Final Regulations Clarify Transitional Reinsurance Fee Payment Requirements under the Affordable Care Act

The U.S. Department of Health and Human Services (?Ç£HHS?Ç¥) issued final regulations, published on March 11, 2014, setting out the amounts for 2015 coverage to be charged to self-funded and insured health plans that provide ?Ç£major medical coverage?Ç¥ for the transitional reinsurance fee (the ?Ç£Fee?Ç¥) under the Affordable Care Act (the ?Ç£ACA?Ç¥).?á The transitional reinsurance program is one of the risk programs implemented by the ACA to minimize the incentives for health insurers in the individual and small-group markets to avoid enrolling higher-risk individuals, by transferring funds to insurers who cover higher-risk populations.?á The amount of the Fee is based on the number of ?Ç£covered lives?Ç¥ under the plan, determined in accordance with one of four HHS-approved methods and reported to HHS by November 15 of the coverage year. ?áIn addition to confirming the definition of ?Ç£major medical coverage?Ç¥ for purposes of the Fee, the regulations provide that the Fee will be payable in two installments across the reporting year. ?áFor example, for 2014 coverage, the first Fee installment will generally be payable in January of 2015, and the second installment will be payable in the fourth quarter of 2015.?á Apart from the Fee provisions, the regulations outline the method HHS will use to adjust annual cost-sharing limits under the ACA, such as out-of-pocket maximum amounts, and clarify that the ACA limits will not supersede the cost-sharing limits for high-deductible health plans established under a different method by the IRS.?á A copy of the final regulations is available here.