Obamacare: New rule may remove reinsurance fee for unions

A provision in Obamacare would collect a fee from health insurance companies and third-party administrators (TPAs) of administrative services only (ASO a.k.a. self-insured) group health plans, to fund a reinsurance program to help “stabilize” premiums available through the exchanges. A significant number of unions are self-insured. Unions were pissed they had to pay this fee of between $60 and $80 per insured (now said to start at $63 and reduce in following years), and as recently as last week were demanding President Obama change the law. Obama caved.

I thought we had to suck it up and the law was the law? It’s “settled” is it not? From the NY Post, with a hat tip to John Nolte at Big Government.

The Obama administration sneaked in a rule that would let some labor unions off the hook for an ObamaCare tax.

After publicly rejecting the unions’ request for an exemption, the Department of Health and Human Services last week quietly gave the unions a pass on what would have been a massive tax hit.

The tax, known as the reinsurance fee, requires self-insured organizations, such as unions and some large companies, to pay $63 for each covered member and an additional $63 for each additional family member on a health plan.

The fee was expected to raise $25 billion over three years, with the funds going to insurance companies to offset the cost of covering pre-existing conditions and other mandatory benefits.

Another friggin’ back-door waiver deal. The first year (2014) they were to pay $63, then pay $42 in 2015 and $26 in 2016. After that, they said the reinsurance fee – designed as a start-up tax to help get things going – would go away after three payments. It is certainly true this waiver may not be exclusive to unions. More from Kaiser Health News.

Weeks after denying labor’s request to give union members access to health-law subsidies, the Obama administration is signaling it intends to exempt some union plans from one of the law’s substantial taxes.

Buried in rules issued last week is the disclosure that the administration will propose exempting “certain self-insured, self-administered plans” from the law’s temporary reinsurance fee in 2015 and 2016.

That’s a description that applies to many Taft-Hartley union plans acting as their own insurance company and claims processor, said Edward Fensholt, a senior vice president at Lockton Cos., a large insurance broker.

You’ll only see the section of the Federal Register, Vol. 78, No. 210 released on Oct. 30 referenced right here at RVO. My emphasis added.

C. Part 153—Standards Related to Reinsurance, Risk Corridors, and Risk Adjustment Under the Affordable Care Act

In the proposed rule, we proposed certain provisions related to program integrity for State-operated risk adjustment and reinsurance programs, including provisions governing reporting requirements and restricting the use of reinsurance funds for administrative expenses. In addition, we proposed record retention standards for States operating risk adjustment, for contributing entities, and for reinsurance-eligible plans when HHS operates reinsurance on behalf of a State. We intend to propose additional standards related to the oversight of the premium stabilization programs in future regulations and guidance.

We also note that, to alleviate the upfront burden of the reinsurance contributions, we intend to propose in future rulemaking to collect reinsurance contributions in two installments—the reinsurance contributions for reinsurance payments and administrative expenses would be collected at the beginning of the calendar year following the applicable benefit year, and the contributions for payments to the U.S. Treasury would be collected at the end of the calendar year following the applicable benefit year. We also intend to propose in future rulemaking to exempt certain self-insured, self-administered plans from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years.

What do they mean by certain self-insured, self-administered plans? Will some get the deal and others not? Even though the law was passed forty-three months ago, we still don’t know what’s in it.

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Steve McGough

Steve's a part-time conservative blogger. Steve grew up in Connecticut and has lived in Washington, D.C. and the Bahamas. He resides in Connecticut, where he’s comfortable six months of the year.


  1. bien-pensant on November 7, 2013 at 8:28 pm

    I read that as an “invitation for donations” to the DNC.
    This is wrong on so many levels.
    I hope that Obamacare implodes on the sheer weight of its own corruption.

    • Dimsdale on November 8, 2013 at 7:11 am

      They call it “boodle” in Chicago.
      RICO, anyone?

    • bien-pensant on November 8, 2013 at 7:56 am

      Minor glitch: Holder is beholding to Obama for getting him out of the contempt of Congress charge. The civil lawsuit, if it still is active, will take years to wind its way.
      It is the Chicago Way. Obama has insulated himself very well.
      Whatever Obama doesn’t need legal cover from — like that would ever happen! — he simply lies. Cronies are so useful.
      That is the Obama Way.

  2. Lynn on November 10, 2013 at 4:58 pm

    Just another way to redistribute wealth, who the heck pays the costs if the Unions don’t.

  3. SeeingRed on November 11, 2013 at 9:53 am

    I simply do not understand how/why the House Repubs don’t/can’t declare all of these changes to the core O-care null and void.? Are these changes ALL part of the ‘Secy of HHS shall determine’?? Otherwise, how can/does the Exec Branch get to change a standing law w/out Congressional oversight?


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