By Jerry Geisel, Crain News Service
WASHINGTON (March 4, 2013) — Final regulations issued March 1 affirm how much employers will have to pay to fund a program created by the healthcare reform law that will partially reimburse commercial insurers writing policies for individuals with high healthcare costs.
Fees generated by the Transitional Reinsurance Program are intended to raise $25 billion in revenue over three years — including just over $12 billion during the program's first year, which begins in 2014.
In the preamble to the final U.S. Department of Health and Human Services regulation, HHS said it estimates that a $63-per-health-care-plan-participant fee will be needed to raise the required amount of revenue for the first year of the program. The actual fee will be based on health plan enrollment information filed with HHS later this year.
The fee is unpopular among employers. "Employers will see no direct benefit by paying this fee. It is used to help stabilize premiums in the individual market," said Amy Bergner, managing director-human resource solutions with PricewaterhouseCoopers L.L.P. in Washington.
While the fees are assessed for only three years, "it is a significant new cost for employer plans," Ms. Bergner added.
The final regulations affirm previous guidance on several issues including:
• The fee will not apply to retirees enrolled in Medicare and receiving supplemental coverage from their former employers. However, the fee would be assessed on retired employees not yet eligible for Medicare and receiving healthcare coverage from their former employers.
• The fee will apply to former employees and their dependents receiving COBRA continuation coverage.
• In the case of fully insured employers, the fee will be paid by insurers. For self-funded plans, third-party administrators are to remit the fee on behalf of their clients.
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This report appeared in Business Insurance magazine, a Chicago-based sister publication of Tire Business.