Quarterly report pursuant to Section 13 or 15(d)

Affordable Care Act

v3.10.0.1
Affordable Care Act
9 Months Ended
Sep. 30, 2018
Affordable Care Act [Abstract]  
Affordable Care Act
Affordable Care Act

The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual MLR and cost sharing reductions. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum MLR.

During the second quarter of 2018, the Company recognized a $79 million net pre-tax benefit related to the reconciliation of the 2017 risk adjustment program compared to a $48 million net pre-tax benefit related to the reconciliation of the 2016 risk adjustment program during the second quarter of 2017.



The Company's net receivables (payables) for each of these programs are as follows ($ in millions):
 
September 30, 2018
 
December 31, 2017
Risk adjustment
$
(784
)
 
$
(677
)
Reinsurance
1

 
15

Risk corridor
4

 
6

Minimum MLR
(154
)
 
(22
)
Cost sharing reductions
(61
)
 
(96
)