United States

Statutory Accounting for Affordable Care Act Health Care Assessment

Oct 13, 2014
From the Financial Reporting View

In early 2014, the NAIC finalized guidance about an annual fee imposed on health insurers by the Patient Protection and Affordable Care Act payable annually beginning in 2014. The guidance in SSAP No. 106, Affordable Care (ACA) Assessment (Section 9010 Assessment), which originally was included in SSAP No. 35R, Guaranty Fund and Other Assessments, states that in the data year (year in which the premiums used to allocate the assessment are written), reporting entities should reclassify the estimated amount of the fee that will be paid in the subsequent year from unassigned surplus to special surplus. The liability for the fee should be recorded in full when the entity provides qualifying health insurance in the fee year (the year in which the assessment is paid), with a corresponding entry to expense. A reporting entity should reclassify amounts from unassigned surplus to special surplus monthly throughout the data year. Because SSAP No. 106 was not issued until early 2014, the requirement to accrue periodically the amounts in the special surplus may not be apparent to reporting entities, as they segregated the entire amount at one time for the year-end December 31, 2013.