Buying a short-term health plan in Colorado
- Colorado has its own regulations pertaining to short-term health insurance.
- Short-term plan duration in Colorado is limited to six months.
- You can’t buy a short-term plan in Colorado if you’ve had coverage under more than one short-term plan in the last 12 months.
- Short-term plans in Colorado are required to cover state-mandated benefits, including maternity.
- Short-term plans must have loss ratios of at least 60 percent, but the state plans to increase that to 80 percent as of February 2019.
- At least three insurers offer short-term plans in Colorado.
Colorado established its own short-term regulations
Colorado has its own regulations pertaining to short-term health insurance. The Trump Administration relaxed the federal rules of October 2, allowing longer durations for short-term plans. States can still impose their own restrictions, however, and Colorado will continue to do so.
Short-term plan terms limited to six months in Colorado
Short-term plan terms can’t last more than six months in Colorado, and cannot be renewable (see Colorado Revised Statutes Title 10 Insurance § 10-16-102 Definitions, section 60).
So a person in Colorado could buy a short-term plan with a six-month term, and then buy one more short-term plan after the first ends. But after that, they’d have to wait at least six months before being able to purchase a third short-term plan. With this rule, the state eliminates the option to string together multiple short-term plans instead of purchasing regular health insurance.
The Trump Administration’s new rules for short-term plans (which allow the plans to have initial terms of up to 364 days, and total duration, including renewals, of up to three years) are clear in noting that states may continue to impose tighter regulations than the new federal rules. So short-term plans in Colorado cannot have maximum terms of more than six months.
Other Colorado insurance regulations for short-term plans
Short-term plans in Colorado are required to cover state-mandated benefits. This includes maternity. (Colorado mandated maternity coverage on all state-regulated plans as of 2011.) But maternity is only covered on a short-term plan in Colorado if the pregnancy begins after the short-term plan takes effect, and the coverage ends when the short-term plan terminates.
So in reality, only the first portion of a pregnancy would ever be covered under a short-term plan in Colorado. And if a pregnant woman were to apply for another short-term plan after the first plan ends, her application would be rejected, since the pregnancy would be a pre-existing condition.
Extensive rate filing requirements include a minimum loss ratio rule; Regulators have proposed a higher loss ratio requirement and a 3:1 ratio for age-based premium variation
Colorado has extensive filing requirements (regulation 4-2-59) for insurers that wish to sell short-term plans in the state, including a requirement that rates for short-term plans can only vary based on age, tobacco use, geographic area, network factors, and whether the policy covers a single individual or multiple family members.
The filing requirements also include a rule stating that carriers must have a loss ratio of at least 60 percent. Unlike the ACA’s medical loss ratio, which excludes certain expenses from the calculation, Colorado’s calculation is just total claim amounts divided by total premiums collected.
In October 2018, the Colorado Division of Insurance proposed changes to regulation 4-2-59, which are slated to take effect in February 2019. The changes include the addition of a maximum 3 to 1 premium variation based on age (the same as the ACA’s requirement for individual and small group plans), and increasing the minimum allowable loss ratio to 80 percent. The new rules also eliminate network factors from the list of things upon which insurers can base premiums. There was a hearing about the proposed rule in early December, but it had not been finalized as of mid-December.
Which insurers offer short-term plans in Colorado?
- Independence American
- National General
Everest and Everest Prime had been offering short-term plans in Colorado as of October 2018, but there plans no longer appeared to be available as of December.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.