Healthcare is a hot topic in the United States and can be confusing for many. One of the lesser-known costs of healthcare is the Transitional Reinsurance Fee (TRF), which can add unexpected costs for both employers and employees. This article will provide an overview of what the TRF entails, who it affects, and how it adds to existing healthcare costs. Additionally, this article will discuss alternatives available to employers that may help reduce these unexpected costs. Knowing more about the TRF can help employers design a better healthcare plan that meets their needs while avoiding unnecessary expenses.
What is the Transitional Reinsurance Fee?
The TRF is a temporary fee assessed on all individual and small group health plans to make up for costs exceeding the premium caps set by the Affordable Care Act.
Who Pays the Transitional Reinsurance Fee?
The Transitional Reinsurance Fee (TRF) is a fee organization pay to the government to fund the Patient Protection and Affordable Care Act (ACA). The fee applies to all health insurance issuers, including self-insured employers. This means employers who provide coverage for their employees must pay this fee to comply with ACA regulations.
To calculate how much an employer pays for the TRF, they need to know the number of covered lives under their plan. Each employer must submit an annual enrollment count of all employees and any dependents enrolled on their health plans. The employer will be required to pay $44 per participant in 2018 and $2 per participant in 2019. For example, if an employer has 500 lives covered by their plan, they would owe the government $22,000 in 2018 and $1,000 in 2019.
How Much is the Transitional Reinsurance Fee?
The Transitional Reinsurance Fee is a fee mandated by the Affordable Care Act (ACA). It is charged to health care plans to help cover the costs of high-risk individuals who have enrolled in individual insurance plans. The fee applies to self-insured group health plans, insured group health plans, and non-grandfathered personal market coverage.
In 2015, the rate for the Transitional Reinsurance Fee was set at $44 per covered life for plan years beginning on or after January 1, 2015, and ending before December 31, 2016. The fee decreased yearly until it reached $5 per covered life in 2017. Employers are responsible for paying this fee and must submit payment to the Department of Health & Human Services by November 15 each year.
When Does the Transitional Reinsurance Fee Apply?
The Transitional Reinsurance Fee (TRF) applies to all self-insured health plans and major medical plans in the individual and small group markets, both inside and outside the Health Insurance Marketplaces. This fee is imposed annually per member for each plan year from 2014 through 2016.
The TRF was designed to help stabilize premiums in the individual market by helping to absorb some of the costs associated with high-risk enrollees who are required to be accepted into Marketplace plans without being rated up or refused coverage due to pre-existing conditions. The fee is intended to apply evenly across all insurers offering the range in those markets so that those with higher-than-average costs do not end up bearing more than their fair share of the burden.
Why Was the Transitional Reinsurance Fee Established?
The Transitional Reinsurance Fee was established by the Affordable Care Act (ACA) in 2014 to help stabilize premium costs for health insurance plans. The fee is paid by most group health plans and self-insured plans and is used to help cover the cost of high-risk enrollees who purchased coverage through exchanges. This helps lower premiums for all consumers, regardless of their risk levels.
The funds collected from the fee are used to reimburse insurers for high-cost claims that exceeded $45,000 in 2014 and $90,000 in 2015 and beyond. The price also helps fund reinsurance programs that allow insurers to share a portion of their costs with other insurers. This reduces the financial burden on insurers when they have an influx of high-risk or costly enrollees.
Advantages of the Transitional Reinsurance
The Transitional Reinsurance Fee is an important tool for providing greater financial security to health insurers in the United States. It helps ensure that those who purchase insurance through the Affordable Care Act’s (ACA) marketplaces can get coverage even if their insurer experiences high costs due to an unexpected influx of enrollees. The fee also helps stabilize premiums so insurers can continue providing range without dramatically increasing consumer prices.
Additionally, the reinsurance program helps reduce the risk for insurers and allows them to offer more comprehensive plans with lower deductibles and copayments since they have a safety net in place in case of unforeseen conditions. This leads to a greater variety of programs available on the marketplace and ensures that both individuals and small businesses have access to quality health insurance at an affordable rate.
