Guidance On MLR Reporting For Fixed Indemnity Plans Issued By CCIIO

The Center for Consumer Information and Insurance Oversight (CCIIO) has issued technical guidance explaining that issuers of plans that had categorized their plans as fixed indemnity policies, but which fail to satisfy the criteria for such policies as described in the Patient Protection and Affordable Care Act (ACA) do not need to report the medical loss ratio (MLR) experience of those policies for the 2012 minimum medical loss ratio (MLR) reporting year.

Issuers that offer only excepted benefit plans are not subject to the MLR filing and rebate requirements. Fixed indemnity coverage that meets certain regulatory conditions is an excepted benefit under PHSA Sec. 2791(c)(3)(B), ERISA Sec. 733(c)(3)(B), and Code Sec. 9832(c)(3) if: benefits are provided under a separate policy, certificate, or contract of insurance; there is no coordination between the provision of benefits and an exclusion of benefits under any group health plan maintained by the same plan sponsor; benefits are paid with respect to an event regardless of whether or not benefits are provided with respect to that same event under any group health plan maintained by the same plan sponsor; and the insurance pays a fixed dollar amount per day or per other period of hospitalization or illness regardless of the amount of expense incurred.

The HHS, IRS, and DOL have become aware of situations where a health policy is advertised as fixed indemnity coverage, but fails to meet the above criteria, so that it does not constitute excepted benefits.

Insurers offering group or individual health insurance must report annually to the HHS on the percentage of health premiums used for claims reimbursement, and they must maintain a certain minimum MLR. If minimums are not maintained, rebates must be provided to health plan participants (PHSA Sec. 2718, as added by Act Sec. 1001(5) of the ACA, as amended by Act Sec. 10101(f)).