Transitional Reinsurance Program Fee

Transitional Reinsurance Program Fee

The Patient Protection and Affordable Care Act (PPACA) is a doozy of fees and charges all rolled up in about 20,000 pages of governmentese. PPACA is also called the Affordable Care Act (ACA) and Obamacare.

The transitional reinsurance program fee will be collected and paid in years 2014, 2015 and 2016. In 2014, the total annual cost is $63. That breaks down to $5.25 per month per covered employee.

The employer and insurer are taxed to collect and pay the fee. Congress rationalized that employers and insurers should bear the cost of a temporary reinsurance fund in order to stabilize premiums for coverage in the reformed individual health insurance market (inside and outside the exchanges) for a three-year period from 2014 through 2016.

In case you are wondering who will actually pay this $63 fee look in the mirror. It is everyone’s first thought that employers will simply add the monthly Transitional Reinsurance Program Fee of $5.25 to the premium employees in an employer sponsored health plan already pay.

If that is true, you already know your health insurance just went up by $5.25 per month. However there has been a new twist tossed into the game. Obama moved the mandatory coverage requirement on employers with 50 or more employees from January 1, 2014 to January 1, 2015.

In other words, large employers do not have to have a health insurance plan in place for their employees until 1-1-2015. It appears this $63 annual fee was moved out one more year. However, no one in the administration is commenting on the fees including the Transitional Reinsurance Program Fee they imposed starting in 2013 and 2014.

It would appear large employers will not be required to pay the Transitional Reinsurance Program Fee but that is only a guess because the regulations covering this fee were written and implemented in March of 2013.

Whether they pay the fee or do not pay the fee for 2014 is a relatively moot point given the administration’s health insurance law has only a one year reprieve. That means come January 1, 2015 employees will probably be zinged the monthly $5.25.

In addition, their already in place insurance program may have upped their current premium to recoup the other costs and fees imposed by ACA. This article only covers the Transitional Reinsurance Program Fee and doesn’t go into the other fees.

The Transitional Reinsurance Program Fee was hidden in the law and when it was discovered caused more than a hoot and howl from employers. Unfortunately for them, the government regulators did not back down from their assessment and enforcement of this fee.

Some pundits have pointed to the Transitional Reinsurance Program Fee in combination with the other fees and taxes imposed by ACA to warn employees that their jobs might be in danger of either being eliminated or their hours being cut to 30 a week.

30 is the magic number at which large employers are not forced into providing health insurance or face penalties for not having a health insurance program in place. These pundits may be proved right given all of the announcements from major employers saying they are cutting hours.

The Transitional Reinsurance Program Fee wasn’t the fee that broke the camel’s back but it was a thorn that pricked the employers where they least expected it, in the pocket book. The ACA should be a fun piece of legislation to watch over the next two years.

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