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MCHA Basic Facts

Background on MCHA

Minnesota Comprehensive Health Association (MCHA) is the state’s high risk pool that provides health insurance coverage to individuals as a plan of last resort when they cannot get coverage in private markets. MCHA is considered a model high risk pool in the nation.

  • MCHA was created by the Minnesota legislature in 1976 and was one of the first two operational high risk pools in the nation.
  • MCHA is one of the largest state high risk pools with 25,815 members (as of December 2012)
  • MCHA is a non-profit company.  MCHA contracts with Medica for plan administration.  

Who is covered by MCHA?

MCHA covers Minnesotans that cannot obtain insurance through other means such as:

  • Individuals who are rejected in the private market due to a health condition or for other reasons
  • Individuals who are self-employed 
  • Employees of employers that do not provide employee health coverage
  • Dependents of employees working for companies that do not provide dependent coverage
  • Individuals who have been laid off or terminated from employer coverage
  • Individuals over age 65 but not eligible for Medicare
  • Former employees of bankrupt companies
  • Lifetime/annual maximum benefit reached
  • Health coverage cancelled by their insurance company – employers dropping group coverage
  • Insurance companies that become insolvent

In addition, MCHA insures those individuals that lose group coverage and are eligible under either the:

  • Health Insurance Portability and Accountabiltiy Act (HIPAA), or
  • Health Coverage Tax Credit (HCTC) program for workers who lost jobs due to increased imports, foreign trade, etc.

How is MCHA funded?

MCHA receives its funding from two main sources:

  1. Health insurance premiums paid by members
    • Premium rates for MCHA policies must be set between 101% and 125% of weighted average for comparable policies.  Currently, rates are at approximately 111% of the market price for most deductibles plans.
    • The premiums cover approximately 43% of the costs of MCHA

  2. Subsidy mechanism
    • The remaining losses not covered by premiums are assessed to each health insurance company based on its amount of health insurance premiums written in Minnesota.

      Additional sources of income: 

  3. Healthy Minnesota Contribution Program (HMCP) – HMCP provides adults without children who have income at or above 200% of the federal poverty guidelines (FPG) through 250% FPG (about 670 individuals) with a monthly defined contribution to use towards the purchase of private health insurance or insurance through MCHA.   Losses are tracked separately and are reimbursed out of the health care access fund.

  4. Federal grants – In the past, MCHA has received federal grants that the Center for Medicare & Medicaid Services (CMS) provides to each of the 35 state high risk pools.  In 2012, $1,690,592 in federal grant funds were applied to MCHA operating losses;  MCHA uses the rest of the federal grant funds it receives for a low income subsidy program that provides premium refunds to low income individuals enrolled in MCHA; in 2012, MCHA provided low income subsidies totaling $1,159,000.

2014 and MCHA Transition

MCHA was developed to be the plan of last resort for individuals not able to obtain insurance in the private market.  Under the federal Patient Protection and Affordable Care Act (ACA), beginning in 2014, MCHA will not be needed to perform this function in the market due to:

  • Guarantee Issue – Beginning in 2014, health plans will no longer be able to reject someone due to a preexisting health condition.
  • No preexisting condition exclusions – Beginning in 2014, health insurance plans can no longer exclude individuals based on a preexisting condition.
  • Lifetime/Annual Limits – Lifetime and annual limits have already been eliminated on most plans, except plans that received federal waivers. The plans with federal waivers will expire in 2014.
  • Open Enrollment and Special Enrollment Opportunities – Individuals will have the opportunity to enroll in coverage during open enrollment periods as well as other times of the year if they have a life change, including changes in income, etc.
  • The Health Care Tax Credit (HCTC) Program is currently set to expire January 1, 2014.

There are special eligibility categories in MCHA that will need to be addressed as part of this transition:

  • HIPAA Eligible enrollees (MCHA is designated as the state alternative mechanism for HIPAA compliance.  Federal guidance is needed to determine how this designation is changed.)
  • HCTC Program participants (If program extended beyond January 1, 2014.)
  • MCHA Medicare Supplement policyholders (429 members as of December 2012. These individuals are not eligible to enroll in the Exchange.)

MCHA Frequently Asked Questions

Common questions and answers about Minnesota Comprehensive Health Association (MCHA). Click on the question to view the answer.

  • Is there a proposal to phase out MCHA on or before January 1, 2014?

    The Minnesota Insurance Marketplace Act, signed into law by Governor Mark Dayton on March 20, 2013, directs, “the commissioner of commerce in consultation with the board of directors of the Minnesota Comprehensive Health Association, has the authority to determine the need for and to implement the eventual appropriate termination of coverage provided by the Minnesota Comprehensive Health Association under Minnesota Statutes, chapter 62E. The phase-out of coverage shall begin no sooner than January 1, 2014.”

    As authorized by the Minnesota Insurance Marketplace Act, the Commerce Department, in consultation with MCHA, has begun the process to determine the need for and to implement the eventual appropriate termination of coverage provided by MCHA. The transition of coverage (including phase-out) from MCHA to the health insurance markets shall not begin sooner than January 1, 2014. The transition process will include an opportunity for public notice and comment on a draft transition plan.

  • What will be the goals in establishing a transition plan for MCHA?

    The initial goal of a transition plan, as required under the Minnesota Insurance Marketplace Act, will be to determine the need for and to implement the eventual appropriate termination of coverage provided by MCHA, with any phase-out of coverage not to begin sooner than January 1, 2014. The Commerce Department goals in developing a transition plan will include the following:

    • Review and analyze key financial, operation, enrollee, and other data;
    • Develop an orderly and prudent transition plan with opportunities for public comment and feedback;
    • Assist enrollees, health plans and others to minimize potential disruption to enrollee coverage and healthcare; and
    • Provide timely communication and outreach to help enrollees with accurate information about the transition process, as well as health coverage opportunities available in 2014.

    The Commerce Department will continue to consult with MCHA and will provide opportunities for the public to receive notice of, and comment on, a draft transition plan.

  • Why would MCHA need to be kept open past January 1, 2014 if people can enroll in any health plan regardless of preexisting health conditions as of that date?

    MCHA has approximately 26,000 members, many of whom have serious ongoing health conditions. 

    The Department, in consultation with MCHA, is working with stakeholders to determine the most effective and responsible manner to transition members from MCHA to the private markets while they are in the midst of a course of treatment without causing hardship, including developing education and outreach efforts to inform consumers of upcoming changes.

  • Why does MCHA need to phase out at all?

    With the advent of the ACA’s requirements of guaranteed issue in the entire market, which means that insurance companies can no longer deny coverage to individuals with pre-existing conditions, the reason for MCHA's existence as the insurer of “last resort” to provide coverage for individuals who cannot purchase products in the private market is going away. Additionally, a significant portion of MCHA enrollees who do not have large ongoing claims may look to leave MCHA as new opportunities and subsidies are available in the new insurance market beginning in 2014.

  • When is the MCHA phase-out expected to occur?

    In accordance with the Minnesota Insurance Marketplace Act, the Commerce Department has begun a process to develop a plan to transition and phase-out MCHA. Initially, Commerce has consulted with MCHA to gather important financial, operational, and other data. The Department then will publicly announce a timeline for the process to develop a transition plan, which will include opportunities for public notice and comment in its development.