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NAIC Adopts Revised Model Act with Significant Implications for HMOs

Publisher: Day Pitney Alert
December 26, 2017

On December 21, the National Association of Insurance Commissioners (NAIC) adopted amendments to the Life & Health Guaranty Association Model Act, previously discussed here. Among other revisions, the amendments will make three significant changes:

  • extending guaranty association membership (and related assessments for insurance company failures) to HMOs;
  • reallocating the cost of guaranty association assessments related to long term care insurance companies that have become insolvent, which will now be allocated evenly between health-type insurance (including long term care) and life-type insurance instead of health alone (the current system); and
  • banning the use of a market-rate adjustment to inflation provisions of long term care policies when calculating guaranty association covered claims.

The next step in the process will be for states to decide whether to adopt the revised NAIC Model Act, which may be an uphill battle in states with high HMO penetration.

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