Press Releases - July 5, 2016

Insurance Commissioner Katharine L. Wade announced today that based on hazardous financial standing, the Department has placed HealthyCT, a Consumer Oriented and Operated Plan (CO-OP), under an immediate order of supervision, which prohibits the company from writing new business or renewing existing business in Connecticut effective immediately in order to protect its existing policyholders.

“This is not an action that we take lightly but did so in order to immediately protect the company’s 40,000 policyholders in Connecticut and make certain that their claims will be paid under the terms of their policies and for the duration of those policies,” Commissioner Wade said. “As regulators, consumer protection is our prime mission and an essential part of that is ensuring that carriers can honor their promises to their policyholders.

“Unfortunately HealthyCT’s financial health is unstable, having been seriously jeopardized by a federal requirement issued June 30, 2016 that it pay $13.4 million to the U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services as part of the Affordable Care Act’s Risk Adjustment Program,” the Commissioner said. “As a result, it became evident that this risk adjustment mandate would put the company under significant financial strain. This order of supervision provides for an orderly run-off of the company’s claim payment under close regulatory oversight.”

Since HealthyCT’s inception, the Department has met monthly with the company to monitor its financial solvency, its business plan and operations. Prior to the CMS Risk Adjustment Report on June 30, the company had adequate capital and sustainable liquidity.

What this means to policyholders:

• All Individual plan members will be fully covered through the end of the 2016 plan year which ends December 31, 2016 and all claims incurred during the 2016 calendar year will be paid under the terms of the policy.
• During open enrollment for the 2017 plan year, which runs from November 1 through December 31, 2016, individual plan members must choose a different carrier because HealthyCT plans will no longer be offered.

• HealthyCT cannot write new business or renew existing business effective August 1, 2016.
• HealthyCT group plans that renewed on July 1, 2016 will still have coverage through June 30, 2017 with HealthyCT.
• Group plans that come up for renewal on August 1, 2016 and beyond must move to a new carrier at renewal.
• The Department will work closely with HealthyCT, the state exchange Access Health CT, the broker community and other carriers to help large and small employers find new coverage when it comes time for them to renew their plan annually.

HealthyCT was formed in 2011 as a non-profit entity in Connecticut with the intent to participate in the Connecticut health care market as a CO-OP under the federal Affordable Care Act (ACA). Under the ACA, the federal risk adjustment program is intended to spread the risk for carriers participating in ACA exchanges by redistributing funds from insurers with generally healthier policyholders to companies with sicker policyholders and higher claims costs.

When paired with a previous federal decision to withhold payments to companies under a related program known as the “risk corridor,” this created a level of financial stress which necessitated the Commissioner’s order. Commissioner Wade, Department staff and several other state insurance regulators have expressed concern to federal authorities over the risk adjustment formula and its potential damaging effects on the market, particularly its impact on small insurers like HealthyCT. The Commissioner personally met with HHS Secretary Sylvia Burwell earlier this year to urge for change to the risk adjustment formula.

“We have been exceptionally proud of our efforts here at HealthyCT and our staff has worked tremendously hard to serve our policyholders,” HealthyCT CEO Kenneth Lalime said. “We are grateful for the strong stewardship of the Connecticut Insurance Department whose professional staff have helped guide us through the entire process from our formation. I want to assure our policyholders that they are covered through the end of their policy periods.”

For more information: FAQs on HealthyCT Order of Supervision