Reinsurance Contributions Collections On Target For 2015

 

As of March 31, 2015, the Department of Health and Human Services (HHS) has collected approximately $8.7 billion in reinsurance contributions for the 2014 benefit year. According to CMS’ Center for Consumer Information and Insurance Oversight (CCIIO), $1 billion more is scheduled to be remitted on or before November 15, 2015. CCIIO noted that because the collection of the reinsurance contributions fell below estimates for benefit year 2014, the first $10 billion collected would be allocated strictly as reinsurance payments to issuers of non-grandfathered reinsurance-eligible individual market plans. Subsequent collection amounts over the $10 billion would be allocated to U.S. Treasury general funds and administrative expenses.

Background. Section 1341 of the Patient Protection and Affordable Care Act (ACA) established a transitional reinsurance program to help stabilize premiums in the individual market inside and outside of the Marketplaces. The program collects contributions from health insurance issuers, as well as other self-insured group health plans, to fund the (1) reinsurance payments to non-grandfathered reinsurance-eligible individual market plans; (2) administrative operating costs of the program itself; and (3) general fund of the U.S. Treasury for benefit years 2014 through 2015.

Collection amounts. In benefit year 2014, the collection target was set at $12 billion, with $10 billion for reinsurance payments and $2 billion for the U.S. Treasury general fund. According to the CCIIO, the administrative expenses target of the reinsurance program in benefit year 2014 was $20.3 million. As a result, in order to meet the total targeted amount of $12.02 billion, HHS set in the same Final rule an annual per capita contribution rate of $63.00.

Health insurance issuers and certain self-insured group health plans were given the option to pay the 2014 benefit year contribution: (1) in one payment to be remitted no later than January 15, 2015, reflecting $63.00 per covered life; or (2) in two separate payments, with the first payment due by January 15, 2015, reflecting $52.50 per covered life, and the second payment due by November 15, 2015, reflecting $10.50 per covered life.

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