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Far, Far Away

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As the on-going debate over the implementation of the Patient Protection Affordable Care Act (PPACA) continues, whether or not international travel insurance for expatriates should be grandfathered from the new medical loss ratio (MLR) limits remains up in the air.

It has many agents and brokers wondering about the fate of their industry if they are forced to comply with the minimum 80% MLR policy under the PPACA.

In July, representatives from Cigna Corp., Atena, and Groom Law Group held a conference call with the National Association of Insurance Commissioners (NAIC) to discuss the reasons why international health insurance plans should be excluded from the Affordable Care Act’s medical loss ratio standards. According to the NAIC, “by definition, expatriate and international policies cover individuals who travel frequently and who may return to their home countries for both business and personal purposes.”

According to Groom Law Group, international health plans should be excluded by the NAIC or the Department of Health and Human Services (HHS) from MLR requirements because they are classified as a different type of plan under the MLR provisions of the PPACA, which needs to be taken into account when calculating medical loss ratios.

No matter what decision is made, it will undoubtedly have a huge impact, both on companies that provide travel insurance and the individuals that rely on it. As globalization wraps its fingers around what used to be a far-flung world, there are different reasons for travel that may require specifically tailored insurance plans. Student, business, adventure, cruise and “work-to live” travel will all present travel insurance companies with different needs and therefore require money to go in different directions depending on the traveler’s situation. The question that arises is: Should a company offering coverage to someone going cliff diving in Acapulco be required to have the same MLR requirement as the company covering an executive’s six-month stay in London?

The main concern that arises with the issue of excluding the international health plans from the MLR provisions of the PPACA is who ultimately has the decision to exclude the coverage.

In October, Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, wrote a letter to the NAIC addressing several concerns with the PPACA and its MLR and rebate programs, which are scheduled to go into effect Jan. 2011. A section of the letter addressed the policy concerning medical loss ratios for expatriates. Within that section, an argument was made by the NAIC putting forth reasons why international plans should be excluded from the minimum MLR of 80%, stating that it would be impossible to comply with the mandate due to the high administrative costs within the market. The NAIC also concluded that the decision to exclude international and expatriate insurance from the new MLR standards is ultimately to be made by HHS.

At press time, HHS did not have any information available regarding a decision for the expatriate and international policies. A representative from HHS said in a statement, “We have received the recommendations regarding the MLRs for expatriate and international policies. The decision is currently in its regulatory process and we are unable to discuss it at this time, but we are looking to have a decision in the coming weeks.”

In a statement made by Cigna Corp.’s financial and international news media contact, Gloria Barone stated that at the current time they aren’t aware of the state of their international and expatriate plans. Usually, companies hold out on making this information available to the public until all regulatory issues are dealt with.

The pending grandfather decision is one that will have a substantial effect on the international travel health insurance market in some way, shape or form. Expatriate industry insiders see many mergers forming as the PPACA continues to take its place within the health insurance industry. Only time will only tell how the PPACA will affect the expatriate and international health market, but one thing is certain: as implementation continues to unfold, it will fuel more ongoing debate over the intent, execution and impact of this year’s industry-shaking legislation.


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