Regarding Section 1332 State Innovation Waiver and Reinsurance Program
In its 2019, session, the New Hampshire Legislature further amended Section 12 of the Statue effective July 1, 2019 (the “2019 Statutory Amendments”) to permit the Insurance Commissioner, if supported by the recommendation of actuarial experts, to request that the Association propose a plan of operation for a risk sharing program, reinsurance program or other program that will best support the availability and affordability of the individual insurance market in the state. Pursuant to the 2019 Statutory Amendments and based on the report of his actuarial experts, the Insurance Commissioner issued an Order on February 25, 2020 requiring the Association to assess and develop a proposal for a reinsurance program with the support of federal funding in the form of shared savings under a State Innovation Waiver (n/k/a State Relief and Empowerment Waiver) under Section 1332 of the Affordable Care Act (the “Section 1332 Waiver”).
In response to the Insurance Commissioner’s Order, the Association engaged its management team, in consultation with experts and legal counsel and the Insurance Commissioner, to review the actuarial analysis and determine the components of a proposed State market stabilization programs and its anticipated costs and operational procedures and to develop a related Section 1332 Waiver application. To document its proposed program pursuant to Section 12 of the Statue, the Association adopted a Second Amendment to its Restated Plan (the “Second Amendment) on March 11, 2020. During 2020, all of the conditions to the implementation of the proposed program – know as the “New Hampshire Reinsurance Program” (the “Reinsurance Program”) – were met, including approval by the US Department of Health and Human Services and the US Department of the Treasury (collectively the “Federal Agencies”) of the State’s Section 1332 Waiver application and it projected “pass-through savings.” On September 30, 2020 the Insurance Commissioner issued a Supplemental Order directing that the Association, as Administrator of the Reinsurance Program, receive the federal grant monies under the Section 1332 Waiver. The Association adopted a Third Amendment to its Restated Plan (the “Third Amendment”) on October 20, 2020 which allows and directs the Association to become the grantee of the record under the Section 1332 Waiver, and to accept and receive directly federal funding under the Section 1332 Waiver.
The Reinsurance Program commenced operation on January 1, 2021 and is to be administered by the Association on behalf of the New Hampshire Department of Insurance (the “Insurance Department”). The Reinsurance Program will reimbursement issuers who offer comprehensive, major medical plans in New Hampshire’s individual market that are part of the single-risk pool. Payments to carriers are to be calculated based on percentage (coinsurance percentage) of the annual claims that issuers incur for coverage under such plan between a specified lower threshold (attachment point) and upper threshold (reinsurance cap). The reinsurance parameters are to be determined each year by the Insurance Department by March 31 of the prior year based on recommendation of the Board of Directors of the Association and the Commission of the Status of Health Coverage Markets for Individual and Small Employers. The Restated Plan, as amended, requires that all funding collected for the Reinsurance Program be paid out (for payments to issuers and for program administration) for the year for which it is collected, but no additional State funds will be provided for the Reinsurance Program. The Association’s obligation to make payments to issuers under the Reinsurance Program is limited to the extent of funding received by the Association in connection with the Reinsurance Program.