Affordable Care Act Risk & Premium Limits Set

     WASHINGTON (CN) – The Department of Health and Human Services rolled out new provisions that aim to make healthcare more accessible when the Affordable Care Act is enacted next year.
     Beginning in 2014, individuals and small businesses will be able to buy private health insurance. Qualified individuals may receive tax credits to make the insurance more affordable, and may apply for financial assistance to cover costs.
     This week, the Department of Health and Human Services issued a rule explaining the parameters related to the new law.
     “We expect that the premium tax credits, combined with the new insurance reforms, will significantly increase the number of individuals with health insurance coverage, particularly in the individual market,” the department wrote.
     Among other things, the rule sets parameters related to risk adjustment, reinsurance, cost-sharing reductions and advanced payments of tax credits.
     “These programs, in combination with the medical loss ratio program and market reforms extending guaranteed availability and prohibiting the use of factors such as health status, medical history, gender, and industry of employment to set premium rates, will help ensure that every American has access to high-quality, affordable health insurance,” the department wrote.
     The rule also sets parameters for three premium stabilization programs: permanent risk adjustment, transitional reinsurance and temporary risk corridors.
     “The provisions of this final rule, combined with other provisions in the Affordable Care Act, will improve the functioning of both the individual and the small group markets while stabilizing premiums,” the department wrote.
     “The transitional reinsurance program will help to stabilize premiums in the individual market. Reinsurance will attenuate individual market rate increases that might otherwise occur because of the immediate enrollment of higher risk individuals, potentially including those currently in state high-risk pools.”
     The department anticipates that reinsurance payments will result in a 10-15 percent decrease in premiums for the individual markets.
     Along with the final rule, the department issued an interim rule related to the calculation of risk corridors.
     The temporary risk corridor program requires the federal government to share profits or losses from inaccurate rate setting between 2014 and 2016. The interim rule modifies the interpretation of “allowable costs” under the Affordable Care Act.
     Under the rule, a qualified healthcare provider’s allowable costs are determined on the basis of its pro-rata share of an amount of pooled claims.
     The rule also establishes an alternative payment method that aims to provide issuers of healthcare plans with more flexibility and reduce the administrative burden of participating in the cost-sharing reduction program.
     The department also proposed a regulation that would implement parts of the Affordable Care Act that relate to the Small Business Health Options Program (SHOP).
     The regulation would amend existing rules for triggering events and special enrollment periods, and would implement a transitional policy for employees’ choice of qualified health plans. The department seeks comment on the proposal by April 1.

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