Glossary

risk corridor

The temporary risk corridor program was a provision of the Affordable Care Act from 2014 through 2016 that was intended to discourage insurers from setting premiums high in response to uncertainty about who will enroll and what they will cost. The program worked by cushioning insurers participating in exchanges and marketplaces from extreme gains and losses. It set a target for exchange participating insurers to spend 80 percent of premium dollars on health care and quality improvement. Insurers with costs less than 3 percent of the target amount must pay into the risk corridors program; the funds collected were used to reimburse plans with costs that exceed 3 percent of the target amount.