Humana Inc. says it no longer has much hope that it will collect $591 million in payments that it’s supposed to get from the Affordable Care Act risk corridors program.
The Louisville, Kentucky-based health insurer says it will record $583 million in adjustments, before taxes, when it reports its earnings for the fourth quarter.
The ACA risk corridors program was supposed to protect health insurers against some of the risks involved with participating in the ACA public health insurance exchange system, by using cash from thriving exchange plan issuers to help carriers with poor exchange results in 2014, 2015 and 2016.
After the program started up, Congress prohibited it from using any cash other than contributions from thriving exchange plan issuers to pay program obligations. The program generated only enough cash from thriving issuers in 2014 to pay less than 13 percent of the obligations.
This year, program managers at the Centers for Medicare & Medicaid Services said any cash the program collects for 2015 will go toward paying the 2014 obligations.
A federal court recently ruled that exchange plan issuers have no contractual right to collect the program payments.
The company reported it has received only $30 million in risk corridors program payments for 2014 and has heard that it might get another $8 million.
Humana previously included the risk corridor receivables in its premium income total. The write-off will be an adjustment to that income, the company said.
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