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Readjusting reinsurance: Obamacare proposal to change 2014 parameters

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Administrators have proposed adjustments to Obamacare's reinsurance program for 2014, in part to compensate for recent policy changes.

"In the 2014 Payment Notice, we finalized the following uniform reinsurance payment parameters for the 2014 benefit year – a $60,000 attachment point, a $250,000 reinsurance cap, and an 80 percent coinsurance rate," the newly issued 255-page regulatory proposal says. "However, updated information, including the actual premiums for reinsurance-eligible plans, as well as recent policy changes, suggest that our prior estimates of the payment parameters may overestimate the total covered claims costs of individuals enrolled in reinsurance-eligible plans in 2014. To account for this, we propose to decrease the 2014 attachment point to $45,000."

The $25 billion reinsurance program is supposed to help stabilize premiums for coverage in the individual market from 2014 through 2016, as the implementation of Obamacare mandates significant change to the industry.

The most visible policy change was President Obama’s Nov. 14 announcement that, pending state regulatory approval, insurers could choose to renew existing individual policies that are not Obamacare-compliant for one year. Pennsylvania Insurance Commissioner Michael Consedine today announced that Pennsylvania insurers may, but do not have to, offer those renewals.

“We have asked insurance companies that have not already done so to reach out to consumers so that they may make informed choices. Individuals impacted by these cancellations will soon hear from their health insurance carriers about options to ensure that they have continued coverage,” Consedine said.

“For example, all four of our Blue Plans have agreed to allow current Special Care policyholders the option of continuing that coverage for some period into next year. Continuation of these products will serve as an interim safety net.

“Options for policyholders may differ and may include continuation of their current policies or enrollment in a new ACA-compliant product,” Consedine continued. “Options will be insurance company specific and consumers are encouraged to call their current insurance carrier for information.”

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