On Thursday, April 5, Governor Hogan signed into law the “Establishment of a Reinsurance Program” bill to be effective January 1, 2019. The reinsurance program is expected to help stabilize the individual market by protecting insurance carriers from the risk of very high claims. With the most expensive claims covered by state reinsurance funds, carriers would not need to take those high-risks patients into account when setting next year’s individual market premium rates.

Funding for the state reinsurance program will be provided by the “Individual Market Stabilization” bill, which was signed into law by Governor Hogan on Tuesday, April 10. Under this bill, the state will charge health insurance carriers with a temporary 2.75% assessment on medical and dental insurance premiums. The assessment will be collected from insurers only in calendar year 2019. Although it is anticipated that the 2.75% assessment on insurers will be passed down to consumers through premium, the assessment is not likely to result in a premium increase. This is because the assessment amount approximates the amount of the federal health insurance industry fee, which was suspended by Congress for 2019.

In addition to providing reinsurance funding, the “Individual Market Stabilization” bill also establishes Maryland’s position regarding two policy matters introduced by Executive Order 13813 in October 2017. The Executive Order proposed expansion of association health plans (AHPs) and the loosening of federal rules for short-term, limited-duration insurance (STLDI). If an AHP covers employees of a Maryland small employer, the “Individual Market Stabilization” bill subjects the AHP to the same requirements that apply to all small employer group health plans, even if offered through an out-of-state organization. Further, the bill amends the Maryland definition of STLDI to only include policies with a maximum duration of 3 months and which may not be renewed or extended, regardless of any future changes to the federal definition.

If you have any questions, please contact your Keller account team.

Update: On August 21, 2018, the Maryland Insurance Administration issued MIA Bulletin 18-16 describing the procedures for the collection of the temporary 2.75% insurance premium assessment.