Transitional reinsurance tax guidance for municipalities and offline agencies

It has come to our attention that some municipalities have received the correspondence appended below from Centers for Medicare & Medicaid Services (CMS) and are unsure of how to respond.

Municipalities that have their insurance through the GIC are NOT contributing entities for purposes of the Transitional Reinsurance tax. Rather, the municipalities are fully insured (even if their employees are enrolled in our self-insured plans) and the responsibility for paying the tax lies with the insurers. The GIC has paid the tax to CMS on behalf of all members of its self-insured plans. This payment was calculated based on enrollment in the self-insured plans without any consideration of who is “responsible” for the insured. There is nothing in the documents related to the tax payment that will show that the GIC filed for any specific municipality or offline agency. Accordingly, we believe that a municipality or offline agency should respond to this letter from CMS indicating, as appropriate, that, they are fully insured, not a contributing entity subject to the tax and that the tax was paid by the insurer.

Sample Request from CMS:

The Transitional Reinsurance Program is established by Section 1341 of the Affordable Care Act (ACA) to help stabilize premiums in the individual market in 2014 through 2016. Contributing Entities are required to make contributions to fund the Transitional Reinsurance Program. A Contributing Entity as defined under 45 CFR 153.20 generally includes health insurance issuers and self-insured group health plans. Contributing Entities are responsible for paying reinsurance contributions for the 2014, 2015, and 2016 benefit years with respect to their covered lives enrolled in major medical coverage based on the annual contribution rate, unless an exemption under 45 CFR 153.400(a) applies. The annual contribution rate for the 2014 benefit year is $63 per covered life.

For the 2014 benefit year, contributing entities were required to complete the reinsurance contributions submission process by filing the ‘ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form’ and scheduling payments through www.pay.gov by December 5, 2014. CMS offered contributing entities the option to pay: (1) the entire 2014 benefit year contribution in one payment no later than January 15, 2015 reflecting $63.00 per covered life; or (2) in two separate payments for the 2014 benefit year, with the first remittance due by January 15, 2015 reflecting $52.50 per covered life, and the second remittance due by November 15, 2015 reflecting $10.50 per covered life.

Based on our review of the ‘ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form’ submissions received, we have not found an annual enrollment count submission and accompanying reinsurance contribution payment(s) for your organization.

Please note that if required payments are not made, any amount owed to the Federal government is a determination of a debt and will be subject to applicable Federal debt collection rules. Additionally, reinsurance contributions are considered Federal funds, and as such, are subject to the False Claims Act.

To help resolve your organization’s filing status, please visit CMS.gov and provide the necessary information as soon as possible based upon your applicable situation(s).