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

Issue Date: October 29, 2014

Program Area: Reinsurance-Contributions (RIC)

Question: When should a Contributing Entity deduct exempted lives from its Annual Enrollment Count for reinsurance contribution purposes?

Answer: Applicable to All Reinsurance Contributions Benefit Years: As stated in the HHS Notice of Benefit and Payment Parameters for 2014 (78 FR 15456), Contributing Entities may use any reasonable method of estimating the number or percentage of its enrollees who are exempted from the requirement to make reinsurance contributions, as set forth in 45 CFR 153.400(a). For example, a Contributing Entity may calculate the percentage of enrollees for which the employer group health coverage is secondary under the Medicare Secondary Payer (MSP) rules on the dates it uses when applying the Snapshot Count Method or Actual Count Method, or on other periodic dates, and reduce the enrollment count calculated using one (1) of the applicable methods in 45 CFR 153.405(d) through (g) by that percentage. A Contributing Entity may also calculate the total enrollment of individuals for which the employer group health coverage is secondary under the MSP rules on the last day of the third quarter and reduce the enrollment count that was calculated using one (1) of the methods in 45 CFR 153.405. Alternatively, if a plan has enrollees who should not be included in the enrollee count pursuant to an exemption in 45 CFR 153.400(a), a reasonable method of estimating the number of exempted lives could include subtracting the exempted lives as follows: - Actual Count Method (45 CFR 153.405(d)(1)) - subtract any exempted covered lives from the total for each day, prior to adding the total number of lives covered for each day of the first nine (9) months of the benefit year and then divide that total by the number of days in the first nine (9) months. - Snapshot Count Method (45 CFR 153.405(d)(2)) - subtract any exempted covered lives from the total for each date(s) on which a count is taken in a quarter, prior to adding the total number of lives covered on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three (3) quarters of the benefit year, and then divide that total by the number of dates on which a count was made. - Snapshot Factor Method (45 CFR 153.405(e)(2)) - add the total number of lives covered on any date (or more dates, if an equal number of dates are used for each quarter) during the same corresponding month in each of the first three (3) quarters of the benefit year (provided that the date used for the second and third quarters must fall within the same week of the quarter as the corresponding date used for the first quarter), and dividing that total by the number of dates on which a count was made, except that the number of lives covered on a date is calculated by adding the number of participants with self-only coverage on the date to the product of the number of participants with coverage other than self-only coverage on the date and a factor of 2.35. For this purpose, the same months must be used for each quarter (for example, January, April, and July). Following this determination, subtract from the total number of lives covered the number of exempted covered lives. - State Form or Member Months Method (45 CFR 153.405(d)(3)) - determine the average number of policies for the first nine (9) months of the calendar year and multiply that that number of policies by the ratio of covered lives per policy in effect, calculated using the prior National Association of Insurance Commissioners (NAIC) Supplemental Health Care Exhibit (or a form filed with the issuer's State of domicile for the most recent time period). Following this determination, subtract from the total number of lives covered the number of exempted covered lives. - Form 5500 Method (45 CFR 153.405(e)(3)) - determine the number of lives covered for the most current plan year calculated based upon the 'Annual Return/Report of Employee Benefit Plan' filed with the Department of Labor (Form 5500) for the last applicable time period. For purposes of this method, the number of lives covered for the plan year for a plan offering only self-only coverage equals the sum of the total participants covered at the beginning and end of the plan year, as reported on the Form 5500, divided by two (2), and the number of lives covered for the plan year for a plan offering self-only coverage AND coverage other than self-only coverage equals the sum of the total participants covered at the beginning and the end of the plan year, as reported on the Form 5500. Following this determination, subtract from the total number of lives covered the number of exempted covered lives.

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