Living benefit riders to life insurance policies: Pricing considerations and strategy
Adding benefit riders to policies provides meaningful coverage for those who need it, and carriers usually can do so at a relatively low cost.
The Patient Protection and Affordable Care Act (ACA) introduced many changes to the individual health insurance market beginning in calendar year (CY) 2014, including new rating rules and the introduction of federal financial assistance to purchase health insurance through the insurance marketplaces. It is important for state policymakers to understand the health and stability of the individual health insurance market and how the ACA has affected its health insurance consumers.
To support this understanding, we have prepared a profile of the individual health insurance market for each state along with the District of Columbia (DC). The profile summarizes insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplaces, incorporating recently released data from the 2017 open enrollment period.1 Click on a state to read the latest information on each market.*
Profiles of the individual health insurance market for the 50 states and the District of Columbia
*Information was based on publicly available calendar year 2015 through 2017 data depending on the most currently available.
The table below summarizes our estimates of effectuated marketplace enrollment and associated federal financial assistance for the CY 2015 through CY 2017 time period.
|Average monthly marketplace enrollees||9,130,000||10,098,000||9,794,000|
|Average monthly premium subsidy recipients||7,681,000||8,546,000||8,264,000|
|Average monthly CSR recipients||5,169,000||5,727,000||5,663,000|
|Annual premium subsidy||$3,300||$3,500||$4,500|
|Annual CSR payments||$900||$1,000||$1,000|
|Aggregate premium subsidy ($ millions)||$25,028||$29,898||$37,382|
|Aggregate CSR payments ($ millions)||$4,548||$5,603||$5,835|
This information is vital to stakeholders for several reasons:
The information contained in this report and the 51 state market profiles was prepared through the use of publicly available data sources and estimates of effectuated marketplace enrollment. Effectuated marketplace enrollment includes the population that has made premium payments and is actively enrolled in a marketplace policy. Data underlying our analyses is based on information from CY 2015 through CY 2017.
CY 2015 financial results
Financial results for CY 2015 were summarized through the use of annual Medical Loss Ratio Reporting Data (MLR Data), which was publicly released by the Center for Consumer Information and Insurance Oversight (CCIIO) within CMS.3 Individual market financial information from the MLR Data is inclusive of marketplace enrollment, off exchange (marketplace) enrollment, and enrollment on Transitional products. Further information related to CY 2015 insurer financial results can be found in our annual research report on the commercial health insurance market.4 Values contained in this report, as well as our individual market state profiles, reflect risk corridor shortfalls for CY 2015.5 Additional adjustments were made to the data for observed reporting issues or data variances relative to statutory financial statements.
The Centers for Medicare and Medicaid Services (CMS) released quarterly effectuated enrollment for the insurance marketplace on a national and state level for December 2014 through March 2016.6 Effectuated marketplace enrollment at the end of each quarter is provided separately for total marketplace enrollment, APTC enrollment, and CSR enrollment.
The effectuated marketplace enrollment data also includes the average APTC on a national and state level for each quarter. Additionally, we relied on the CY 2016 and CY 2017 marketplace open enrollment report (OER) public use files.7 Through the use of this information, we compared CY 2016 and CY 2017 plan selections from the OER and applied historical effectuation percentages for the purpose of estimating effectuated enrollment in CY 2017. In some situations, actuarial judgement was utilized to estimate CSR and APTC enrollment due to the information being unavailable in a subset of the state-based exchanges. While we believe our methodology for estimating average monthly effectuated enrollment is sound, actual values are certain to vary from our estimates to an unknown degree. Adjustments were made to CY 2017 CSR enrollment values for California and Vermont due to unreasonable reported changes relative to CY 2016.
Average monthly premium (for individuals receiving an APTC) and APTC amounts were estimated through the use of the public use files for states using the federal marketplace.8 Due to inconsistent data sources across the three-year period, we have not illustrated monthly marketplace premiums for state-based exchanges (for any state that operated a state-based exchange for at least one year during the CY 2015 to CY 2017 time period). For a subset of the state-based exchanges, CY 2017 APTC information was not provided in the public use files. In these situations, estimates were developed based on the average premium increases. Actual APTC amounts in these states will vary from our estimates to the extent that changes to the benchmark silver plan premium varies from changes in the statewide average premium. For all states, it is certain that the actual effectuated monthly APTC amounts will vary from the estimates developed within each state profile.
CY 2015 CSR payments were sourced from the MLR Data. It should be noted that a small number of insurers reported a negative CSR amount in their MLR reporting forms for CY 2015. For these insurers, we replaced reported CSR amounts with data from their CY 2017 Unified Rate Review Template (URRT) submissions. If an insurer reported negative CSR payments in both data sources, then we set the CSR amount to zero. CSR payments developed through the use of MLR Data were trended to estimate values for years after CY 2015. For Arkansas, we adjusted the CSR payments reported in the MLR data for private Medicaid expansion enrollees.9 CSR payments for CY 2016 and CY 2017 were estimated by trending CY 2015 CSR payments per 12-month effectuated enrollment period at an 8% annualized trend rate. This annual trend rate assumption was developed based on our review of medical trend assumptions underlying individual market insurer rate filings during this time period. For Alaska, Louisiana, and Montana, we have made adjustments to CY 2016 and CY 2017 CSR payment estimates for the expansion of Medicaid. New York’s CSR payment estimate for CY 2016 and CY 2017 was adjusted for the implementation of a Basic Health Plan in CY 2016.
Publicly available data used in our analysis was reviewed for reasonableness and consistency. However, the data sources have not been audited. To the extent data items were not correctly reported, the values presented in this report and accompanying state profiles will need to be updated.
Summary of individual market enrollment and Affordable Care Act subsidies
Milliman prepared a profile of the individual health insurance market for each state and the District of Columbia, summarizing insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplace.