The Wagner Law Group Description
Wagner Law Group, A Professional Corporation, is a nationally
recognized ERISA & employee benefits, estate planning,
employment, labor & human resources practice.
in 1996, The Wagner Law Group has 22 attorneys engaged
exclusively in employee benefits, estate planning and
employment law. Five of our attorneys are AV rated by
Martindale-Hubbell as having very high to preeminent legal abilities
and ethical standards. The firm is among the largest ERISA boutiques
in the country. Our practice is national in scope, with clients in
more than 40 states and several foreign countries.
Wagner Law Group
Fax: (561) 293-3591
7108 Fairway Drive
Palm Beach Gardens, FL 33418
Francisco, CA 94104
March 14, 2013
State and Federal Law
HHS Issues Final Regulations
on PPACA's Transitional Reinsurance Fees
HHS has issued final
regulations on group health plan sponsors' liability under the
transitional reinsurance fee provisions of the Patient Protection and
Affordable Care Act ("PPACA").
During the first three years
that the Health Insurance Exchanges are in effect (i.e., 2014
through 2016), employer-sponsored group health plans are subject to
PPACA's transitional reinsurance fees. These fees will be used to
fund transitional reinsurance programs, which are designed to protect
against premium increases caused by the implementation of the 2014
market reform rules, particularly guaranteed availability.
The final regulations offer
much needed clarification about the assessment, calculation and
payment of these fees, including the following:
transitional reinsurance fee for 2014 will be $63 per covered
life. Although HHS suggested that the 2014 fee might be lowered,
this is the same amount as set forth in the proposed
- The fee
applies on a per-covered-life basis, which includes spouses,
children and domestic partners.
sponsors may use one of the following methods to calculate the
number of covered lives:
- the actual
count method (i.e., the plan sponsor adds the number of
lives covered on each day, and divides that number by the by
the number of days in the plan year);
snapshot method (i.e., the plan sponsor uses total lives
covered on one day in each quarter of the plan year); or
- the Form
5500 method (i.e., the plan sponsor uses a specified
formula thatincludes the number of participants actually
reported on the Form 5500 for the plan year).
- The fee is
applicable only to group health plans that provide "major
medical coverage," which is defined as health coverage for
a broad range of services and treatments, including diagnostic
and preventive services, as well as medical and surgical
conditions. As a practical matter, this includes typical PPO,
HMO and high-deductible health plan coverages, whether insured
beneficiaries receiving COBRA continuation coverage must be
counted as covered lives.
savings accounts, health reimbursement arrangements, flexible
spending arrangements, prescription drug coverage, dental and
vision plans offered on a stand-alone basis, and other programs
providing ancillary benefits are generally not major medical
coverage and are not a factor in the assessment of plan
sponsors' fee liabilities.
employees who have both Medicare and employer-provided coverage,
when Medicare is the primary payer, the employer coverage is not
considered major coverage and the employee is not counted as a
sponsors must report the total number of covered lives to HHS by
November 15 (of 2014, 2015 and 2016). In turn, HHS will notify
plan sponsors of their fee assessment by December 15. Plan
sponsors will then be required to remit fee payments to HHS
within 30 days of receiving the fee assessment notices.
sponsors that maintain multiple group health plans that provide
major medical coverage for the same covered lives may combine
the plans to prevent double counting. Plan sponsors may deduct
the reinsurance fees for income tax purposes as ordinary and
necessary business expenses.
plans may use plan assets to pay the fee assessments.
Given the financial impact
of the reinsurance fees, group health plan sponsors are advised to
begin estimating the amount of transitional reinsurance fees that
their plans will be assessed and factor these amounts into their 2014
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