The Affordable Care Act (ACA) established a transitional reinsurance program as one of three premium stabilization programs designed to protect health insurance issuers from losses, and consumers from high-cost premiums, during the public Exchanges’ first three years of operation. The reinsurance program’s goal is to help stabilize premiums by providing reinsurance payments to issuers that incur high claims costs for enrollees in non-grandfathered individual market plans.
The Department of Health and Human Services (HHS) recently announced it anticipates making $7.7 billion in reinsurance payments for the 2015 benefit year. HHS will begin sending early payments in March 2016 at a coinsurance rate of 25 percent. The final coinsurance rate and estimated payment amounts will be announced late June 2016.