Issuers May Defer Portion Of Premiums In 2013 MLR And Rebate Calculations

In CCIIO Technical Guidance (CCIIO 2013—004), the Center for Consumer Information and Insurance Oversight (CCIIO) has provided guidance on when a health insurance issuer may defer including premiums collected for Patient Protection and Affordable Care Act (ACA) fees on non-calendar year policies in its medical loss ratio (MLR) and rebate calculations. The guidance was issued as part of the CCIIO’s Insurance Standards Bulletin Series.

Annual report. Insurers offering group or individual health insurance must report annually to the Department of Health and Human Services (HHS) on the percentage of health premiums used for claims reimbursement, and they must maintain certain minimum MLRs. If minimums are not maintained, rebates must be provided to health plan participants.

Issuers must report the premium earned, claims, quality improvement expenses and other non-claims costs incurred under health insurance that is in force during the calendar year (MLR reporting year). This annual report must be submitted by June 1 of the year following the end of an MLR reporting year.

Beginning with the 2014 MLR reporting year, the report for each MLR reporting year would have to be submitted to the HHS Secretary by July 31 of the year following the end of an MLR reporting year.

Deferred amounts. For the 2013 MLR reporting year, issuers may defer including in their MLR and rebate calculations the portion of 2013 premiums collected for 2014 ACA assessments or fees on non-calendar year policies. If issuers elect to defer this portion of premium in the 2013 MLR and rebate calculations, they must disclose the deferred amount for each respective state and market. In addition, issuers must disclose and reduce the MLR tax adjustment to premium by the amount of federal and state taxes and fees associated with the deferred portion of premium.

For more information, visit http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/mlr-guidance-aca-fees-carveout-2013-12-30.pdf.