Summary
Centene Corporation (CNC) filed an 8-K on April 1, 2014, to provide an update on the Affordable Care Act (ACA) annual insurer fee. As of March 31, 2014, the company had secured signed reimbursement agreements from 12 out of 17 applicable states, covering the ACA insurer fee and its tax implications. This progress is expected to allow Centene to recognize approximately 55% of the reimbursable quarterly fee as revenue for the quarter ended March 31, 2014. The remaining portion of the unrecognized fee is primarily associated with operations in Texas (42%). Centene remains confident that it will ultimately secure agreements for substantially all of the ACA insurer fee impact on a grossed-up basis from all its ongoing states, as previously factored into its 2014 guidance. Discussions with the remaining five states are continuing, with no definitive timeline yet established for these agreements.
Key Highlights
- 1Centene has secured ACA insurer fee reimbursement agreements with 12 of 17 applicable states as of March 31, 2014.
- 2These agreements cover reimbursement for the ACA insurer fee and its gross-up for federal and state income taxes.
- 3The company expects to recognize approximately 55% of the quarterly reimbursable ACA insurer fee as revenue in Q1 2014.
- 4The primary outstanding amount relates to Texas operations (42% of the unrecognized fee).
- 5Centene reiterates its expectation to receive agreements for substantially all of the ACA insurer fee impact from all ongoing states.
- 6Discussions with the remaining 5 states are ongoing, but the timing for agreements is not yet determined.