To help stabilize the individual insurance market, Section 1341 of the Affordable Care Act introduced the Transitional Reinsurance Program (TRP), which includes the collection of a TRP fee from “contributing entities” for 2014, 2015 and 2016 to fund the program. The reporting for 2016 (the final year that the TRP fee is applicable) is due by November 15, 2016.

Who has to pay the fee?

“Contributing entities” are required to pay the TRP fee to the U.S. Department of Health and Human Services (HHS). Generally, “contributing entities” include health insurers and self-funded group health plans providing major medical coverage. The IRS has confirmed that the TRP fee is deductible as an ordinary and necessary business expense.

How is the fee calculated and reported?

For 2016, the fee is $27.00 per covered life. The HHS regulations provide several methods for counting the number of covered lives under the applicable health plan. Contributing entities must report the number of covered lives using one of the applicable counting methods to HHS through Pay.gov by November 15, 2016. Helpful guidance on the reporting (and fee payment) process is available here.

How and when must the fee be paid?

The fee must be reported and the applicable payment(s) scheduled (for ACH debit from the account you enter) through Pay.gov by the November 15, 2016 deadline. The 2016 payment(s) may either be made in one lump sum payment by January 17, 2017, or in two installments, with the first payment (based on $21.60 per covered life) due by January 17 and the second payment (based on the remaining $5.40 per covered life) by November 15, 2017.