Connecticut has joined the growing list of states that are indirectly applying taxes and fees to self-funded medical plans. Specifically, the State will be applying a $10.23 fee per Connecticut covered life to help fund a state-sponsored vaccine program for children. Although the assessment is not imposed directly on self-insured plan sponsors, third-party administrators may pass on any increase in administration fees.
Background
Last summer, the Connecticut General Assembly amended the state-funded Connecticut Vaccine Program (the “Program”) by changing the methodology for which the Department of Insurance uses to assess fees for funding the Program and the entities subject to the fees. The objective of this modification is to increase access to childhood vaccines by utilizing the state’s purchasing power to acquire immunizations at a lower cost and distributing them free of charge to health care providers for children who are not eligible under a similar program offered at the federal level.
Applicable Entities and New Methodology
Prior to the change in the law, the assessment was based on health insurance premiums, life insurance premiums, and subscriber charges collected in Connecticut. The new assessment is based on Connecticut insured or enrolled lives in an applicable entity’s plan. Life insurance premiums are no longer included in the assessment. Additionally, individuals enrolled in Medicare, Department of Social Services medical assistance programs, workers’ compensation insurance, or Medicare Part C are exempt.
The assessment was broadened to extend to third party administrators licensed in Connecticut that provide administrative services for self-insured plans. Domestic insurers or health care centers doing business in the state of Connecticut and domestic insurers that administer self-insured plans are also subject to the assessment. This means that only third party administrators, insurers, or insurers that provide third party administration services for self-insured plans and are licensed to do so in the state of Connecticut are subject to this assessment.
The Assessment Process
Affected entities must report annually by September 1st to the Insurance Commissioner (the “Commissioner”) the Connecticut covered lives count as of the immediately preceding May 1st. The Commissioner must determine each entity’s assessment for the following year by each November 1st multiplying the covered lives count by an annual factor determined to fully fund the Program and then communicate that assessment by December 1st.
Entities must pay the assessment by the following February 1st. An entity that fails to submit the assessment to the Commissioner must pay a late filing fee of $100 per day (up to $15,000 for filings not made in good faith). The first assessment, $10.23 per covered life, was due Friday, February 1, 2013.