42 U.S.C. § 18062 — Establishment of risk corridors for plans in individual and small group markets

(a) In general For 2014, 2015, and 2016, the Secretary runs a "risk corridor" program for qualified health plans sold in the individual and small group markets. Each plan's payments are adjusted based on the ratio of its allowable costs to its total premiums. The program is modeled on the Medicare Part D regional plan program. (b) Payment methodology (1) Payments out — If a plan's allowable costs for a year are more than 103 percent but not more than 108 percent of its "target amount," the Secretary pays the plan 50 percent of the amount its costs exceed 103 percent of the target. If costs are more than 108 percent of the target, the Secretary pays the plan 2.5 percent of the target plus 80 percent of the amount over 108 percent. (2) Payments in — If a plan's allowable costs are less than 97 percent but at least 92 percent of the target, the plan pays the Secretary 50 percent of the amount its costs fall short of 97 percent of the target. If costs are below 92 percent of the target, the plan pays the Secretary 2.5 percent of the target plus 80 percent of the amount below 92 percent. (c) Definitions (1) Allowable costs — (A) A plan's allowable costs equal its total costs of providing covered benefits, not counting administrative costs. (B) That amount is reduced by any reinsurance or risk-adjustment payments the plan already received under sections 18061 and 18063. (2) Target amount — A plan's target amount equals its total premiums (including any government premium subsidies), minus its administrative costs.