What are Transitional Reinsurance Programs?

Posted on: Thursday, August 29, 2013

Beginning in 2014, insurance companies can no longer base rates or eligibility on medical history. This change is expected to significantly increase the number of people who will enroll in individual coverage. Many of these individuals have pre-existing conditions and have been denied individual coverage in the past. Under the Affordable Care Act, each state must establish a transitional reinsurance program in an effort to help insurance companies that insure more high risk individuals offset some of their claims, and to help stabilize premiums for coverage of pre-existing conditions.

The Transitional Reinsurance Program will start in 2014 and will be in place for 3 years. It is intended to generate over $25 billion during this time period. The Department of Health and Human Services estimates that a $63 fee per participant will be needed to fund the program in the first year. Insurance companies will be required to pay the fees on behalf of all fully insured plan participants. Employers that provide self-funded coverage will be required to pay the fees on behalf of all participants in their health care plan.

The fees apply to:

  • Insured plans (policies written by U.S.licensed insurance companies)
  • Self-funded group health plans 
  • Grandfathered plans and non-grandfathered plans
  • State and local government employee plans
  • Federal Employee Health Benefit Plans (FEHBP)

The fees do not apply to: 

  • Medicare Advantage and Medicare Part D 
  • Medicaid 
  • State Children’s Health Insurance Program (SCHIP)
  • Medicare Supplement and similar group supplemental coverage
  • Stop Loss
  • Disability and/or accident-only coverages
  • Hospital indemnity/other fixed indemnity insurance

 

Do you have questions about the Affordable Care Act? We have a call center which is ready to help you navigate through the maze of complexities in the new world of health coverage.

Please call 1-877-214-2969. We’re ready to assist you.

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