A managed care company will be compensating some customers for a shortfall in the average 2006 New York small group loss ratio.
Oxford Health Plans, a unit of UnitedHealth Group Inc., Minnetonka, Minn., recorded a 2006 New York small group loss ratio of 70.58%, New York State Insurance Department officials report.
That loss ratio fell below the minimum New York state small group loss ratio of 75%.
To make up for the gap, Oxford will pay a $50 million settlement to 36,746 New York small business policyholders with about 300,000 health plan participants, officials say.
The payments will average $1,360 per affected business, or 5.5% of the total average 2006 annual premium, officials say.
The settlement affects users of Oxford’s small group Freedom Plan Direct, Freedom Plan Metro and Freedom Plan EPO products. It does not affect Oxford’s small group and direct-pay health maintenance organization and “point of service” policyholders.
Oxford executive have put out a statement noting that they originally had planned to make up for the loss ratio shortfall by contributing to a state risk pool.