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New NAIC Model Act Would Add to HMO Costs

Posted in Legislation and Public Policy, Private Insurers, Reimbursement Matters, State Matters

On October 27, the National Association of Insurance Commissioners (NAIC) Receivership Model Law Working Group (under the direction of the NAIC’s Receivership and Insolvency Task Force) unanimously approved, for public comment, a proposed draft of a revised Life & Health Insurance Guaranty Association Model Act. The proposed Model Act was the result of weeks of work by a special drafting group in an attempt to address funding for an anticipated wave of long term care insurer insolvencies.The proposed Model Act would expand the membership of each state’s life and health insurance guaranty association to include HMOs (which are regulated as health care centers in Connecticut). In addition, the proposed Model Act would broaden the types of member insurers assessed to pay claims of insureds in long term care insurance insolvencies. Previously, these assessments were directed toward only long term care insurers and health insurers, but now will be expanded to add life and annuity writers and HMOs into the assessment pool.

The proposed Model Act is currently in the comment period before being considered for adoption by the appropriate NAIC committees (and ultimately the Executive Committee and Plenary) at the NAIC’s National Meeting December 2-4, 2017. If approved by the NAIC Plenary, the proposed Model Act would then be ready for states to adopt through legislation to help fund the growing long term care insolvency problem.

The text of the proposed Model Act is available on the NAIC’s website (see Attachment B). At present, the public comment period is scheduled to end on November 27. The methods for assessment are complex and the author of this post is available to answer questions.

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