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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established 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.



Contact Info

The Wagner Law Group


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7121 Fairway Drive
Suite 203
Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104





January 3, 2013 

 State and Federal Law Alert


HHS Issues Proposed Regulations on PPACA's Transitional Reinsurance
 Program Fees


HHS has issued proposed regulations implementing reinsurance fees imposed by the Patient Protection and Affordable Care Act ("PPACA") on employer-sponsored group health plans. The fees will fund PPACA's transitional reinsurance program. They will apply for the first three years that the Health Insurance Exchanges are in effect (i.e., 2014 through 2016).


Transitional Reinsurance Program. The main purpose of the transitional reinsurance program is to help stabilize premiums in the individual health insurance market from 2014 to 2016. The program is designed to protect against insurers' potential need to raise premiums due to the implementation of the 2014 market reform rules, especially guaranteed availability. In particular, the program will provide funding to certain individual market insurers that cover individuals with large claims. Each state will have its own program that will be set up either by the state or HHS.


Contributing Entities. HHS will assess the reinsurance fees on health insurance carriers (on behalf of fully insured group health plans) and TPAs (on behalf of self-funded group health plans). In turn, the health insurers and TPAs will pass the reinsurance fees along to plan sponsors through increases in premiums and other fees. Self-funded group health plans without TPAs will be assessed the reinsurance fees directly. The entities responsible for payments are called "contributing entities".


For the first year, HHS estimates that the reinsurance fee will be $63 for each covered life. However, HHS will not finalize this rate until late 2014, when it can make a better estimate of 2014 enrollee numbers. Reinsurance fees are tax deductible to employers as ordinary and necessary business expenses.


Covered Plans. Reinsurance fees will only be assessed on group health plans that provide major medical coverage. Thus, health savings accounts, health reimbursement accounts, health flexible spending accounts, employee assistance plans, wellness and disease management programs (to the extent they do not provide major medical coverage), and plans that provide coverage consisting solely of HIPAA-excepted benefits (e.g., limited vision or dental) will not be subject to the reinsurance fees.


Group health plans that coordinate with Medicare will only be assessed a reinsurance fee when the employer-provided coverage is primary. This situation would arise when an individual is still currently employed by an employer and covered under both the employer's plan and Medicare. However, where an individual is not currently employed by an employer but is covered under the employer's plan and Medicare, the employer's coverage would be secondary and no reinsurance fee would be assessed on the group health plan for that individual.


Counting Number of Lives Covered. The reinsurance fee applies on a per-covered-life basis, including dependents of covered employees (i.e., spouses, partners and children). This determination is made on a calendar-year (as opposed to plan-year) basis. The approved methods for counting the number of lives covered are similar to those permitted under the Patient Centered Outcome Research guidance. (See the 12/20/12 Alert.) The guidance includes aggregation rules that: (i) prevent the double counting of lives for major medical coverage offered across multiple plans, and (ii) prohibit plan sponsors from dividing major medical coverage into separate arrangements to avoid reinsurance contributions.


Payment of the Reinsurance Fee. In 2014, contributing entities must report the total number of covered lives to HHS by November 15. In turn, HHS will notify plans of their fee assessment by December 15. Plans will then be required to submit payments to HHS within 30 days of receiving the fee notices.


Given the financial impact of the reinsurance fees, group health plan sponsors are advised to begin estimating the amount of reinsurance fees that their plans will be assessed and to factor these amounts into their 2014 budgets.


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Pursuant to Internal Revenue Service Circular 230, we hereby inform you that any advice set forth herein with respect to US federal tax issues is not intended or written by The Wagner Law Group to be used and cannot be used, by you or any taxpayer, for the purpose of avoiding penalties that may be imposed on you or any other person under the Internal Revenue Code.


This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.