Florida Regulators Object To Health Insurers’ $400M In Dividends

June 24--Florida regulators have objected to more than $400 million in dividends health insurers sought to pay parent companies out of state. In some cases, regulators have blocked payments, records reviewed by The Palm Beach Post show.

"Consumers want insurers to be using as many of their assets as possible to keep premiums affordable," said Cheryl Fish-Parcham, private insurance program director at Families USA, an advocacy group promoting affordable coverage. "They should be thinking of their duties to their enrollees before they think about sending money out of state."

Florida's actions involving Humana and Aetna come amid reports of intense merger and acquisition discussions among some of the nation's largest health insurers, including those two companies.

In one case, Florida regulators sent a letter denying a $10 million dividend to Humana they considered extraordinary. In another case, Aetna said it did not go through with a $40 million dividend payment after receiving an objection letter.

"It's important that sufficient capital be maintained by licensed companies in order to help ensure they make good on their obligations to policyholders," a statement to The Post from the state's Office of Insurance Regulation said. "Each case is determined on its own merits. We will not comment on specific companies."

Regulators sent objection letters to companies that state officials said were affected by uncertainty in the health insurance market and/or federal programs to help insurers cover costs, including Affordable Care Act Reinsurance, Risk Corridor and Risk Adjustment programs, records show:

--Aetna Health Inc. provided notice of a $40 million dividend to be paid to its parent, Aetna Health Holdings LLC, on or around June 28.

--Humana Medical Plan, Inc. provided notice of a $305 million dividend to be paid to its parent, Humana, Inc., on or about May 20.

--CarePlus Health Plans, Inc. provided notice of a $56.8 million dividend to be paid to its parent, Humana, Inc., on or about May 20.

Aetna spokesman Walter Cherniak said the $40 million payment required state approval, and was not paid.

"We believe the proposed dividend was appropriate," Cherniak said. "Otherwise, we would not have proposed it. Aetna Health Inc. remains well capitalized, and, based on our projections, the company would have continued to exceed the capital required by Florida laws and regulations if the dividend had been paid."

State regulators sent a denial letter in the case of another payment they considered extraordinary and subject to state approval: Humana Health Insurance Co. of Florida Inc. requested approval to pay a $10 million dividend to its parent, Humana, Inc., on or about May 20, officials said.

Humana officials did not respond to requests for comment.

Heading into June, Humana shares rose above all-time highs on speculation that one of the nation's biggest health insurers and Florida's largest Medicare HMO company might be up for sale, according to news reports.

Rumblings of prospective mergers and acquistions within the industry have continued at a feverish pace, with reports that Cigna rebuffed an offer from Anthem followed by word that Aetna and Cigna have both expressed interest in Humana.

The friction over dividend payments comes to light as some health insurers are requesting substantial rate increases in Florida.

For example, Aetna has requested increases of 18 percent to 21 percent in three plans for 2016, The Post reported June 1. The requests are under review by regulators.

"The rates that we are filing simply reflect the costs of health care including the cost of services, the amount of services people will receive and an increase in pharmaceutical costs," Cherniak said then.

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