SSAP No. 107 adopted at recent NAIC meeting

The Statutory Accounting Principles (E) Working Group and the Accounting Practices and Procedures (E) Task Force of the National Association of Insurance Commissioners (NAIC) held a joint conference call Friday during which Statement of Statutory Accounting Principles No. 107, Accounting for the Risk-Sharing Provisions of the Affordable Care Act (SSAP No. 107), was adopted as previously exposed. The Financial Condition (E) Committee subsequently adopted the standard.

SSAP No. 107 adopts accounting treatment based on the previously adopted Issue Paper No. 150, Accounting for the Risk-Sharing Provisions of the Affordable Care Act, for the three Affordable Care Act (ACA) programs known as risk adjustment, reinsurance, and risk corridors (3R) that have been in place during 2014. Risk adjustment is a permanent risk-spreading program (ACA Section 1343). The temporary transitional reinsurance program (ACA Section 1341) and temporary risk corridors program (ACA Section 1342) are for years 2014 through 2016.

SSAP No. 107 permits admission of receivables for the risk adjustment and risk corridors programs, if the estimates are based on conservatism and sufficiency of data. It allows the receivables to be treated consistent with other government receivables subject to impairment guidance.

SSAP No. 107 is effective for years ending on or after December 15, 2014.

Materials from the joint conference call can be found on the NAIC website within the Committees & Activities homepage.

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