HARTFORD–Thousands of residents will need new health insurance starting in 2017 after HealthyCT deemed financially unstable.
The state’s Insurance Department has placed HealthyCT, a non-profit that covers 13,000 individuals and 27,000 members on company plans, under supervision, meaning it can’t elicit new business or renew existing policies.
“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,” Insurance Commissioner Katherine Wade said. “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.”
According to a statement, HealthyCT is experience problems after a federal requirement was issued June 30 forcing the company to pay the U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid $13.4 million as part of the Affordable Care Act’s risk adjustment program.
“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,” Wade added.
All 13,000 individual policy holders will be covered through December 31, 2016, and all claims from the 2016 calendar year will be paid. These policy holders will have to choose a different insurance carrier during the open enrollment period this year, which runs November 1 through December 31.
Policy holders covered under large and small employer plans who renewed their insurance on July 1 will be covered through the plan term, which ends June 30, 2017. All other employees can’t renew their policies starting August 1 and must find new insurance, and new employees cannot register for insurance through HealthyCT.
HealthyCT launched in 2011 to be part of the Connecticut marketplace for the Affordable Care Act. The federal risk adjustment program spreads the risk for carriers by redistributing funds from insurers with healthier policy holders to those with higher claim costs.
“When paired with a previous federal decision to withhold payments to companies under a related program known as the ‘risk corridor,’ this created a level of financial stress which necessitated” the Insurance Department’s decision to dissolve HealthyCT, a statement explained. “State insurance regulators have expressed concern to federal authorities over the risk adjustment formula and its potential damaging effects on the market, particularly its impact on small insurers like HealthyCT.”
