124 STAT. 211 PUBLIC LAW 111–148—MAR. 23, 2010 (c) APPLICABLE REINSURANCE ENTITY.—For purposes of this section— (1) IN GENERAL.—The term ‘‘applicable reinsurance entity’’ means a not-for-profit organization— (A) the purpose of which is to help stabilize premiums for coverage in the individual and small group markets in a State during the first 3 years of operation of an Exchange for such markets within the State when the risk of adverse selection related to new rating rules and market changes is greatest; and (B) the duties of which shall be to carry out the reinsur- ance program under this section by coordinating the funding and operation of the risk-spreading mechanisms designed to implement the reinsurance program. (2) STATE DISCRETION.—A State may have more than 1 applicable reinsurance entity to carry out the reinsurance pro- gram under this section within the State and 2 or more States may enter into agreements to provide for an applicable reinsur- ance entity to carry out such program in all such States. (3) ENTITIES ARE TAX-EXEMPT.—An applicable reinsurance entity established under this section shall be exempt from taxation under chapter 1 of the Internal Revenue Code of 1986. The preceding sentence shall not apply to the tax imposed by section 511 such Code (relating to tax on unrelated business taxable income of an exempt organization). (d) COORDINATION WITH STATE HIGH-RISK POOLS.—The State shall eliminate or modify any State high-risk pool to the extent necessary to carry out the reinsurance program established under this section. The State may coordinate the State high-risk pool with such program to the extent not inconsistent with the provisions of this section. SEC. 1342. ESTABLISHMENT OF RISK CORRIDORS FOR PLANS IN INDI - VIDUAL AND SMALL GROUP MARKETS. (a) IN GENERAL.—The Secretary shall establish and administer a program of risk corridors for calendar years 2014, 2015, and 2016 under which a qualified health plan offered in the individual or small group market shall participate in a payment adjustment system based on the ratio of the allowable costs of the plan to the plan’s aggregate premiums. Such program shall be based on the program for regional participating provider organizations under part D of title XVIII of the Social Security Act. (b) PAYMENT METHODOLOGY.— (1) PAYMENTS OUT.—The Secretary shall provide under the program established under subsection (a) that if— (A) a participating plan’s allowable costs for any plan year are more than 103 percent but not more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to 50 percent of the target amount in excess of 103 percent of the target amount; and (B) a participating plan’s allowable costs for any plan year are more than 108 percent of the target amount, the Secretary shall pay to the plan an amount equal to the sum of 2.5 percent of the target amount plus 80 percent of allowable costs in excess of 108 percent of the target amount. 42 USC 18062. Definition.
