The S.C. Health
Insurance Market In a
Post ACA Environment
South Carolina Health
Underwriters Symposium
March 26, 2013
Presentation Overview
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Federal Encroachment on the Business of
Insurance Regulation
Impact of the ACA on the South Carolina
Health Insurance Market
Update on the South Carolina Department
of Insurance
ACA Overview
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2010 Market Reforms include:
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Eliminates lifetime annual limits on benefits
Prohibits rescissions of health insurance policies
Provides assistance for those who are uninsured because of a pre-existing
condition
Requires coverage of preventive services and immunizations
Extends dependent coverage up to age 26
Develops uniform coverage documents so consumers can make apples-toapples comparisons when shopping for health insurance
Caps insurance company non-medical, administrative expenditures
2014 Market Reforms will include:
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Elimination of medical underwriting by requiring policies to be guaranteed
issue and guaranteed renewable. Preexisting conditions exclusions will be
eliminated.
Health Insurance rates cannot be based on health status, medical condition,
claims experience or other health-related factors.
Premiums may only vary by family structure, geography, actuarial value ,
tobacco use and age.
Health insurance exchanges become operational in the states.
Health Insurance Exchange
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By 2014, states required to establish an
Exchange or the federal government will
establish one. States had these options:
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State-based exchange
Partnership
FFE (Federally-facilitated exchange)
South Carolina will not establish a statebased exchange.
The federal government will establish an
FFE in South Carolina.
Upcoming Exchange Deadlines
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Exchanges:
 Carriers begin submitting federal Exchange applications:
April 1, 2013
 All federal Exchange applications due: April 30, 2013
 State certification complete: July 31, 2013
 Carriers notified: September 4, 2013
 Exchange sales begin October 1, 2013
Market Rule Gives States until March 29th to Request/Notify
CMS of:
 Family Tiers; Rating Areas; Age Ratio; Age Curve; Tobacco
Ratio
 Merging of Small Group and Individual Markets
What role will the Department play in the
regulation or other areas of the FFE?
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The Department will not operate the FFE. It will
be operated by the federal government.
The FFE is just one segment of the health
insurance market.
States (represented by the departments of
insurance) continue to have the primary
responsibility for regulating the health insurance
market.
The ACA affirms state regulation of insurance.
Accordingly, the DOI will continue to perform its
traditional regulatory functions i.e., rate and
form review, solvency regulation, etc.
What role do you see agents playing in Exchanges
moving forward?
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Agents/Producers may transact business
with the Exchange
The FFE will define how that business is to
be transacted.
Additional guidance from CMS/HHS is
expected at the end of March, 2013.
Navigators vs. Producers: How
are they different?
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Navigators are not producers and must be licensed to perform the acts of a
producer.
Producers solicit, sell, recommend and provide advice about insurance coverage.
Navigators are required to perform the following:
 Conduct public education activities to raise awareness of the availability of
Qualified Health Plans;
 Distribute fair and impartial information concerning enrollment in Qualified
Health Plans, and the availability of premium tax credits and cost-sharing
reductions in accordance with federal tax laws;
 Facilitate enrollment in Qualified Health Plans;
 Provide referrals to any applicable office of health insurance consumer
assistance or health insurance ombudsman, or any other appropriate state
agency or agencies, for any enrollee with a grievance, complaint, or question
regarding their health plan, coverage, or a determination under such plan or
coverage; and
 Provide information in a manner that is culturally and linguistically appropriate
to the needs of the population being served by the Exchange.
Producer licensure and
Appointments
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Producers can enroll individuals in a QHP
through an Exchange Portal if
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Agent is registered with the FFE
Agent signs privacy/confidentiality agreement
Agent completes training on QHP options
Issue: Will the producer have to be
appointed with all QHPs to enroll the
applicant? The producer will have to be
appointed by all insurers with whom he
does business.
What traditional regulatory responsibilities will the
DOI perform?
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Department will continue to perform its traditional insurance regulatory role
including, but not limited to:
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Monitoring insurer solvency. The Department will continue to monitor the
solvency of all insurers operating in the South Carolina insurance marketplace. The
Department will review the financial condition of all insurers operating through the
exchange. Insurers will be asked to submit a copy of their application to be a QHP to
the Department for review. The Department will not certify health plans, but it will
provide information to the Exchange regarding the financial condition of the insurer.
Reviewing and Approving Health Insurance Forms. The Department will
continue to review and approve health insurance products. We anticipate receiving
approximately 500-800 form and rate filings during the next 30-90 days. The
Department is in the process of hiring recent law school graduates to assist with the
form review process. For those companies planning to file forms or rates with the
Department, the sooner you get them in the better. Plans must be approved by July
31, 2013.
Therefore, companies must file their rates by April 15, 2013 to allow the Department
time to complete the necessary reviews. It is our understanding that CMS wants
states to review the Summary Plan Documents to ensure that they comply with the
ACA. The Department will be issuing a bulletin within the next two weeks that
addresses form filing requirements
DOI Regulatory Responsibilities, Cont’d.
Reviewing and Approving Health Insurance Rates. South
Carolina has been deemed an effective rate review state. As such, the
Department plans to review and act on all rates for products offered in
the South Carolina health insurance market. The results of those
reviews will be posted in HIOS and on the Department’s website. To
facilitate the review of rates, the Department is in the process of hiring
additional actuarial assistance. This assistance will be provided by
consulting actuaries and actuarial students.
 Geographical Rating Areas. The Department is in the process of
notifying CMS of the geographical rating areas for the State. South
Carolina’s notice is due March 29, 2013.
 Rate Filing Bulletin. The Department will be issuing a bulletin within
the next two weeks which outlines rate filing requirements.
Monitoring the Health Insurance market inside and outside the
health insurance exchange. The Department plans to enhance
resources within Market Analysis so that it may effectively monitor the
market inside and outside the Exchange.
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DOI Regulatory Responsibilities
Cont’d.
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Licensing. The Department will continue to be primarily responsible for
licensing of any and all entities transacting insurance business within this
state. This includes multi-state cooperatives and private health insurance
exchanges, if any.
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Producers are permitted according to recent guidance to place business with the
Exchange with the commission paid by the insurer.
It is the Department’s position that any person that is engaged in the activities defined
by Section 38-43-20 i.e., the acts of an agent should be licensed as a producer.
The Department will issue a bulletin which specifies the type of acts that are
considered the act of an agent and will pursue those individuals that engage in the
unauthorized transaction of insurance business. This Department will be reviewing
these standards with CMS.
CMS is supposed to issue guidance regarding the licensing/certification
process for navigators on or around March 31, 2013.
Monitoring. The Department plans to track and monitor any complaints
that it receives against navigators who exceed the scope of their duties
i.e., the unauthorized transaction of insurance business.
DOI is planning a Filings Workshop/webinar to educate insurers on
new review procedures and rating requirements
Rating Issues
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For Plan Years beginning on or after
January 1, 2014
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Health insurance rates can only vary based
on:
Individual or family coverage
 Geographic rating area
 Age; and
 Tobacco Use
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Variations based on health insurance status
are prohibited. Geography cannot be used as
a proxy for health underwriting.
Rating Issues, Cont’d.
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Geographic Rating Areas
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ACA provides that each state shall establish one or
more rating areas in the state and that the Secretary
shall review to ensure adequacy
If the state’s rating areas are inadequate if a state
does not act, CMS may establish the rating areas for
that state
Rating areas may be based on counties, zip codes or
metropolitan statistical areas. Rating areas
established on this basis are presumed adequate if
they existed prior to January 1, 2013
SC rating areas consists of the 46 counties
Other Issues Related to the FFE
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The High Risk Pool
Will states continue to operate the high risk pool?
 What populations may be affected by closing the
high risk pool?
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SC DOI Update
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The First 90 days:
 Interactive online complaint form
 Extended office hours for consumer assistance
 Providing consumer assistance in other parts of the
state (DOI has a consumer analyst in Charleston and
is looking placing someone in other parts of the state
part-time)
Listed below are some things you can expect to see
within the next 90 days
 Updated, more robust and interactive website
 Enhanced market assistance program
 More visible community involvement and outreach
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Enhanced customer service (following up)
Questions
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Questions about the ACA should be
directed to:
Leslie M. Jones
ljones@doi.sc.gov
(843) 577-3413