States have options to weigh in establishing or contracting with one or more entities that will work most effectively for their states in providing reinsurance in the individual market that provides stability while the market is in a transitional phase.
*Full name: Identify an “applicable reinsurance entity” to provide reinsurance for high-risk individuals covered in the individual market beginning January 1, 2014.
*Relevance to the ACA:
The ACA requires states to establish or contract with an entity to carry out a reinsurance program for three years beginning in 2014. The Secretary of HHS and the NAIC will establish federal standards that states must adopt.
§1341 - Requires states to establish or contract with a non-profit reinsurance entity to carry out the reinsurance program and to adopt specific federal standards related to the program. A state may identify more than one reinsurance entity or may enter into an agreement with other states to establish a reinsurance entity for multiple states. Health insurance issuers and third party administrators for group plans are required to make payments to the entity, which will use the funds to make payments to plans that cover high-risk individuals in the individual market. States also have the option to modify or eliminate their high-risk pool to carry out the reinsurance program.less