A health insurance provider in Illinois, designed to give consumers an alternative option to big insurance companies, is going out of business.
Over the next 60 days, the state of Illinois is taking control of the health insurance start-up Land of Lincoln Health says company spokesman Dennis O’Sullivan.
O’Sullivan says the Department of Insurance will manage the shutdown of the company, which has suffered multi-million dollar losses over several years.
O’Sullivan feels the downfall of the company started at the beginning of the year when the government failed to pay the risk corridor payment.
“They had paid approximately 12-percent last year and had announced that they would not be paying insurers the risk corridor payment this year. Land of Lincoln, on behalf of it’s members, sued the federal government to seek those dollars. Shortly thereafter, the risk adjustment payment numbers came out. That resulted in Land of Lincoln owing approximately $32 million to other insurers in Illinois,” says O’Sullivan.
“The Department of Insurance created a plan to where once the federal government had paid the risk corridor dollars, Land of Lincoln would then pay its risk adjustment dollars. PMS decided this week that they would not approve that plan,” says O’Sullivan.
O’Sullivan says the 49,000 current Land of Lincoln Health customers will be covered through a special enrollment period over the next few months.
“Land of Lincoln still will be paying claims and it will be under the Department of Insurance oversight until the special enrollment period has ended. The market place will be re-opened, and Land of Lincoln members will have an opportunity to shop for a new plan,” he explains.
For more information on the rehabilitation petition for Land of Lincoln Health, click here.