Indiana has finally received a response from the federal government regarding the state’s request for a waiver from the Affordable Care Act’s medical loss ratio provision. The provision requires insurance companies to pay at least 80% of the money they collect from premiums on improving medical care. Indiana had sought an exemption from the rule, claiming that it served as a detriment to the state’s insurance companies. The Department of Health and Human Services, however, has rejected the state’s request for a waiver.
The state may have failed to obtain a waiver, but the Indiana Department of Insurance will now try to reach a compromise with the Department of Health and Human Services to apply the medical loss ratio rule over time. The department will look for approval to institute an altered version of the law where insurers are only required to pay 65% of the money they collect from premiums on improving medical care. This rate will be raised to 72% in 2013 and again to 76% in 2014.
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State regulators are hoping to obtain a modified waiver in order to keep insurers from fleeing the state. Thus far, Aetna has been the largest insurance company to leave the state. Several other, smaller insurers have followed suit. Aetna, however, has expressed interest in returning to the state, waiver or no, once a health insurance exchange has been established in Indiana.