NAIC Adopts Revised Model Act With Significant Implications For HMOs

On December 21, the National Association of Insurance Commissioners (NAIC) adopted amendments to the Life & Health Guaranty Association Model Act, previously discussed here. Among other revisions, the amendments will make three significant changes:

• extending guaranty association membership (and related assessments for insurance company failures) to HMOs;
• reallocating the cost of guaranty association assessments related to long term care insurance companies that have become insolvent, which will now be allocated evenly between health-type insurance (including long term care) and life-type insurance instead of health alone (the current system); and
• banning the use of a market-rate adjustment to inflation provisions of long term care policies when calculating guaranty association covered claims.