How to Find and Read Health Insurance Company Annual Financial Statements

Transcription

1 How to Find and Read Health Insurance Company Annual Financial Statements Joseph P. Ditré, Esq., Ex. Dir. Consumers for Affordable Health Care Advocating the right to health care for every man, woman, and child MISSION STATEMENT Consumers for Affordable Health Care is a Maine advocacy organization that strives to ensure a strong consumer voice in decision making at all levels and in all forums in order to advocate for a consumer oriented health system in Maine and the United States. Since 1988, Consumers for Affordable Health Care has provided leadership and support to consumers, businesses, organizations, and policymakers to specifically advocate for: Access to health care for all Maine residents including preventive, acute, chronic and long term care that is assured through health care coverage Affordable health care coverage that is guaranteed for all Maine residents, taking into account an individual s ability to pay An individual's right to freely choose her or his provider and method of care within the confines of quality care that is based on objective standards and supported by publicly available data on individual providers and hospitals Financing coverage from a broad variety of government and private sources Controlling rising costs while preserving quality care Consumers for Affordable Health Care provides resources to educate consumers and assist them in navigating the existing system. PO Box 2490 Augusta, ME Consumers for Affordable Health Care works with other organizations to educate them and to advocate our mission before legislative and regulatory bodies

2 Finding Health Insurance Company Annual Financial Statements 3 Where to Find Health Insurance Company Annual Financial Statements for Your State a. NAIC: b. See Endnotes How to obtain your 5 free annual financial statements from the NAIC website c. State Departments of Insurance website 4 2

3 Annual Financial Statements (Health Annual Statement) a. Typically 100 pages (or more with Schedules) b. Multiple pages may be associated with a page number (e.g.,26, 26.1, 26.2, 26.2, 26.3) c. Format is uniform and consistent (e.g., page 2 always lists Assets, page 28 always lists the Five Year Historical Data, etc.) 5 Reading Key Indicators In A Health Insurance Company s Annual Financial Statement 6 3

4 Key Financial Terms and Indicators a. Net Income (Loss) b. Medical Loss Ratio c. Reserves d. Surplus e. Investment Income f. Dividends 7 Net Income (Loss) a. Definition: Income (or loss) after all expenses paid, often called Profits (or Loss). Calculates Net Underwriting Gain (Loss) plus Net Investment Gain (Loss) minus capital gains and federal income taxes. b. Where to Find: Page 4, Statement of Revenues and Expenses (Balance Sheet), Line 32 c. See also: Page 28, Five-Year Historical Data, Line 12 d. Compare Net Underwriting Gain (Loss): Net Underwriting Gain (or Loss) calculates Total Revenues minus Total Underwriting Deductions. It is typically larger than net income (or loss). It is a pre-tax figure

5 Medical Loss Ratio a. Definition: The ratio of Medical Claims (including Quality Improvement) to Premiums Incurred b. Where to Find: Supplemental Health Care Exhibit, Line 7 c. MLR Federal Rule: 01/pdf/ pdf 9 Reserves a. Definition: Funds set aside to cover expenses which are due or will become due in the future. Reserves represent liabilities. b. Where to Find: Page 3, Liabilities, Capital, and Surplus, Line

6 Surplus a. Definition: Excess of assets over liabilities, sometimes called Capital and Surplus or Net Worth. b. Where to Find: Page 3, Liabilities, Capital and Surplus, Line 31 c. Compare to Risk Based Capital (RBC): RBC is a measure of solvency developed by the NAIC for regulatory purposes. It takes into account the risks associated with each insurance company s operations. Usually a state s insurance code sets the minimum level of surplus based on a company s risks. NOTE: RBC/2 = ACL. Actual surplus/acl = RBC ratio 11 Investment Income a. Definition: Income generated by the investment of assets. Insurers have two basic sources of income, underwriting (premiums less claims and expenses) and investment income. b. Where to Find: Page 4, Statement of Revenue and Expenses, Line 25. See also, Page 15, Exhibit of Net Investment Income, Line

7 Dividends a. Definition: Money paid to shareholders from an insurance company's earnings. b. Where to Find: Page 5, Statement of Revenue and Expenses, L Questions?

8 ENDNOTES How to Obtain Your Five Free Financial Statements or other insurance company data from NAIC Consumer Information Source Go to the NAIC Homepage at Click on the box Consumer Information Source (CIS) on the left side of the page Consumer Information Source landing page will open. It lists: o File Insurance Complaint o Do You Suspect Fraud o Download Key Financial Statements o Get More Information o Aggregate Consumer Complaint Reports Click on Download Key Financial Statements o Download Key Financial Statements page opens. On the left side of the page it offers: Information about 5 Free Requests (read for more information about what constitutes one request) o It also offers the opportunity to: Sign Up or Log In Sign up or Log In (depending on whether you re already a subscriber) Once you log in, you should still be on the Download Key Financial Statements page. On the right side of page, it asks you to enter Company Name or Company Code, the Filing Year, and the Filing Period (Enter those and submit) Next page provides the requested document by Company Name, Company Code, Home Office, Main Address Click on the document you requested The next page will provide both Key Annual Statement Page and Non key Annual Statement Pages (which you can select Add to Cart ) You can then proceed to Checkout or do a new search. You can open the documents by double clicking on each. That s it.

9 Resources Consumers for Affordable Health Care National Association of Insurance Commissioners Center for Consumer Information & Insurance Oversight (CCIIO at CMS formerly OCIIO at HHS) Thank You!