Affordable Care Act – Action required by November 15th
By Jeffrey R. Spencer, CPA, Principal, Ciuni & Panichi, Inc.
The Affordable Care Act imposes a $63 fee per enrollee on insured and self-insured health plans. Employers with self-insured health plans must report certain information to the Department of Health and Human Services by November 15, 2014. Here is what you need to do now.
The Affordable Care Act (ACA) requires a fee to be paid by health insurance issuers and by self-insured group health plans to fund the Transitional Reinsurance Program (TRP). The TRP financially assists insurance companies that cover high-risk individuals. Insurers and sponsors of self-insured group health plans must report the number of covered individuals under the plan to the Department of Health and Human Services (HHS) in order to determine the per-enrollee fee. For fully insured plans, the insurance company will typically collect the TRP fee through premium rates. Self-insured plans fund and remit the TRP fee themselves.
The TRP fee is based on the average number of covered lives (employees, spouses, and dependents) for the first nine months of the calendar year. The IRS has proposed three methods for determining the average number of covered lives: 1) Actual count method, 2) Snapshot method, and 3) Form 5500 method. Since the TRP fee is $63 per covered life for 2014, it is important to analyze which method results in the lowest fee. The fee may be paid from plan assets as a permissible plan expense under ERISA.
HHS allows the payment of the TRP fee in two installments. For 2014, the first installment of $52.50 per enrollee is due by January 15, 2015, and the second installment of $10.50 per enrollee is due by November 15, 2015. Self-insured employers must register on www.Pay.gov to complete the TRP fee submission process. Pay.gov is a web-based application where forms may be retrieved and online payments to government agencies can be submitted. All payment information and scheduling of payment dates for the TRP fee will be handled using this site.
To begin the process, plans must register and submit their number of covered lives to HHS via Pay.gov by November 15, 2014. Within 30 days, HHS will notify the plan of its required TRP fee.
It is important to note certain types of health coverage are excluded from the TRP fee, including:
- Coverage that is not major medical (e.g., standalone vision and dental, health savings accounts, Part D prescription drug benefits, etc.)
- Supplemental coverage (e.g., HRA)
- Secondary coverage (e.g., Medicare)
Please contact Jeff Spencer at 216-831-7171 or jspencer@cp-advisors.com for more information on this topic or on other Affordabe Care Act issues.
Jeff Spencer is a Tax Principal at Ciuni & Panichi, Inc., and he is the head of the employee benefits tax services group.
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