By Jerry Geisel, Crain News Service
WASHINGTON (April 21, 2015) — A healthcare reform law-created program that imposes a fee on self-funded employers and other healthcare plan sponsors is expected to generate enough revenue to partially reimburse insurers — under earlier government set standards — covering those with high healthcare costs in the individual market, according to federal regulators.
As of March 31, the Department of Health & Human Services (HHS) disclosed that it has collected $8.7 billion from healthcare plan sponsors paying the Transitional Reinsurance Program fee. In addition, HHS said it expects to collect roughly another $1 billion on or before Nov. 15, the last day payments can be made for the first year of the program.
That $9.7 billion is close to the $10 billion the program is supposed to produce to reimburse insurers under an earlier set reinsurance formula. For the first year of the three-year program, the government reimburses insurers for 80 percent of an individual's claims costs between a $45,000 attachment point and a $250,000 ceiling.
The revenue for the reinsurance program is generated by an HHS-set $63 per healthcare plan participant fee. Employers had the option to pay the 2014 fee with one full payment by Jan. 15, 2015, or paying a $52.50 per participant fee then and the remaining $10.50 per participant fee by Nov. 15.
The 2015 fee is scheduled to decrease to $44 per participant, while the 2016 fee is scheduled to decline to $27 per participant.
The reinsurance payments to insurers in succeeding years also are scheduled to decrease.
This report appeared on the website of Crain's Business Insurance magazine, a Chicago-based sister publication of Tire Business.