Hartford health insurer Aetna said it has signed a five-year reinsurance policy that would provide as much as $200 million if the company’s commercial health benefits spending hits a certain level this year.
Under the contract, which comes after a similar arrangement expired Jan. 7, Aetna would begin to receive payments from Vitality if the medical benefit ratio for its covered businesses hits 96 percent.
In other words, if Aetna spends 96 percent or more of its premium revenue on medical care for its members in 2014, Vitality will start to pay out on the policy. Aetna would receive the full $200 million if its ratio hits 116 percent in 2014.
Under federal healthcare reform, insurers must spend a minimum of 80 percent of premium revenue on medical care, depending on their size.
