Capital and surplus requirements for a health insurer can change over time based on many internal and external factors. Regulators generally focus on the solvency of health insurers to ensure they meet obligations to consumers. However, a health insurer with capital levels that are significantly above the regulatory minimum may also get a lot of attention from regulators and stakeholders. A health plan’s target capital requirements are generally significantly higher than the regulatory minimums.
In this paper, Milliman’s David Hayes, Rachel Killian, and Shyam Kolli discuss considerations for health plans when determining capital requirements.
Medicare Advantage (MA) is one way for new insurers to enter the health market. In doing so, insurers must account for new accruals that have to be calculated as assets and liabilities in their financial reports. The need for accruals can begin as early as the year in which an MA bid is filed, depending on the projected gain/loss position that the carrier is expecting in the first few years. Therefore, it is necessary for the financial and actuarial teams to begin work on determining how such accruals will be calculated and the proper amounts that will need to be held. Milliman’s Rachel Killian offers perspective in her article “Medicare Advantage financial reporting: What accruals need to be considered?”
The health exchange provisions of the Patient Protection and Affordable Care Act (PPACA) will usher in some complex and sensitive organizational issues and new interdependencies for state governments. Although the deadlines are still years away, states should begin to examine the situation as soon as possible. These three briefing papers discuss the critical points that state governments need to address in regard to structuring health exchanges, designing health plans and benefits, and setting the terms of participation for both insurance carriers and consumers.
Structuring health exchanges »
Health exchanges: Setting the terms of participation »
Health exchanges and plan designs »