Thousands Will Need New Insurance After HealthyCT Deemed Financially Unstable

The state Insurance Department has placed HealthyCT under an immediate order of supervision and said policy holders will be covered through the end of the current policy, but members will need to choose new carriers when their policies end.

A statement from the Insurance Department says the decision comes about because HealthyCT’s financial health is unstable and was seriously jeopardized by a federal requirement issued June 30.

“This is not an action that we take lightly but did so in order to immediately protect the company’s 40,000 policyholders in Connecticut and make certain that their claims will be paid under the terms of their policies and for the duration of those policies,” Commissioner Katharine Wade said in a statement. “As regulators, consumer protection is our prime mission and an essential part of that is ensuring that carriers can honor their promises to their policyholders.

The impact on 13,000 individual plan members will be that they are fully covered through the end of the 2016 plan year, which ends Dec. 31, and all claims incurred during the 2016 calendar year will be paid under the terms of the policy, according to the Insurance Department.

However, during open enrollment for the 2017 plan year, from Nov. 1 through Dec. 31, individual plan members must choose a different carrier.

The impact for 27,000 members of the large and small employer plans will be that HealthyCT cannot write new business or renew existing business effective Aug. 1 and HealthyCT group plans that renewed on July 1 will still have coverage through June 30, 2017 with HealthyCT.

However, when the group plans come up for renewal on Aug. 1, 2016 and beyond, members must move to a new carrier at renewal.

The Department will work closely with HealthyCT, the state exchange Access Health CT, the broker community and other carriers to help large and small employers find new coverage when it comes time for them to renew their plan annually, according to the Insurance Department.

“Unfortunately HealthyCT’s financial health is unstable, having been seriously jeopardized by a federal requirement issued June 30, 2016 that it pay $13.4 million to the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services as part of the Affordable Care Act’s Risk Adjustment Program,” the commissioner said in a statement. “As a result, it became evident that this risk adjustment mandate would put the company under significant financial strain. This order of supervision provides for an orderly run-off of the company’s claim payment under close regulatory oversight.”

HealthyCT was formed in 2011 as a non-profit entity in to participate in the Connecticut health care market as a CO-OP under the federal Affordable Care Act.

Officials from the Insurance Department said the federal risk adjustment program is intended to spread the risk for carriers participating in ACA exchanges by redistributing funds from insurers with generally healthier policyholders to companies with sicker policyholders and higher claims costs.

“We have been exceptionally proud of our efforts here at HealthyCT and our staff has worked tremendously hard to serve our policyholders,” HealthyCT CEO Kenneth Lalime said in a statement. “We are grateful for the strong stewardship of the Connecticut Insurance Department whose professional staff have helped guide us through the entire process from our formation. I want to assure our policyholders that they are covered through the end of their policy periods.”

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