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Health care law reinsurance fee to generate about $10 billion says HHS

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A health care reform law-created program that imposes a fee on self-funded employers and other health care plan sponsors is expected to generate enough revenue to partially reimburse insurers — under earlier government set standards — covering those with high health care costs in the individual market, federal regulators say.

As of March 31, the Department of Health & Human Services disclosed earlier this week, that it has collected $8.7 billion from health care plan sponsors paying the Transitional Reinsurance Program fee. In addition, HHS says it expects to collect roughly another $1 billion on or before Nov. 15, the last day payments can be made for the first year of the program.

That $9.7 billion is close to the $10 billion the program is supposed to produce to reimburse insurers under an earlier set reinsurance formula. For the first year of the three-year program, the government reimburses insurers for 80% of an individual's claims costs between a $45,000 attachment point and a $250,000 ceiling.

The revenue for the reinsurance program is generated by an HHS-set $63 per health care plan participant fee. Employers had the option to pay the 2014 fee with one full payment by Jan. 15, 2015, or paying a $52.50 per participant fee then and the remaining $10.50 per participant fee by Nov. 15.

The 2015 fee is scheduled to decrease to $44 per participant, while the 2016 fee is scheduled to decline to $27 per participant.

The reinsurance payments to insurers in succeeding years also are scheduled to decrease.