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Common Questions


Price Concessions and Cost Adjustments

Sponsors of employment-based plans sometimes receive post-point of sale negotiated price concessions in a manner that does not identify for the sponsor the specific claim or individual to whom the price concession applies. This is common with respect to prescription drug rebates. When reporting post-point of sale negotiated price concessions, how, and to which individuals, should a sponsor allocate these amounts?

ANSWER: For information about this topic, see Allocating Post-Point of Sale Negotiated Price Concessions to Individual Early Retirees Under the Early Retiree Reinsurance Program.


Answer ID: 600-3
Date Posted: 09/24/2010      Last Updated: 06/07/2011


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Must a plan sponsor that has received post-point of sale price concessions, but does not know, or cannot know with a reasonable degree of effort, the amount of price concessions that apply to each early retiree or early retiree's spouse, surviving spouse or dependent, for a given plan year, adjust its health benefit costs when reporting to HHS?

ANSWER: Yes. The regulation at 45 C.F.R. 149.110 states that, when determining the ERRP reimbursement amount, the negotiated price concessions "that have already been subtracted from the amount the employment-based plan or insurer paid for the cost of health benefits and the amount of post-point of sale negotiated price concessions received" will be taken into account. Therefore, plan sponsors are responsible for allocating the price concessions to each individual in the plan, and, accordingly, reduce the amount reported in the Costs Paid by Plan column in the Summary Cost Data screen in the ERRP Secure Website. For information about this topic, see Allocating Post-Point of Sale Negotiated Price Concessions to Individual Early Retirees Under the Early Retiree Reinsurance Program.


Answer ID: H600-4
Date Posted: 12/30/2010      Last Updated: 06/07/2011


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Must a sponsor take price concessions into account when determining which individuals meet the cost threshold?

ANSWER: Yes. The regulation at 45 C.F.R. 149.110 states that, when determining the ERRP reimbursement amount, the negotiated price concessions "that have already been subtracted from the amount the employment-based plan or insurer paid for the cost of health benefits and the amount of post-point of sale negotiated price concessions received" will be taken into account. For information about this topic, see Allocating Post-Point of Sale Negotiated Price Concessions to Individual Early Retirees Under the Early Retiree Reinsurance Program.


Answer ID: H600-5
Date Posted: 12/30/2010      Last Updated: 06/07/2011


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Page last updated June 7, 2011 at 5:00PM EST