Many Hawaii residents will lose their health plans following the liquidation order of a local provider.
A court order has now sent a Hawaii insurance company called Family Health Hawaii (FHH) into liquidation which means that thousands of people who’d had plans through that provider will be losing their coverage.
The court order was signed by First Circuit Court Judge Karen Nakasone, authorizing Insurance Commissioner Gordon to take over.
Commissioner Gordon will be taking both control and possession over the insurance company and its assets, becoming the liquidator. He will be taking over the role of the FHH’s directors and officers in order to ensure that the policyholders, public and creditors are all protected. In Hawaii, regulations state that health insurance providers must meet statutory solvency requirements. Among them is the ability to maintain a minimum net work in order to make certain that they will be capable of meeting their financial obligations.
The insurance company’s 2015 filings showed that its financial position had dropped below that minimum legal requirement.
Moreover, that same filing showed that the FHH did not have any prospect of making up that existing deficit, said federal officials. The health insurer had already been working with the state’s examination team before making last year’s filing, but there were a number of critical deadlines that had already been missed by that point.
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According to JP Schmidt, the CEO and president of Family Health Hawaii, “We had hoped to be able to get the capital necessary to continue or go into rehabilitation, but it did not come to fruition.”
The annual financial statement from March had revealed that the insurance company was already facing a $1.2 million insolvency and that in order to be able to make it up to the bare minimum requirement, it would have needed about $3.7 million in additional capital. Member companies had already been advised to begin contacting other insurers in earnest in order to find out where they could move their policies and how much it would cost to continue covering their employees and their family members. At this point, it is urgent that any members that had not already done so should begin the process.