Wed., November 9, 2011 5:04pm (EST)

Insurers Get Waiver On Deadline
By Joshua Stewart
Updated: 2 years ago

ATLANTA  —  
A provision included in the federal health care reform bill requires insurance companies that offer individual plans to spend 80 percent of the money they collect from customers on insurance claims. It also forces companies to give their customers rebates if they do not meet the requirements. (Photo Courtesy of <a href=http://www.flickr.com/photos/dliban/4163029921/>David Liban via Flickr</a>.)
A provision included in the federal health care reform bill requires insurance companies that offer individual plans to spend 80 percent of the money they collect from customers on insurance claims. It also forces companies to give their customers rebates if they do not meet the requirements. (Photo Courtesy of David Liban via Flickr.)
Health insurance companies offering Georgians individual plans are getting more time before they have to spend 80 percent of the money they collect from customers on insurance claims.

The federal Dept. of Health and Human Services decided Monday to adjust the requirement after state officials expressed concerns about smaller insurers leaving the state if forced to meet the standard.

Federal officials agreed three small companies could be at risk if the mandate went into effect this year, so they set a schedule: the threshold is 70 percent for 2011 and 75 percent for 2012, working up to the full 80 percent in 2013. Georgia had asked to phase it in by 2014.

“[The delay] means that there’s a much better chance that those entities which may have otherwise exited [the state] won’t," said Trey Sivley, assistant director of Regulatory Services for the Georgia Dept. of Insurance. "That means that if [consumers] are currently insured, they will remain insured.”

The provision, which was included in the federal health care reform bill, also forces companies to give their customers rebates if they do not meet the requirements.

Sivley said it is likely at least a few companies will have to do that.

Twenty-three companies offer individual coverage to nearly 350,000 Georgians. Those are plans that people buy themselves, not as part of a group or at work.

Consumer group Georgians for a Healthy Future argued against extending the deadline. But Executive Director Cindy Zeldin said the new deadline still helps customers by slowing the increase in healthcare costs.

“[The 80-percent requirement] isn’t going to get at that portion of costs that is actually spent on medical care. But it will get at that portion that’s spent on administration, profits, marketing, all of those types of expenditures,” Zeldin said.

Read the Dept. of Health and Human Services’ full decision here.