Implementation of the Delaware Health Insurance Individual Market Stabilization Reinsurance Program Assessment

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TO:

RE:

DATED:

DOMESTIC AND FOREIGN INSURERS BULLETIN NO. 113

INSURANCE CARRIERS WHO ISSUE HEALTH BENEFIT PLANS IN

DELAWARE

IMPLEMENTATION OF THE DELAWARE HEALTH INSURANCE

INDIVIDUAL MARKET STABILIZATION REINSURANCE PROGRAM

ASSESSMENT

December 12, 2019

REVISED:

March 3, 2020 and November 6, 2025

REISSUED: December 3, 2020, November 30, 2021, February 7, 2023, December 5, 2023,

and November 25, 2024.

This Bulletin sets forth the procedures for the collection of the assessment that provides, in part,

the funding mechanism for the Delaware Health Insurance Individual Market Stabilization and

Reinsurance Program (the Reinsurance Program). This program was established under 16 Del.C.

§ 9903 et seq. and 18 Del. C. § 8701 et seq. (collectively, the Act).

The purpose of revising and reissuing the Bulletin is to remind applicable carriers of their

obligation to pay the assessment by March 1, 2026, and emphasize the Reinsurance Program’s

role in maintaining affordability and market stability, especially as Advance Premium Tax

Credits (APTCs), which expanded eligibility and increased subsidy amounts, are set to expire on

December 31, 2025, unless extended by Congress.

Background:

On August 20, 2019, the Federal Centers for Medicare and Medicaid Services (CMS) approved

Delaware’s application to establish a reinsurance program under Section 1332 of the Patient

Protection and Affordable Care Act (ACA). CMS approved Delaware’s Reinsurance Program to

take effect for the 2020 plan year and to remain in effect until 2025. Delaware submitted a

request to extend its Reinsurance Program on April 2, 2024, followed by an updated submission

on May 21, 2024. On July 31, 2024, CMS approved the extension, extending the Reinsurance

Program waiver period from January 1, 2025 to December 31, 2029, as detailed here.

ved Delaware’s Reinsurance Program to

take effect for the 2020 plan year and to remain in effect until 2025. Delaware submitted a

request to extend its Reinsurance Program on April 2, 2024, followed by an updated submission

on May 21, 2024. On July 31, 2024, CMS approved the extension, extending the Reinsurance

Program waiver period from January 1, 2025 to December 31, 2029, as detailed here.

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The assessment is collected by the Delaware Department of Insurance, as authorized by 18 Del.

C. § 8701 et seq. The Delaware Health Care Commission (DHCC) uses these funds to administer

the State’s Reinsurance Program as authorized by 16 Del. C. § 9903 et seq.

Who is subject to the assessment?

The assessment must be paid by any health insurance carrier that provides health insurance in

this State. “Health insurance carrier” or “carrier” includes an insurance company, health service

corporation, health maintenance organization, managed care organization, and any other entity

providing a plan of health insurance or health benefits subject to state insurance regulation.

The entities providing insurance under the following types of plans do not meet the definition of

carrier: plans of health insurance or health benefits designed for issuance to persons eligible for

coverage under Titles XVIII, XIX, and XXI of the Social Security Act (42 U.S.C. §§ 1395 et

seq., 1396 et seq., and 1397aa et seq.), known as Medicare, Medicaid; Chapter 52 of Title 29 of

the Delaware Code; or any other similar coverage under state or federal governmental plans.

Which products or lines are subject to the assessment?

Any carrier who is providing health insurance in this State (other than those products specifically

excluded under 18 Del. C. § 8702(c)) is required to pay the assessment. The definition of carrier

does not distinguish between group and individual insurance

Code; or any other similar coverage under state or federal governmental plans.

Which products or lines are subject to the assessment?

Any carrier who is providing health insurance in this State (other than those products specifically

excluded under 18 Del. C. § 8702(c)) is required to pay the assessment. The definition of carrier

does not distinguish between group and individual insurance.

The Act does not apply to stand-alone dental insurance, stand-alone vision insurance, long-term

care insurance, disability income insurance, or accident-only insurance.

How is the assessment calculated?

The assessment is equal to 2.75 percent of all amounts used to calculate an entity’s Delaware

premium tax liability or the entity’s premium tax exemption value, for products subject to the

Act. See 18 Del. C. § 8703(b).

The Further Consolidated Appropriations Act, 2020, Division N, Subtitle E § 502 signed into

federal law on December 20, 2019, repealed the annual fee on health insurance providers (The

Health Insurance Providers Fee as defined under Section 9010 of the ACA) for calendar years

beginning after December 31, 2020. Related technical corrections to the Delaware Insurance

Code occurred in 2022.

Henceforth, Delaware’s assessment on all amounts used to calculate an entity’s Delaware

premium tax liability or the entity’s premium tax exemption value for products subject to the Act

is 2.75 percent. See 18 Del. C. § 8703(b).

The attached form and instructions include precise methodology for this calculation.

How will the premiums be allocated to Delaware?

Code occurred in 2022.

Henceforth, Delaware’s assessment on all amounts used to calculate an entity’s Delaware

premium tax liability or the entity’s premium tax exemption value for products subject to the Act

is 2.75 percent. See 18 Del. C. § 8703(b).

The attached form and instructions include precise methodology for this calculation.

How will the premiums be allocated to Delaware?

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Carriers should employ the same methodology that is used for premium tax allocation pursuant

to 18 Del. C. § 702.

When will the amount be assessed and when is the amount due and payable?

The assessment payment is due by March 1 of the calendar year. Entities subject to the

assessment should submit the attached form and remit payment no later than March 1, 2026.

A nonprofit health service plan subject to this assessment should use the premium tax exemption

value from its first quarter report for the relevant plan year, subject to any exemptions or

exclusions in the Act, to determine its assessment base.

Is there any penalty or fee imposed for late payment or failure to pay?

Yes, penalties and interest will be assessed pursuant to the Department’s authority in 18 Del. C.

§ 329.

Is the assessment tax deductible for entities subject to the Act?

The Federal Internal Revenue Service (IRS) has confirmed to other states who are implementing

a 1332 waiver reinsurance program of their own that the assessment will be treated, for federal

tax purposes, as either a deductible expense pursuant to 26 U.S.C.A § 162 and I.R.C. § 162 or a

deductible tax pursuant to 26 U.S.C.A. § 164 and I.R.C. § 164 for those entities carrying on a

trade or business. While this treatment is generally accepted, the IRS has not issued formal

guidance specifically addressing the tax treatment of assessments under Section 1332 waiver

reinsurance programs. Carriers are encouraged to consult with their tax advisors to determine the

appropriate classification based on their specific circumstances and accounting practices

entities carrying on a

trade or business. While this treatment is generally accepted, the IRS has not issued formal

guidance specifically addressing the tax treatment of assessments under Section 1332 waiver

reinsurance programs. Carriers are encouraged to consult with their tax advisors to determine the

appropriate classification based on their specific circumstances and accounting practices.

When will the DOI distribute the funds to the DHCC?

The DOI anticipates that the assessment will be distributed to the DHCC as a lump sum no later

than April 15th of the calendar year.

How does the Reinsurance Program work?

Insurers who offer coverage in Delaware's individual market are reimbursed by the Reinsurance

Program for a percentage of the annual claims which they incur on a per member basis between a

specified lower threshold (“attachment point”) and upper threshold (“reinsurance cap”), to be

determined each year by the DHCC.

Due to these reimbursements and the anticipated improvement in morbidity, it is expected that

insurers will incur lower costs on their individual health insurance plans each year, and that those

lower costs will then be required to be passed on to consumers in the form of lower premium

rates, regardless of APTC availability..

Who will likely benefit from the Reinsurance Program?

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Consumers in the individual market who do not receive APTCs particularly benefit from the

lower premium rates, as they bear the full cost of coverage. By offsetting high-cost claims, the

program reduces gross premiums across all metal tiers, making coverage more affordable for

unsubsidized enrollees.

Consumers in the individual market who do receive APTCs generally experience little to no

impact from the lower premium rates. This is because the APTCs are set such that eligible

individuals pay no more than a specified percentage of their income for the second-lowest cost

silver plan, regardless of the cost of the second-lowest cost silver plan

ge more affordable for

unsubsidized enrollees.

Consumers in the individual market who do receive APTCs generally experience little to no

impact from the lower premium rates. This is because the APTCs are set such that eligible

individuals pay no more than a specified percentage of their income for the second-lowest cost

silver plan, regardless of the cost of the second-lowest cost silver plan. However, if the lower

premium rates for the second-lowest cost silver plan were to be less than the specified percentage

of income for certain individuals, consumers would pay the lower amount.

In the absence of APTCs, the Reinsurance Program will serve as a primary mechanism to offset

premium increases and preserve affordability for unsubsidized consumers. All consumers in the

individual market are expected to continue to benefit from increased stability due to an

expectation that overall membership in the single risk pool would continue to increase due to

lower premium rates.

Please direct questions to doi-invoices@delaware.gov. Include Attn: 1332 Waiver Assessment

Payment in the subject line.

This Bulletin shall be effective immediately and shall remain in effect unless withdrawn or

superseded by subsequent law, regulation or bulletin.

____________________________

Trinidad Navarro

Delaware Insurance Commissioner

NOTE: This Bulletin is intended solely for informational purposes. It is not intended to set forth legal rights, duties, or privileges,

nor is it intended to provide legal advice. Readers should consult applicable statutes and rules and contact the Delaware

Department of Insurance if additional information is needed.

__________________________

Trinidad Navarro

Delaware Insurance Commissioner

NOTE: This Bulletin is intended solely for informational purposes. It is not intended to set forth legal rights, duties, or privileges,

nor is it intended to provide legal advice. Readers should consult applicable statutes and rules and contact the Delaware

Department of Insurance if additional information is needed.

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Assessment Form Instructions

Delaware Health Insurance Individual Market Stabilization Reinsurance Program

Total Direct Written Premiums: Report the gross amount of all health and/or accident & health

premiums reported in Delaware. The total should equal the company’s premiums reported in the

annual statement filed with the NAIC during the applicable plan year and the schedule

referenced in Note 1 of the form.

Excluded Premiums: Excluded premiums include those expressly set forth by federal law and

regulation (see, for example, 26 C.F.R. § 57.2), premiums for federal programs not subject to

assessment in Delaware, and premiums expressly excluded in 18 Del. C. § 8702(b). Excluded

premiums should be specifically reported on the form in the column provided.

How is the assessment due calculated? Multiply 2.75 percent by the net total premium (total

premium minus excluded premiums).

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Delaware Health Insurance Individual Market Stabilization and Reinsurance Program Assessment Form

Company Name: ____________________________________________________________________________________

NAIC Number _____________

Company Address ___________________________________________________________________________________

As Reported Annual Statement

Amount

Total Direct Premiums Written

Excluded Premiums

Medicare

Medicare Supplemental

Federal Employees Health Benefit

Plans

Stand-alone Dental Insurance

Stand-alone Vision Insurance

Accident Only

Disability Only

Long Term Care

Other-

Other-

Other-

Other-

Total Excluded Premiums

Assessable Premiums

Total Direct Premiums Written less Total Ex

_______

As Reported Annual Statement

Amount

Total Direct Premiums Written

Excluded Premiums

Medicare

Medicare Supplemental

Federal Employees Health Benefit

Plans

Stand-alone Dental Insurance

Stand-alone Vision Insurance

Accident Only

Disability Only

Long Term Care

Other-

Other-

Other-

Other-

Total Excluded Premiums

Assessable Premiums

Total Direct Premiums Written less Total Excluded Premiums

Assessment Factor

2.75 percent

Assessment Declared

Assessable Premiums multiplied by Assessment Factor

Name and title of person responsible for

filling out this form

Name___________________________Title________________

Contact information for person responsible

for filling out this form

Telephone number_______________________________________

Email address ___________________________________________