§18061 — Title 42 The Public Health and Welfare | U.S. Code

Summary

By January 1, 2014, each State must put rules in place and set up (or hire) one or more reinsurance organizations to run a short-term program that helps pay part of the costs when people with very expensive health conditions buy individual market plans. Insurers and third-party administrators for group plans must make payments into the program for plan years in the 3-year period starting January 1, 2014. The reinsurance organizations collect those payments and use the money to pay insurers who cover high-risk people in the individual market (not including grandfathered plans). The federal rules must say how to pick high-risk people (by a list of 50 to 100 medical conditions or another objective method recommended by the American Academy of Actuaries) and how to decide payment amounts (either a schedule by condition or another method that encourages care management). The rules also must say how much each insurer or plan must contribute. Contributions can be based on a percentage of revenue or a per-enrollee amount and may be paid up front or during the year. The total contributions across States must equal $10,000,000,000 for 2014, $6,000,000,000 for 2015, and $4,000,000,000 for 2016, plus extra amounts of $2,000,000,000 for 2014, $2,000,000,000 for 2015, and $1,000,000,000 for 2016. States can move collected funds among the three years as needed, and any money left after December, 2016 can be used in State individual-market reinsurance programs during the 2 years starting January 1, 2017. Reinsurance organizations must be nonprofit, can serve more than one State, and are tax-exempt except for unrelated business income tax. States must change or close existing high-risk pools if needed to run the program.

Title 42, §18061

The Public Health and Welfare — Source: USLM XML via OLRC

(a)Each State shall, not later than January 1, 2014—

(1)include in the Federal standards or State law or regulation the State adopts and has in effect under section 18041(b) of this title the provisions described in subsection (b); and

(2)establish (or enter into a contract with) 1 or more applicable reinsurance entities to carry out the reinsurance program under this section.

(b)(1)In establishing the Federal standards under section 18041(a) of this title, the Secretary, in consultation with the National Association of Insurance Commissioners (the “NAIC”), shall include provisions that enable States to establish and maintain a program under which—

(A)health insurance issuers, and third party administrators on behalf of group health plans, are required to make payments to an applicable reinsurance entity for any plan year beginning in the 3-year period beginning January 1, 2014 (as specified in paragraph (3); 11 So in original. A second closing parenthesis probably should precede the semicolon. and

(B)the applicable reinsurance entity collects payments under subparagraph (A) and uses amounts so collected to make reinsurance payments to health insurance issuers described in subparagraph (A) that cover high risk individuals in the individual market (excluding grandfathered health plans) for any plan year beginning in such 3-year period.

(2)The Secretary shall include the following in the provisions under paragraph (1):

(A)The method by which individuals will be identified as high risk individuals for purposes of the reinsurance program established under this section. Such method shall provide for identification of individuals as high-risk individuals on the basis of—

(i)a list of at least 50 but not more than 100 medical conditions that are identified as high-risk conditions and that may be based on the identification of diagnostic and procedure codes that are indicative of individuals with pre-existing, high-risk conditions; or

(ii)any other comparable objective method of identification recommended by the American Academy of Actuaries.

(B)The formula for determining the amount of payments that will be paid to health insurance issuers described in paragraph (1)(B) that insure high-risk individuals. Such formula shall provide for the equitable allocation of available funds through reconciliation and may be designed—

(i)to provide a schedule of payments that specifies the amount that will be paid for each of the conditions identified under subparagraph (A); or

(ii)to use any other comparable method for determining payment amounts that is recommended by the American Academy of Actuaries and that encourages the use of care coordination and care management programs for high risk conditions.

(3)(A)The Secretary shall include in the provisions under paragraph (1) the method for determining the amount each health insurance issuer and group health plan described in paragraph (1)(A) contributing to the reinsurance program under this section is required to contribute under such paragraph for each plan year beginning in the 36-month period beginning January 1, 2014. The contribution amount for any plan year may be based on the percentage of revenue of each issuer and the total costs of providing benefits to enrollees in self-insured plans or on a specified amount per enrollee and may be required to be paid in advance or periodically throughout the plan year.

(B)The method under this paragraph shall be designed so that—

(i)the contribution amount for each issuer proportionally reflects each issuer’s fully insured commercial book of business for all major medical products and the total value of all fees charged by the issuer and the costs of coverage administered by the issuer as a third party administrator;

(ii)the contribution amount can include an additional amount to fund the administrative expenses of the applicable reinsurance entity;

(iii)the aggregate contribution amounts for all States shall, based on the best estimates of the NAIC and without regard to amounts described in clause (ii), equal $10,000,000,000 for plan years beginning in 2014, $6,000,000,000 for plan years beginning 22 So in original. Probably should be followed by “in”. 2015, and $4,000,000,000 for plan years beginning in 2016; and

(iv)in addition to the aggregate contribution amounts under clause (iii), each issuer’s contribution amount for any calendar year under clause (iii) reflects its proportionate share of an additional $2,000,000,000 for 2014, an additional $2,000,000,000 for 2015, and an additional $1,000,000,000 for 2016.

(4)The provisions under paragraph (1) shall provide that—

(A)the contribution amounts collected for any calendar year may be allocated and used in any of the three calendar years for which amounts are collected based on the reinsurance needs of a particular period or to reflect experience in a prior period; and

(B)amounts remaining unexpended as of December, 2016, may be used to make payments under any reinsurance program of a State in the individual market in effect in the 2-year period beginning on January 1, 2017.

(c)For purposes of this section—

(1)The term “applicable reinsurance entity” means a not-for-profit organization—

(A)the purpose of which is to help stabilize premiums for coverage in the individual market in a State during the first 3 years of operation of an Exchange for such markets within the State when the risk of adverse selection related to new rating rules and market changes is greatest; and

(B)the duties of which shall be to carry out the reinsurance program under this section by coordinating the funding and operation of the risk-spreading mechanisms designed to implement the reinsurance program.

(2)A State may have more than 1 applicable reinsurance entity to carry out the reinsurance program under this section within the State and 2 or more States may enter into agreements to provide for an applicable reinsurance entity to carry out such program in all such States.

(3)An applicable reinsurance entity established under this section shall be exempt from taxation under chapter 1 of title 26. The preceding sentence shall not apply to the tax imposed by section 511 such 33 So in original. Probably should be preceded by “of”. title (relating to tax on unrelated business taxable income of an exempt organization).

(d)The State shall eliminate or modify any State high-risk pool to the extent necessary to carry out the reinsurance program established under this section. The State may coordinate the State high-risk pool with such program to the extent not inconsistent with the provisions of this section.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2010—Pub. L. 111–148, § 10104(r)(1), substituted “market” for “and small group markets” in section catchline. Subsec. (b)(2)(B). Pub. L. 111–148, § 10104(r)(2), substituted “paragraph (1)(B)” for “paragraph (1)(A)” in introductory provisions. Subsec. (c)(1)(A). Pub. L. 111–148, § 10104(r)(3), substituted “individual market” for “individual and small group markets”.

§18061 Transitional reinsurance program for individual market in each State

Summary

Title 42, §18061

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata