IRS Issues FAQs on Transitional Reinsurance Program

NBCH thanks the American Benefits Council for the information provided in this post.

On October 31, the Internal Revenue Service (IRS) updated a set of frequently asked questions (FAQs) on the Transitional Reinsurance Program (TRP) of the Patient Protection and Affordable Care Act (PPACA) with two questions regarding the treatment of contributions made under the reinsurance program as ordinary and necessary business expenses.

Section 1341 of the PPACA established a transitional reinsurance program (2014 through 2016) intended to stabilize premiums in the individual insurance market. Health insurance issuers and certain self-insured group health plans will be assessed a per-enrollee contribution to fund this transitional reinsurance program. The contribution is $63 per covered life for 2014.

Specifically, the FAQs state that:

• a health insurance issuer may treat the contributions under the Reinsurance Program as ordinary and necessary business expenses; and 
• a sponsor of a self-insured group health plan may treat contributions (including contributions made directly or through a Third Party Administrator or an Administrative Services Only contractor) under the Reinsurance Program as ordinary and necessary business expenses. 

The U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) recently released the form for submitting the TRP annual enrollment count. The deadline for the 2014 benefit year’s annual enrollment count submission is November 15, 2014.