Friday, November 29, 2013

Pre-Turkey Day Release Also Confirms Admin. Plan To Exempt Largest Plans (Mostly Unions) From One of Obamacare's Steepest Taxes

The Transitional Reinsurance Tax will cost approximately 2.5% of premium or $63 per covered member for self funded plans and will be collected beginning in about a year.  The Obama Administration has decided to "re-interpret" it's reading of it and exempt the largest plans (mostly unions) from that tax in subsequent years.  

At least those Taft-Hartley plans have something to be thankful for this season!   

This is from Professor Timothy Jost

The Proposed Notice would exempt from reinsurance contributions self-insured, self-administered plans.  Reinsurance contributions are required under the ACA from insurers and from third-party administrators of self-insured plans.  The ACA does not specifically address whether self-administered, self-insured plans are subject to the reinsurance contribution requirement.  Many of these plans are collectively-bargained Taft-Hartley multi-employer plans, which are funded by employer contributions and administered by trusts representing employers and unions.
Unions have argued that the Taft-Hartley plans should not be subject to the reinsurance contribution requirement, which only applies to an insurer or third-party administrator’s “commercial book of business.”  HHS required self-insured, self-administered plans to contribute to the reinsurance pool for 2014, but is reconsidering its initial interpretation of the statute and proposing to exempt them for 2015 and 2016. This has in turn provoked cries of union favoritism from Republican Senators, who have introduced legislation to block this interpretation of the law.  As the contribution amounts for 2014 are significantly larger than those for 2015 and 2016, and HHS does not propose to change the 2014 rule, the Taft-Hartley plans may not view this as a significant victory.
Under the ACA, the reinsurance program must collect $6 billion for 2015 and $4 billion for 2016, plus $2 billion in 2015 and $1 billion in 2016 to reimburse the federal treasury for the early retiree reinsurance program that operated from 2010 to 2013.  HHS proposes to collect an addition $25.4 million in 2015 for administrative expenses, which will be shared with states that elect to operate their own reinsurance programs.  A $44 per enrollee charge will be assessed against insured and self-insured coverage to cover these costs.  HHS will notify contributing entities of their assessed charges for a given year in December of that year.  The entity will have to pay a first installment of the assessed charge in January, 30 days later, to cover the cost of reinsurance and the administrative fee.  The insurer would pay a second installment in the fourth quarter of the year to cover the federal government reimbursement part of the charge.  Thus, for example, for 2014, contributing entities would pay a $52.50 per capita charge in January and a $10.50 charge would be due late in the fourth quarter. ... 

Here is a video of Megyn Kelly discussing the matter: