Aetna 2014 Annual Report Download - page 40

Annual Report- Page 34
• Restricting the ability of health plans to establish member financial responsibility.
Some of the changes, if enacted, could provide us with business opportunities. However, it is uncertain whether we
can counter the potential adverse effects of such potential legislation or regulation, including whether we can
recoup, through higher premium rates, expanded membership or other measures, the increased costs of mandated
coverage or benefits, assessments or other increased costs, including the cost of modifying our systems to
implement any enacted legislation or regulations.
Our business also may be affected by other legislation and regulations. The Dodd-Frank Wall Street Reform and
Consumer Protection Act (the “Financial Reform Act”) was signed into law in July 2010. The Financial Reform
Act creates incentives for whistleblowers to speak directly to the government rather than utilizing internal
compliance programs, reduces the burden of proof under the Foreign Corrupt Practices Act of 1977 (the “FCPA”)
and creates a Federal Insurance Office (“FIO”) within the U.S. Department of the Treasury (the “Treasury”) with
powers that include information-gathering and subpoena authority. Although the FIO does not have authority over
health insurance, it may have authority over other parts of our business, primarily life insurance. In December 2013,
the FIO released a Financial Reform Act mandated report to Congress on how to modernize and improve the system
of insurance regulation in the United States. The report includes recommendations for reforms to the existing state-
based regulatory regime as well as proposed elements of additional federal involvement in insurance regulation. We
cannot predict whether future legislative or regulatory action will result from this report.
Health savings accounts, health reimbursement arrangements and flexible spending accounts and certain of the tax,
fee and subsidy provisions of Health Care Reform are also regulated by the Treasury and the Internal Revenue
Service (the “IRS”).
We also may be adversely impacted by court and regulatory decisions that expand or revise the interpretations of
existing statutes and regulations or impose medical malpractice or bad faith liability. Among other issues, in 2015
the U.S. Supreme Court will consider whether individuals who buy health insurance on a Public Exchange
established by the federal government will receive assistance in the form of federal tax credits or subsidies. Other
federal and state courts continue to consider cases addressing group and individual life insurance payment practices
and the pre-emptive effect of ERISA on state laws.
The Employee Retirement Income Security Act of 1974
The provision of services to certain employee benefit plans, including certain Health Care, Group Insurance and
Large Case Pensions benefit plans, is subject to ERISA, a complex set of laws and regulations subject to
interpretation and enforcement by the IRS and the U.S. Department of Labor (the “DOL”). ERISA regulates certain
aspects of the relationships between us and employers who maintain employee benefit plans subject to
ERISA. Some of our administrative services and other activities may also be subject to regulation under
ERISA. ERISA generally preempts all state and local laws that relate to employee benefit plans, but the extent of
the pre-emption continues to be reviewed by courts.
Certain Large Case Pensions and Group Insurance products and services are also subject to potential issues raised
by certain judicial interpretations relating to ERISA. Under those interpretations, together with DOL regulations,
we may have ERISA fiduciary duties with respect to certain general account assets held under contracts that are not
guaranteed benefit policies. As a result, certain transactions related to those assets are subject to conflict of interest
and other restrictions, and we must provide certain disclosures to policyholders annually. We must comply with
these restrictions or face substantial penalties.
Federal Employees Health Benefits (“FEHB”) Program
Our subsidiaries contract with the Office of Personnel Management (the “OPM”) to provide managed health care
services under the FEHB program in their service areas. These contracts with the OPM and applicable government
regulations establish premium rating arrangements for this program. OPM regulations require that community-
rated FEHB plans meet a FEHB program-specific MLR by plan code and market. Managing to these rules is
complicated by the simultaneous application of the minimum MLR standards and associated premium rebate