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Individual Plans Already Is Affecting Insurers, Broker Commissions

A rule that will require health insurers to maintain a medical loss ratio of 80% for their individual and small-group products already has caused some health plans to restructure they way they pay brokers and agents. Other insurers have decided to scale back or exit the individual market. One health plan has said it will close its doors at the end of the year due in large part to the new rule, according to interviews and documents obtained by HPW. Other regulations, such as the exclusion of lifetime and annual benefit limits, also could have a negative impact on the individual and small-group markets. Beginning on Jan. 1, health insurers must ensure that at least 80% of premiums for small-group and individual products go toward medical costs or activities that improve health care quality. The MLR floor is 85% for the large-group market. Health plans that donâ??t meet the minimum MLR will be required to pay a rebate to customers.

While the rules regarding how MLR will be calculated have not yet been released, some health insurance broker plans already have made changes. The National Association of Insurance Commissioners (NAIC) says it will provide HHS with final recommendations for the new regulations later this summer. The ratios could â??potentially disrupt the availability of private health insurance,â? Florida Insurance Commissioner Kevin McCarty wrote in a June 16 letter to NAIC President Jane Cline. In the letter, McCarty encouraged the association to study the public policy and legal implications of excluding agent commissions from MLR calculations.

An NAIC actuarial subgroup recommended that HHS adjust the MLR requirement in states where the percentage could â??destabilizeâ? the individual market. The subcommittee proposed that a three-year transition period be allowed in such states. By that time, individual policies are slated to be sold through state-run insurance exchanges. At a June 22 meeting between President Obama, health plan CEOs and state regulators, Kansas Insurance Commissioner Sandy Praeger suggested that the MLR rule be phased in for individual and small-group plans.

This entry was posted on Wednesday, July 28th, 2010 at 3:38 am and is filed under Florida Health Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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