee is one of three premium stabilization programs established under health care reform.
Contributions for the transitional reinsurance program are assessed on insurers of fully-insured group health plans and third-party administrators of self-funded group health plans. Naturally, it is expected that insurers will pass along the cost of this fee to employers sponsoring insured group health plans and, since a self-funded plan generally is funded by employer assets, employers with self-funded plans will pay the fee, too.
The transitional reinsurance program fee is in addition to the “comparative effectiveness” or “patient-centered outcomes research” fee ($1 per covered individual for the first plan year ending on or after October 1, 2012, then $2 per covered individual for subsequent plan years until 2019).