$7.7 billion in reinsurance payments headed to insurers for 2015 enrollment, CMS says
Early payment of 25 percent will go out starting March 2016; rest of payments announced late June, CMS said.
Screenshot via Healthcare.gov.
Health insurers who sold plans through the marketplaces in 2015, and who covered high cost individuals can expect to get $7.7 billion this year through the federal reinsurance program established under the Affordable Care Act, the Centers for Medicare and Medicaid Services announced Feb. 12.
An initial early payment at a rate of 25 percent will go out starting in March 2016, CMS said. The final estimated reinsurance payment amounts will be announced on June 30.
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The transitional reinsurance program was established to ensure a stabilized individual market in the first years of the exchanges. It is aimed at helping insurers who cover high-cost individuals. Insurers pay in, and then those funds are paid out to health plans that have members with high-end medical claims.
As of February 3, the Department of Health and Human Services estimated it would collect a total of $6.5 billion, with about $5.5 billion of that already received. The other $1 billion is expected by November 15.
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Plus, there is about $1.7 billion being carried over from 2014, CMS said, leaving $8.2 billion for distribution. However, about $500 million will go towards program administration and to the federal government's general fund, for a total of $7.7 billion going out to eligible insurers, CMS said.
The government's annual per capita rate for 2015 was $44 per covered life.
Insurers were given the option to make one payment by January 15, 2016, or two payments, with the first due by Jan. 15, reflecting $33 per covered life; and the second payment by Nov. 15, reflecting $11 per covered life.
In 2014, the funds were able to provide reinsurance for all claims exceeding $45,000 up to $250,000 at a reinsurance rate of 100 percent, with $1.7 billion left over, according to Health Affairs Blog.
On February 11, 2016, the Congressional Budget Office released a report on the effect of federal policy on private health insurance premiums, the blog said.The transitional reinsurance program reduced premiums 10 percent in the individual market in 2014 but the fee that financed it raised premiums in the group markets, it said. The health insurance tax, marketplace user fees, Patient-Centered Outcomes Research Institute fee, and risk-adjustment administrative fee increase premiums, probably by about 2 to 2.5 percent, according to blogger Timothy Jost.
Twitter: @SusanJMorse
