On Friday, October 16, 2015 the Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), took action against Colorado HealthOP, preventing it from selling insurance for 2016. As a result, Colorado consumers will not be able to buy new HealthOP coverage or renew existing plans for 2016, for individuals or small groups.
If you currently have coverage through Colorado HealthOP, your policy will continue through December 31, 2016 as long as you continue to pay your monthly premium.
Please be assured that 360benefits is available to help you review other carrier options. We will contact current clients in early to mid-November once we have access to the full 2016 plan and rate information. Please contact us at firstname.lastname@example.org or via phone at 720.204.3019 if you have any questions in the meantime.
Why did the DOI take this action? The financial viability of the HealthOP came into question after learning it would receive considerably less money than expected from a federal, risk-based reimbursement program know as "risk corridor." Earlier this month, the Centers for Medicaid and Medicare (CMS), announced it would only reimburse the nation's health insurers 12.6% of what they were entitled under the program - only $362 million out of $2.9 billion promised. Colorado HealthOP was expecting around $16.2 million this year from the risk corridor payments, but instead will only receive about $2 million.
Because of the shortfall in funds, the HealthOP does not meet the State's minimum capital and surplus requirements. The State requires insurance companies to maintain a certain level of capital and surplus to act as a rainy day fund should the company have a number of very sick people with very high cost claims. Without enough money in that rainy day fund, a company would not be able to pay the claims for its members.
"Our decision is a direct result of this shortfall by CMS, and I sympathize with the HealthOP, but the Division has requirements and it has to protect consumers," said Insurance Commissioner Marguerite Salazar. "It is a key function of the DOI to make sure that insurance carriers are financially stable enough to pay the claims of their policyholders. While Colorado HealthOP can continue to pay claims for the rest of 2015, we cannot allow it to sell or renew policies on the exchange for 2016."
What does this mean for Colorado HealthOP members? As of September 15, the HealthOP had 82,785 members, with 79,877 under individual policies, while 2,908 are covered under small group policies. Current individual and small group Colorado HealthOP policyholders will continue to be covered until the end of their policies, as long as they continue to pay their premiums. But for coverage in 2016, HealthOP members will need to choose plans from other insurance carriers. Members with individual policies must choose another carrier during the upcoming open enrollment for individuals, Nov. 1 - Jan. 31.
Consumers should know that under Colorado law, they will NOT be responsible for payments to providers that should be paid by the HealthOP, as the company will continue to pay claims for current members. If for some reason, the HealthOP is unable to pay claims, the Colorado Life & Health Insurance Protection Association, a nonprofit organization that assists Colorado residents with health insurance policies by insurance companies in financial difficulties, would step in and pay claims. It is for situations such as this that the Association was created.
What does this mean for the 2016 open enrollment? For the 2016 open enrollment for individual health insurance, Colorado HealthOP plans will not be available to buy or renew through Connect for Health Colorado.
Removing Colorado HealthOP from the exchange's 2016 offerings has an impact on all of the information and calculations for open enrollment. This will also impact the advance premium tax credits (APTC) that help make insurance more affordable for many. APTC is based upon the second-lowest Silver plan in an area, and since the Colorado HealthOP was the carrier with that second-lowest Silver premium in many areas throughout the state, this decision will impact those calculations. The Division is revising its figures for the number of carriers and plans available and the statewide and geographic area average premiums.
What do I need to do to get coverage for 2016? If you have an individual policy from the HealthOP, 360benefits will help you choose a plan from another insurance company in the upcoming open enrollment, which begins Nov. 1, 2015 and continues through January 31, 2016. To make sure that coverage starts on January 1, and avoid a gap in coverage, members must enroll before December 15.
Will my tax credit for health insurance for Colorado HealthOP coverage stay in place for the remainder of 2015? If you are receiving a tax credit for your 2015 Colorado HealthOP individual coverage, it will continue through the end of the policy, December 31, 2015, provided you keep paying your premiums.
Do I still need to keep paying premiums to Colorado HealthOP? Yes, to keep your coverage in place through the end of 2015, you must continue to pay your premiums to Colorado HealthOP.
Will my claims still be paid? Yes, the HealthOP will continue to pay claims for its current members. However, should the company become unable to pay those claims, you WILL NOT be responsible for those claims. The Colorado Life & Health Insurance Protection Association, a nonprofit organization that assists Colorado residents with health insurance policies from insurance companies in financial difficulties, would pay claims if the HealthOP is unable to.
Can I still see my doctors and other providers? What about ongoing or upcoming care? What about my prescriptions? Yes, members can continue to see providers and receive coverage for both medical and pharmacy needs. If you have problems with providers not honoring your insurance, contact the Colorado HealthOP member services at 866-915-6619, or contact the Division of Insurance at 303-894-7490 or 800-930-3745 (outside the Denver Metro area).
Why did this happen? On October 8, the Centers for Medicaid and Medicare (CMS) announced that it would only reimburse the nation's health insurers 12.6% of what they were entitled to under a federal, risk-based reimbursement program known as "risk corridor" - only $362 million out of $2.9 billion promised. Colorado HealthOP was expecting around $16.2 million this year from the risk corridor payments, but instead will only receive about $2 million.
The shortfall in funds resulted as there were more insurance companies eligible for risk corridor payments than those required to pay into the program. It is likely because many companies underestimated the risk of the new members they were taking on in 2014, and thus set their premiums too low. Additionally, CMS was recently prevented from using any other resources to make up this year's shortfall in the risk corridor program.
Such a drastic reduction in risk corridor payments made the financial situation for the Colorado HealthOP unsustainable.
Were any other carriers impacted by the reduced risk corridor payments? We have reviewed each carrier to assess the financial impact of the reduced payments and have determined that no other carrier impacted enough as to raise questions to their continued sustainability.