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Life Health > Health Insurance

Some health insurers may face ACA cash crunch

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Federal health insurance regulators have implied that some health insurers may be having trouble coming up with the cash needed to make the payments owed to the Affordable Care Act cost-sharing reduction program for 2014 and 2015.

Officials at the Center for Consumer Information & Insurance Oversight talk about health insurers’ program payment problems in a set of four recently posted documents. The officials posted the documents in an effort to help insurers that asked for payment deadline extensions.

The insurance oversight office is the part of the federal Centers for Medicare & Medicaid Services directly in charge of ACA programs that affect commercial health insurance.

ACA drafters created the cost-sharing reduction program to help poor people use ACA exchange coverage. The program helps exchange plan users with family income under 250 percent of the federal poverty level pay plan deductibles, co-payment requirements and coinsurance amounts.

Related: Software marketer talks about another ACA subsidy

The insurance oversight office sent insurers cost-sharing reduction subsidy payments for 2014 and 2015 based on enrollment estimates, and early information about the enrollees’ eligibility for subsidies, to make sure the enrollees could afford to get health care in 2014 and 2015.

The plan issuers that got the cash are now supposed to be reconciling the amounts they actually received with the amounts they should have received. Issuers that received too little money can ask the subsidy program for more cash. Issuers that received too much cash are supposed to pay the subsidy program back. 

At press time, information about the reconciliation amounts exchange plan issuers owe for 2014 and 2015 was not available to the public.

The insurance oversight office published cost-sharing reduction program payment reconciliation rules for the 2014 and 2015 benefit years in March. At that time, the office wrote, “CMS recognizes that, in this first year of reconciliation, a few issuers may not have fully anticipated the results of the reconciliation, and could be charged amounts they did not fully expect and cannot immediately pay.”

The insurance oversight office talks about the rules for getting payment flexibility in memos dated June 17 and June 27, a sample flexibility request letter posted July 1, and a flexibility request deadline extension notice posted July 6.

In the memo to exchange plan issuers dated June 17, insurance oversight office officials asked insurers that want flexibility to send an email and tell their state insurance regulators that they have asked for flexibility.

In the June 27 memo, officials said any insurer seeking payment schedule flexibility must “demonstrate that full payment will present a liquidity hardship, that the company expects to remain solvent through the end of 2016, and the company does not have reasonable access to another source of funding.”

Originally, the flexibility requests were due July 5. In the July 6 memo, the insurance oversight office pushed the due date back to July 7.

Officials said in the memo posted July 6 that they are offering subsidy program payment flexibility to “assist issuers with cash flow constraints, to ensure they may continue to provide coverage to enrollees through the end of the benefit year.”


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