Niche health plan developer hopes to go public

The company ended the quarter with 24,416 short-term medical plans in force, up from 16,838 a year earlier. The average monthly retention rate was 80 percent, the company says.

The company says it could face regulatory challenges.

If Congress repeals PPACA, that could cause one set of problems, and, if regulators decide that consumers cannot use short-term medical coverage to meet the PPACA coverage mandates, or regulators decide to apply the PPACA MLR rules or other rules to short-term medical insurance, that could cause another set of problems, the company says.

In the past, other sellers of short-term medical insurance and other health insurance products other than traditional major medical insurance have noted that ensuring that brokers explain the limits of the non-traditional products accurately and completely, and understanding that consumers understand the limits, can be challenging.

In the registration statement, Health Insurance Innovations says simply ensuring that agents and brokers in each state maintain the proper licenses can be difficult.

Health Insurance Innovations is not involved in any material legal or regulatory proceedings, the company says.

If there were an adverse regulatory action in one jurisdiction, the action “could result in penalties and adversely affect our license status or reputation in other jurisdictions due to the requirement that adverse regulatory actions in one jurisdiction be reported to other jurisdictions,” the company says in a general discussion of the risks facing the company.

“Even if the allegations in any regulatory or other action against us are proven false, any surrounding negative publicity could harm member, distributor or health insurance carrier confidence in us, which could significantly damage our reputation,” the company says.

In 1998, for example, Health Plan Administrators of Illinois, a TPA, ended up being fined by Wisconsin after an association management company ran afoul of Wisconsin insurance market rules, even though the TPA spent $23,000 of its own funds to help consumers affected by the association management company’s problems.

Also in the registration statement, Health Insurance Innovations:

- Estimates its distributors are spending $2 to $20 per lead to generate leads.

- Says it took out a $4.25 million bank loan in September 2011 and now has $3.5 million of the loan outstanding. The loan has a fixed interest rate of 5.25 percent. The company also set up a $2 million revolving credit facility in December 2012. The rate on the credit facility is LIBOR plus 3.5 percentage points. Collateral for the facility includes the assignment of a $4.5 million life insurance policy on Kosloske.

- Says it ended the third quarter with 51 employees, about 7,858 square feet of office space in Tampa, and about 4,000 square feet of office space in Boca Raton, Fla. 

See also:

• Extend Health Hopes to Raise $75M in IPO
• Independent Invests In Short-Term Medical Firm
• Three Fined In Wis. Health Case