The S.C. Health Insurance Market In a Post ACA Environment

1. The S.C. Health Insurance Market In a Post ACA Environment South Carolina Health Underwriters Symposium March 26, 2013

2. Presentation Overview • 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

3. ACA Overview • 2010 Market Reforms include: • 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-to-apples comparisons when shopping for health insurance • Caps insurance company non-medical, administrative expenditures • 2014 Market Reforms will include: • 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.

4. Health Insurance Exchange • By 2014, states required to establish an Exchange or the federal government will establish one. States had these options: • State-based exchange • Partnership • FFE (Federally-facilitated exchange) • South Carolina will not establish a state-based exchange. • The federal government will establish an FFE in South Carolina.

5. Upcoming Exchange Deadlines • 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

6. What role will the Department play in the regulation or other areas of the FFE? • 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.

7. What role do you see agents playing in Exchanges moving forward? • 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.

8. Navigators vs. Producers: How are they different? • 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.

9. Producer licensure and Appointments • Producers can enroll individuals in a QHP through an Exchange Portal if • 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.

10. What traditional regulatory responsibilities will the DOI perform? • Department will continue to perform its traditional insurance regulatory role including, but not limited to: • 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

11. 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.

12. DOI Regulatory Responsibilities Cont’d. • 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. • 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

13. Rating Issues • For Plan Years beginning on or after January 1, 2014 • Health insurance rates can only vary based on: • Individual or family coverage • Geographic rating area • Age; and • Tobacco Use • Variations based on health insurance status are prohibited. Geography cannot be used as a proxy for health underwriting.

14. Rating Issues, Cont’d. • Geographic Rating Areas • 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

15. Other Issues Related to the FFE • The High Risk Pool • Will states continue to operate the high risk pool? • What populations may be affected by closing the high risk pool?

16. SC DOI Update • 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 • Enhanced customer service(following up)

17. Questions • Questions about the ACA should be directed to: Leslie M. Jones ljones@doi.sc.gov (843) 577-3413