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Remitting the ACA Transitional Reinsurance Program Contribution

The Transitional Reinsurance Program (TRP) contribution was created by the Affordable Care Act (ACA) to help stabilize premiums in the individual insurance market. TRP contributions are used to fund a temporary reinsurance program to help cover the expense of high-cost individuals enrolled in individual market plans. TRP contributions are required for three years – 2014 through 2016 – and may be treated as an ordinary and necessary business expense under the Internal Revenue Code, subject to any applicable disallowances or limitations under the Code.

The TRP contribution is calculated on the average number of total lives covered for medical coverage during the first nine months of the calendar year (employees, dependents, and, if applicable, retirees and COBRA continuees are counted). A plan is allowed to subtract any member for which the plan is the secondary payer.

This process must be completed through Pay.gov prior to November 16, 2015 and payment may only be made using an Automated Clearing House (ACH) payment from your bank account or an account maintained by a third party that has been funded by you.

The TRP contribution submission process is complicated; however, PBA is in a position to assist you in complying with these requirements.

Who is Responsible for Making TRP Contributions?

TRP contributions must be made by self-insured group health plans and by health insurance issuers for insured coverage. If you offer an insured medical plan or HMO in addition to your self-insured group health plan, the insurance company or HMO is responsible for making the TRP contribution for that plan option. If you switched from a fully-insured plan to a self-insured plan during the 2015 calendar year, the insurance company is responsible for paying the TRP contribution for the portion of the year the plan was fully-insured – the self-insured plan is responsible for the TRP contribution for the remaining portion of the year.

Although the Plan Sponsor for a self-insured group health plan is ultimately responsible for TRP contributions, the Plan Sponsor may elect to have an administrator handle the TRP contribution submission process (outlined below) on behalf of the plan.

A Summary of the TRP Contribution Submission Process

  1. The first step in the TRP contribution submission process is to register on Pay.gov. If you are handling the TRP contribution submission process on behalf of your plan and your organization is already registered on Pay.gov, you do not need to create a new account – your existing account should be used to carry out the reinsurance contribution submission process.

  2. The next step in the process is to determine the average number of total lives covered during the calendar year and to prepare the supporting documentation (i.e. a spreadsheet in .CSV file format containing the data fields required to verify your organization and the annual enrollment count). Plan Sponsors of self- insured group health plans may use one of several counting methods to calculate the annual enrollment count – the actual count method (for each day of the month), snapshot count method, snapshot factor method or the Form 5500 method. Not all counting methods will result in the same number and certain methods may, in fact, result in a total contribution that is meaningfully lower. The same counting method must be used by a contributing entity for the entire period regardless of which counting method is chosen. Documents and records used to substantiate the enrollment count submitted must be maintained for at least 10 years.

    TRP Counting Methods

    Actual Count Method
    45 CFR 153.405(d)(1)
    Add the number of covered lives for each day of the month for the first nine months of the calendar year and divide that total by the number of days in those nine months of the calendar year.
    Snapshot Count Method
    45 CFR 153.405(d)(2)
    (Monthly or Quarterly)

    Add the total number of covered lives on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters (for example March, June and September) of the calendar year, and divide that total by the number of dates on which a count was made.

    The date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter.

    Snapshot Factor Method
    45 CFR 153.405(e)(2)
    (Monthly or Quarterly)

    Add the total number of covered lives on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three quarters of the calendar year (that is, March, June and September), and divide that total by the number of dates on which a count was made.

    The date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter.

    The number of lives covered on a date is calculated by adding (1) the number of participants with self-only coverage on the date, and (2) the product of the number of participants with coverage other than self-only coverage on the date multiplied by a factor of 2.35.

    Form 5500 Method
    45 CFR 153.405(e)(3)

    Use the number of lives covered for the most current plan year calculated based upon the "Annual Return/Report of Employee Benefit Plan" filed with the Department of Labor (Form 5500).

    The number of lives covered for the plan year equals the sum of the total participants covered at the beginning and end of the plan year, as reported on lines 5 and 6(d) of the Form 5500. If reporting for a plan offering self-only coverage, divide the sum of the total by 2.

  3. Once you have determined your enrollment count, you will be required to access and complete the "ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form" through Pay.gov, upload the supporting documentation, and enter your payment information which includes scheduling your payment date(s) and entering your banking information. It is strongly suggested that this process be done well before the November 16th due date to allow the government to audit your supporting documentation file for potential discrepancies.

  4. TRP contributions may be scheduled in two payments or in a single combined payment. A single combined payment ($44 per covered life) must be made by January 15, 2016. If two payments are scheduled, the first payment ($33 per covered life) is due no later than January 15, 2016 and the second payment ($11 per covered life) is due no later than November 15, 2016.

    If you select a combined payment, you will only have to complete this process once. If you select two payments, you will be required to complete the process twice. Therefore, most Plan Sponsors will choose to pay the TRP contribution in a single payment to avoid the second process.

How PBA Can Help With the TRP Contribution Submission and Payment Process

  1. If you offer a self-insured group health plan for which PBA is the third-party administrator, you may elect to have PBA handle all administrative aspects of the TRP contribution submission process for your plan. If you elect this option, PBA will:

    • Perform the various calculations to determine which counting method will result in the lowest TRP contribution for your plan.
    • Complete the necessary reporting and remittance of your TRP contribution, including submissions of the necessary supporting documentation through Pay.gov by November 12, 2015.
    • Invoice you for the total amount of your plan’s TRP contribution (one installment) by November 30th. Receipt of your payment will be required no later than January 5, 2016 via ACH transfer, or by December 15, 2015 if remitting by check.
  2. If you elect to handle the TRP contribution submission process for your plan, or if you offer multiple self- insured group health plans for which PBA is not sole third-party administrator, or if PBA is not the current third party administrator for your plan, PBA will:

    • Perform the various calculations to determine which counting method will result in the lowest TRP contribution for your self-insured group health plan and provide you with the necessary supporting documentation to support your TRP contribution submission.
    • Be available to provide you with guidance in stepping through the various submission processes.