Proposed change to transitional reinsurance fee collection

In proposed regulations issues this week by HHS they are proposing a change to how the $63 transitional reinsurance fee will be collected from employers. We have copied the section from the regs below.  This changes slightly how employers have been planning to pay this fee.  Basically, instead of the full $63 being due at the end of 2014 or in very early 2015 employers will only pay $52.50 at that time, then the extra $10.50 would not be due until fourth quarter 2014.  Also note that the proposed fee for 2015 is $44.

This could impact how some employers budget for this fee, especially the larger ones.  See the below excerpt for details and please not that these are only proposed regulations. However we would be surprised if this section changed before going final.

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We recognize that the reinsurance collections provided for in the Affordable Care Act –
$12 billion for 2014, $8 billion for 2015, and $5 billion for 2016 – will result in substantial upfront
payments from contributing entities for the reinsurance program. Therefore, we are
proposing to modify our collection schedule for the program, so that we would collect the
reinsurance contribution amounts for reinsurance payments and for administrative expenses
earlier in the calendar year following the applicable benefit year, approximately in accordance
with the schedule currently described in §153.405(c), but collect the reinsurance contribution
amounts for payments to the U.S. Treasury in the last quarter of the calendar year following the
applicable benefit year. Therefore, we propose to modify §153.405(c) so that a contributing
entity would make reinsurance contributions in two installments to HHS – one at the beginning
of the calendar year following the applicable benefit year, and one at the end. As noted in the
second final Program Integrity Rule, the proposed policy is designed to alleviate the upfront
burden of the reinsurance contribution, allowing contributing entities additional time to make the
payment. We note that the proposed change in the collection schedule would not affect the
amount of funds collected for reinsurance payments. Additionally, the amounts allocated to
reinsurance payments and administrative expenses are needed to operate the reinsurance
program, while the amounts allocated for payments to the U.S. Treasury are not needed for the
operation of the transitional reinsurance program. Therefore, collecting the amounts allocated to
payments to the U.S. Treasury later in the calendar year following the applicable benefit year
will not affect the reinsurance program, and will alleviate a contributing entity’s upfront financial
burden.

Under this proposal, the first of the two installments each year would include the

reinsurance contribution amounts allocated to reinsurance payments and administrative expenses.
We propose in §153.405(c)(1) that following submission of the annual enrollment count, HHS
would notify a contributing entity of the reinsurance contribution amount allocated to
reinsurance payments and administrative expenses to be paid for the applicable benefit year. If
the enrollment count is timely submitted, HHS intends to notify the contributing entity by
December of benefit year 2014, 2015, or 2016, as applicable. We note that, due to our desire to
align the notification of reinsurance contributions due with our monthly payment and collections
cycle, this schedule differs slightly from the schedule currently set forth in §153.405(c)(3), which
provides for notification by the later of 30 days of the submission of the annual enrollment count
or by December 15. We propose in §153.405(c)(3) that the contributing entity remit this amount
within 30 days after the date of the first notification.

The second installment would cover the portion of the reinsurance contribution amount

allocated to the payments for the U.S. Treasury to be paid for a benefit year. We propose in
§153.405(c)(2), that in the fourth quarter of the calendar year following the applicable benefit
year, HHS would notify the contributing entity of the portion of the reinsurance contribution
amount allocated for payments to the U.S. Treasury for the applicable benefit year. Again, under
proposed §153.405(c)(3), a contributing entity would remit this amount within 30 days after the
date of this second notification. We note that the contributing entity would be required to submit
an annual enrollment count only once for each benefit year under §153.405(b).
 
For example, for the 2014 benefit year, of the $63.00 annual per capita contribution rate,
$52.50 would be allocated towards reinsurance payments and administrative expenses, and
$10.50 towards payments to the U.S. Treasury. Thus, we contemplate that if a contributing
entity submits its enrollment count for the 2014 benefit year in a timely manner (by November
15, 2014), a reinsurance contribution payment of $52.50 per covered life would be invoiced in
December 2014, and payable in January, 2015. Another reinsurance contribution payment of
$10.50 per covered life would be invoiced in the fourth quarter of 2015, and payable late in the
fourth quarter of 2015.

We propose that for the 2015 benefit year, the proposed $44 annual per capita

contribution rate be allocated $33 towards reinsurance payments and administrative expenses,
and $11 towards payments to the U.S. Treasury. These amounts would similarly be payable in
January 2016 and late in the fourth quarter of 2016, respectively.

 

Map Showing State Decisions on Administration’s Policy on Coverage Extensions

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Thoughtful Take on the Future of PPACA - Megan McArdle from Bloomberg

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IRS eases FSA use-it-or-lose-it rule

By Allison Bell
via LifeHealthpro

The Internal Revenue Service (IRS) has decided to let holders of health flexible spending arrangements (FSA) roll over up to $500 in account balance from one year to the next without worrying about the infamous "use-it-or-lose-it" rule."

Officials at the IRS, an arm of the U.S. Treasury Department, have discussed the change in IRS Notice 2013-71, and they also talk in the notice about how they will make the change available to workers at employers with non-calendar plan years.

FSAs give workers a vehicle for setting aside cash to pay for health care expenses without paying income taxes on the cash.

The IRS tried to discourage high-income workers from using FSAs as investment accounts by requiring them to forfeit any unused cash at the end of the plan year. The employers got to keep any cash forfeited.

In 2005, the IRS tried to ease the burden the rule caused by creating a grace period. The grace period rule gave FSA holders the ability to avoid losing FSA cash by using the cash up to two months and 15 days after the end of the plan year.

In 2010, the drafters of the Patient Protection and Affordable Care Act (PPACA) tried to generate revenue to cover part of the cost of PPACA by capping the deductibility of FSA contributions at $2,500 per year.

IRS officials noted in 2012, in Notice 2012-40, that because PPACA capped tax deductible contributions at $2,500 per year, the FSA could no longer be much of a tax shelter for the wealthy.
When officials asked for comments on changing the use-it-or-lose-it rule in that notice, commenters said a change could simplify health FSA administration, and make FSA programs more attractive to low-income and moderate-income workers, who "are more reluctant than others to participate because of aversion to even modest forfeitures of their salary reduction contributions," officials said.
IRS officials said they believe a $500 rollover cap is appropriate because most FSA forfeitures are for less than $500.

An employer cannot offer a FSA carryover provision and an FSA grace period at the same time.
To adopt the change, an employer must add a carryover provision to the FSA plan document and eliminate any grace period provision, officials said.

White House says Healthcare.gov will be fixed by end of November

(Reuters) — The website for Americans to buy insurance under President Barack Obama's health care law should be working smoothly for most users by the end of November, a White House official assigned to fix Healthcare.gov said Friday.

Jeffrey Zients told reporters in a conference call that Quality Software Services Inc., or QSSI, will serve as a general contractor to oversee the repairs.

The administration has not had a technology company overseeing the entire project. Instead, the government decided early on that the Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services, would serve as the system integrator.

The company, a unit of health insurer UnitedHealth Group Inc., already has a technology contract related to the website and testified on Thursday to a congressional panel about problems with the system.

QSSI produced the federal data hub and a software tool for creating online consumer accounts, which was at the center of early logjam problems.

Online insurance exchanges were launched on Oct. 1 under the 2010 Patient Protection and Affordable Care Act, often called "Obamacare," to offer health insurance plans to millions of uninsured Americans. But many Americans have experienced error messages and long waits in trying to sign on to Healthcare.gov, which has become a political embarrassment for President Obama.

"By the end of November, the vast majority of consumers will be able to successfully and smoothly enroll through Healthcare.gov," Mr. Zients said.

'A lot of problems'

Mr. Zients said he had brought in technology experts to establish the problems with the website and to prioritize the repairs. Based on that assessment, he described Healthcare.gov as being "fixable."
"It will take a lot of work and there are a lot of problems that will need to be addressed, but the bottom line is that it is fixable," he said.

He said experts had identified "dozens of items" to be fixed in terms of both performance and functionality, and said a problem related to communications with insurers was on the top of the list. He did not provide further details about the nature of the glitches.

Earlier this week, the government told insurers in a meeting that it was working to fix data transmission problems with applications and also with the technology that can allow insurers to directly enroll consumers in exchange plans.

The government expects about 7 million people to enroll for individual insurance in 2014, many of whom are expected to receive government subsidies. Consumers must enroll by mid-December to have insurance on Jan. 1 and by the end of March 2014 if they want to avoid paying the penalty laid out in the Affordable Care Act.

About 90% of people who try to create accounts are able to do so, but the ability to complete an application has been "volatile," Mr. Zients said. The government said that about 700,000 Obamacare applications had been filled out across the country but has not provided enrollment figures.

The federal government is running the website for 36 states while 14 other states have built their own exchanges to sell insurance policies under Obamacare. Some state sites have also had technology issues.

Republican lawmakers, long opposed to Obamacare, have pounced on the rocky rollout to launch multiple investigations into the administration's missteps and the role of contractors.
Some Democrats have also criticized the administration and called for extending the open-enrollment period beyond the existing March 31 deadline.

Two committees in the Republican-controlled House of Representatives will hold hearings next week, one with Health and Human Services Secretary Kathleen Sebelius and another with Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services.

The White House said last week that President Obama still has "full confidence" in Ms. Sebelius, whose department is responsible for implementing the law.

Suit challenging premium subsidies for federal health exchanges can proceed

From: Business Insurance

A lawsuit challenging the heart of the health care reform law — the extension of federal premium subsidies to millions of lower-income uninsured U.S. residents to purchase coverage in a public insurance exchange — can go forward, a federal judge in Washington has ruled.

The suit, filed by four individuals, contends that the Internal Revenue Service overstepped its authority in its 2012 rule saying that the subsidies are available through state and federal insurance exchanges.The plaintiffs argue that that under the Patient Protection and Affordable Care Act, premium subsidies are limited to states that have set up insurance exchanges, and not the 34 states where the Department of Health and Human Services established exchanges after the states declined to do so.In rejecting the Justice Department's bid to dismiss the suit, Judge Paul Friedman of the U.S. District Court of the District Columbia said Tuesday that case will be considered on an expedited basis. But he rejected the plaintiffs' bid for a preliminary injunction to block the rules while the suit is considered.In August, a federal judge in Oklahoma allowed a somewhat similar suit, which was filed by Attorney General Gov. Scott Pruitt, to proceed.

Ramifications
The ramifications of the litigation are huge. If premium subsidies are limited to coverage provided only through state insurance exchanges, millions of uninsured U.S. residents living in states, such as Ohio, Pennsylvania and Texas, that declined to set up exchanges would lack access to the subsidies and likely would remain uninsured. That would defeat the central purpose of the health care reform law, which is to significantly reduce the approximately 48 million individuals who lack health insurance.A ruling against the government also could have significant implications for employers. That is because health care reform law penalties against employers that do not offer coverage or do not offer affordable coverage apply only if an employee eligible for a premium subsidy uses it to buy coverage through a public exchange.But if the courts should rule that the subsidy is available only in state-established exchanges, employers would not face the penalties if their employees live in states that have declined to set up exchanges.Under the law, employers with at least 50 full-time employees are liable for a $2,000 per full-time employee penalty starting in 2015 if they do not offer coverage. If employee premiums for individual coverage exceed 9.5% of wages, the employer would be liable for a $3,000 penalty for that employee.

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PPACA largely untouched in accord to end government shutdown

From Business Insurance

A bipartisan agreement to fully reopen the federal government and raise the government’s borrowing authority that was reached Wednesday by Democratic and Republican leaders in the U.S. Senate includes no major changes to the nation’s health care reform law.

The sole provision in the agreement that relates to the Patient Protection and Affordable Care Act would expand income verification of lower-income uninsured individuals before they could obtain federal premium subsidies to buy coverage in public health insurance exchanges.

Earlier, lawmakers floated a proposal that would have delayed an ACA provision — now set to go into effect next year — that initially imposes a $63 fee per plan participant on self-funded employers and other plan sponsors. The proposal, which would have delayed the fee until 2015, is not part of the accord.

The $25 billion to be generated by the Transitional Reinsurance Program fee over a three-year period is to be used by the federal government to partially reimburse commercial insurers that cover individuals with high health care costs.

Another proposal that was floated but not adopted would have delayed or repealed a new tax on medical devices.

The agreement could be voted on by the House and Senate as soon as Wednesday evening.

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