Issued by: Centers for Medicare & Medicaid Services (CMS)

Issue Date: October 29, 2014

Program Area: Reinsurance-Contributions (RIC)

Question: Does an employer need to make reinsurance contributions if the employer-provided group health coverage applies to individuals with Individual Market health insurance coverage for which reinsurance contributions are required, or such coverage is supplemental or secondary to group health coverage for which reinsurance contributions must be made for the same covered lives?

Answer: Applicable to All Reinsurance Contributions Benefit Years: Reinsurance contributions are generally required for major medical coverage that is considered to be part of a commercial book of business, but are not required to be paid more than once with respect to the same covered life. However, pursuant to 45 CFR 153.400(a)(1)(vi), reinsurance contributions are not required, in the case of employer-provided group health coverage if: (a) such coverage applies to individuals with Individual Market health insurance coverage for which reinsurance contributions are required; or (b) such coverage is supplemental or secondary to group health coverage for which reinsurance contributions must be made for the same covered lives. In the HHS Notice of Benefit and Payment Parameters for 2015 (79 FR 13782), the Centers for Medicare & Medicaid Services (CMS) stated that if it is not clear from the terms of the health plans which group health plan is supplemental, the group health plan that offers the greater portion of inpatient hospitalization benefits is deemed the primary health plan. If it remains unclear from the terms of the health plans which group health plan is primary and which is secondary, deference is given to the arrangements on primary and secondary liability set forth by the respective plan sponsors, in accordance with applicable State coordination of benefit laws and regulations. Therefore, a plan sponsor is held harmless from non-compliance actions for failure to pay reinsurance contributions to the extent the sponsor relied in good faith upon a written representation by the other sponsor that the other sponsor's coverage has primary liability for claims for particular covered lives (and is responsible for making reinsurance contributions with respect to those covered lives).

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