How to Find and Read Health Insurance Company Annual ...

Prepared for Community Catalyst April 19, 2012

How to Find and Read Health Insurance Company

Annual Financial Statements

Joseph P. Ditr?, Esq., Ex. Dir.

Consumers for Affordable Health Care

"Advocating the right to health care for every man, woman, and child"

1-800-838-0388



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.

Consumers for Affordable Health Care works with other organizations to educate them and to advocate our mission before legislative and regulatory bodies.



PO Box 2490 Augusta, ME 04338-2490

1-800-838-0388

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Finding Health Insurance Company Annual Financial Statements



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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



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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.)



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Reading Key Indicators In A Health Insurance Company's Annual Financial

Statement



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Key Financial Terms and Indicators

a. Net Income (Loss) b. Medical Loss Ratio c. Reserves d. Surplus e. Investment Income f. Dividends



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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.



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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/2010-29596.pdf



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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, Line1



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