New Fees Coming for Health Plan Sponsors

by Katten Muchin Rosenman LLP
Contact

To help offset the costs associated with the implementation of the health care reform legislation, also known as the Patient Protection and Accordable Care Act of 2010 (PPACA), the law imposes certain fees on health insurers and sponsors of self-insured health plans.

PCORI FEE

One PPACA fee is intended to fund the Patient Centered Outcome Research Institute (PCORI), a research institute created under PPACA to advance research related to evidence-based medicine. The PCORI fee is effective for each plan year ending after October 1, 2012 and before October 1, 2019. The PCORI fee is $1.00 per covered life for the first plan year for which it is due, $2.00 per covered life for the second plan year for which it is due, and for years three through seven, the PCORI fee is adjusted by each year’s health care inflation rate as determined by the US Department of Health and Human Services (HHS). The final rules issued on December 6, 2012, contain several methods for determining the number of covered lives under a health plan.

A sponsor of a self-insured health plan is responsible for payment of the PCORI fee. For insured plans, the insurance company is responsible for paying the PCORI (although it is expected that insurers will pass the PCORI fee and the TRP fee (discussed below) on to the employer purchasing the policy). The PCORI fee is due no later than July 31 of the calendar year following the calendar year in which the plan year ends. For calendar year plans, the first PCORI fee for the 2012 plan year is due by July 31, 2013. PCORI fees should be submitted to the IRS together with a properly completed IRS Form 720.

TRP FEE

A more substantial fee arising under PPACA is expected to be in effect for calendar years 2014, 2015 and 2016. The Transitional Reinsurance Program (TRP) was created under PPACA to help stabilize health insurance premiums once the requirements of PPACA become more fully effective in 2014. In addition, PPACA requires that the fee associated with TRP be increased so that the US Treasury receives a total of $5 billion over the three-year period that the TRP fee is expected to be in effect.

The TRP fee is calculated based on the revenue necessary to be collected. Specifically, PPACA provides that the aggregate amount of TRP fees to be collected for 2014 is approximately $12 billion. Accordingly (and based on recently issued proposed rules), the TRP fee per covered life for 2014 is expected to be approximately $5.25 per month (or $63.00 per year). However, the specific amount of the TRP fee for 2014 is not yet finalized.

In any case, the TRP fee is expected to be reduced for 2015 and 2016 because the aggregate fees due to be collected in those years are $8 billion and $5 billion, respectively. However, guidance indicates that the US Department of Health and Human Services (HHS) is considering a leveling mechanism that may reduce the 2014 TRP fee to some degree by raising the TRP fee that would be due in 2015 and 2016. Final guidance from HHS will determine the TRP fee for each year.

The actual TRP fee owed by an insurance company or sponsor of a self-insured health plan is determined based on the number of lives covered by the policy or plan. In each year (2014, 2015 and 2016), insurance companies and sponsors are to report to HHS the number of covered lives by November 15 (the guidance contains several methods for determining this number). HHS is then expected to notify the sponsor or insurer of its TRP fee within 30 days. The fee will then be due 30 days thereafter (i.e., the fee for 2014 will be payable in late December 2014 or early January 2015).

While the guidance related to the TRP fee is not yet final, it is recommended that sponsors and insurers keep both the TRP fee and the PCORI fee in mind when budgeting for health care costs.

The final regulations regarding the PCORI fee can be found here.

The proposed regulations regarding the TRP fee can be found here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Katten Muchin Rosenman LLP | Attorney Advertising

Written by:

Katten Muchin Rosenman LLP
Contact
more
less

Katten Muchin Rosenman LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.