Reinsurance Focus

The Department of Health and Human Services (“HHS”) has published a Notice of Proposed Rulemaking proposing the reinsurance payment parameters and uniform contribution rate for the 2015 benefit year and certain oversight/audit provisions for the transitional reinsurance programs required to be established in each state pursuant to the Patient Protection and Affordable Care Act to help pay the cost of treating high-cost enrollees in the individual market from 2014 through 2016. In addition to explaining both the operation of the HHS’s Affordable Care Act Health Insurance Model for estimating market enrollment and expenditure distributions, as well as the composition of the uniform contribution rate formula (which includes an annually decreasing reinsurance payment pool, contributions to the U.S. Treasury, administrative expenses, and an estimation of enrollees in plans required to make reinsurance contributions), the Notice also proposes for the 2015 benefit year (1) a uniform reinsurance contribution rate of $44 annually per enrollee in plans required to make required reinsurance contributions (versus $63 in 2014), (2) a $70,000 attachment point (versus $60,000 in 2014), (3) a $250,000 reinsurance cap (same as in 2014), and (4) a 50% coinsurance rate (versus 80% in 2014). Moreover, the Notice proposes to decrease the attachment point for 2014 from $60,000 to $45,000 to account for the HHS’s prior overestimation of the total covered claims costs of individuals enrolled in reinsurance-eligible plans in 2014. Lastly, the HHS proposes that if reinsurance contributions collected for a benefit year exceed the requests for reinsurance payments for the benefit year, the HHS would increase the coinsurance rate on its reinsurance payments, ensuring that all of the contributions collected for a benefit year are expended for claims for that benefit year.

This post written by Kyle Whitehead.

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