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Home Affordable Care Act More States Move Forward with Reinsurance Programs

More States Move Forward with Reinsurance Programs

3 minute read
by Robert Sheen
More States Move Forward with Reinsurance Programs

3 minute read: 

The Trump administration has made repealing and replacing the Affordable Care Act a top priority. What’s interesting, however, is that as the White House continues to undermine the law, the Centers for Medicare & Medicaid Services (CMS) continue to approve Section 1332 waivers for reinsurance programs that will lower the cost of insurance premiums for those who most need help.

Section 1332 of the ACA permits states to apply for State Innovation Waivers to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA. One of the more popular requests for waivers has been to start state reinsurance programs.

The Kaiser Family Foundation (KFF) describes the reinsurance program as a means for preventing premium increases in the individual market by offsetting the expenses of high-cost individuals. Both Democrats and Republicans, regardless of their position on the ACA, have found reinsurance programs to be of high value as they are projected to lower the cost of premiums for future health plan years.

CMS recently granted approval for reinsurance programs in Wisconsin and Maine, two states with Republican governors. In Wisconsin, the program is projected to reduce individual market premiums for next year. In a tweet, Gov. Scott Walker stated, “Thanks to our Health Care Stability Plan – now approved by the federal government – we estimate people will see an average 11% DECREASE from where premiums were going in in 2019.”

Maine received approval from the federal government shortly after Wisconsin did. In an article with CNN, the Maine Guaranteed Access Reinsurance Association is attributed for covering a large share of claims for certain high-risk enrollees. As a result, premiums for 2019 are expected to drop by 9%. Subsequently, the number of enrollees is expected to jump up 1.7% due to coverage being more affordable.

CMS already had approved Alaska, Minnesota, and Oregon to create reinsurance programs designed to cover higher-than-average claims with state money and thereby reduce overall risk for insurance companies to offer consumers lower premiums.

Hawaii’s legislature is considering a bill to start a state reinsurance program. Ohio recently indicated that it is pursuing a state reinsurance program that would provide some reimbursement to insurance companies for high-cost medical claims. Louisiana and Indiana also are looking at establishing reinsurance plans for 2019.

Maryland and New Jersey have also implemented reinsurance programs to take effect in 2019, pending approval from the CMS.

The promise of reinsurance programs to reduce health insurance premiums is becoming a popular and practical solution for many states, regardless of the party persuasion of the governor. It’s a matter of the practical over the political. With the ACA growing in popularity and becoming a significant campaign issue for the mid-term elections, states are finding it politically expedient to find solutions to address the concerns of their residents (and voters). This is particularly true of those residents who are not eligible for federal Premium Tax Credits (PTCs) to help offset the costs of insurance purchased from government health exchanges.

Interestingly, as the focus grows on the impacts of healthcare costs on individuals and the rising tide of Americans supporting the ACA, a component of the law that continues to find itself left out of the larger debate is the ACA’s Employer Shared Responsibility Provisions (ESRP), otherwise known as the Employer Mandate.

Under the Employer Mandate, Applicable Large Employers (ALEs), organizations with 50 or more full-time employees and full-time equivalent employees, are required to offer minimum essential coverage to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets minimum value and is affordable for the employee or be subject to IRS 4980H penalties.

The IRS has issued over 30,000 penalty notices totaling over 4.4 billion for the 2015 reporting year alone and these notices continue to be issued each month. A report from the Congressional Budget Office predicts these penalty assessments could total up to $12 billion in 2018.

If you’ve already received IRS Letter 226J, check out this infographic on best practices for responding.

And consider undertaking an ACA spot-audit to identify previous ACA filings errors and your potential penalty exposure if you were to receive an IRS Letter 226J. Many organizations will provide this type of audit free of charge.

We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.

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More States Move Forward with Reinsurance Programs
Article Name
More States Move Forward with Reinsurance Programs
Description
The Trump administration approves Maine and Wisconsin reinsurance programs to help stabilize the 2019 ACA marketplace.
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The ACA Times
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