Buying a short-term health plan in Colorado
- Colorado has had its own regulations for short-term health insurance for many years, and has recently tightened the rules substantially.
- Starting September 1, 2019, Colorado is offering a special enrollment period in the individual market for people whose short-term plans terminate and cannot be replaced due to the exit of all short-term insurers from the market.
- Starting in April 2019, Colorado began imposing several new rules for short-term plans:
- Premiums for older enrollees capped at 3 times the premiums for younger enrollees
- The ACA’s essential health benefits must be covered
- Policies have to be guaranteed-issue
- Pre-existing conditions can still be excluded, but only if they were diagnosed, treated, or symptomatic in prior 12 months
- Short-term plans must have loss ratios of at least 80 percent, (it was 60 percent prior to April 2019).
- Colorado already prohibited the purchase of a short-term plan if you’d had coverage under more than one short-term plan in the last 12 months, and for many years, short-term plan duration in Colorado has been limited to six months,
- Short-term plans in Colorado are required to cover state-mandated benefits, including maternity.
- No insurers offer short-term plans in Colorado as of April 2019.
Colorado has always regulated short-term plans, but has recently tightened the rules
Colorado has its own regulations pertaining to short-term health insurance. The Trump administration relaxed the federal rules as of October 2018, allowing longer durations for short-term plans. States can still impose their own restrictions, however, and Colorado has opted to significantly strengthen the regulations that already existed in the state.
Although Colorado already had fairly robust regulations pertaining to short-term plans, the state has drastically tightened its requirements for short-term plans as of April 2019 (details below). As a result, there are no longer any insurers offering short-term plans in Colorado.
New SEP for people whose short-term plan ends and cannot be replaced
The Colorado Division of Insurance has finalized a new special enrollment period [Amended Regulation 4-2-43, Section 5(d)(4)(v)] that will allow people to enroll in a plan in the ACA-compliant individual market if they had a short-term plan that terminates and are unable to purchase another short-term plan because their insurer is no longer offering short-term plans in Colorado.
The new special enrollment period rule takes effect September 1, 2019. It allows a person to enroll in an individual market plan within 60 days of the termination of their short-term plan. Or, for people who have already lost coverage under a short-term plan since April 2019 (when Colorado’s new rules for short-term plans took effect and insurers stopped selling short-term plans in the state), a special enrollment period is available for 60 days, starting when the new rule takes effect on September 1. So people whose short-term plans have terminated since April 2019 will be able to enroll in an ACA-compliant plan during September or October 2019
Extensive new regulations took effect in April 2019
In 2018, Colorado regulators began working on new regulations for short-term health insurance plans. There was a hearing about the new proposed rules in December, and Colorado’s Insurance Commissioner approved the new regulations in January 2019. They took effect on April 1, 2019, and include the following changes:
- Short-term plans have to charge older adults no more than three times as much as they charge younger adults. Short-term plans are generally not available after a person is 64, but a quick check of plans that were available in Colorado in early 2019 showed that some insurers were charging a 64-year-old up to seven times as much as a 21-year-old.
- Short-term plans have to be guaranteed-issue. Insurers can no longer reject applicants based on their medical history. This is a huge change, as short-term plans previously based eligibility on a series of basic health screening questions (this is an example of one company’s pre-screening questions; applicants who answered yes to any of those questions were not eligible for coverage, that had to change as of April, which was a major factor in the exodus of all short-term insurers from Colorado).
- Short-term plans can still exclude pre-existing conditions, but pre-existing conditions are defined in the regulations as a condition that was diagnosed, treated, or symptomatic in the 12 previous months.
- Short-term plans have to cover not only state-mandated benefits (this was already required, as noted above), but also the ACA’s essential health benefits. This is part of Colorado Revised Statute 10-16-102(22), and that provision applies to short-term plans as of April 2019. So short-term plans can no longer avoid covering prescription drugs or mental health care, which was previously common in the industry.
Extensive rate filing requirements already included a minimum loss ratio rule, but was strengthened as of April 2019
Colorado already had 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 (this is the rule that was amended as of April 2019, to include the 3:1 ratio cap for age-based premiums; network factors was also eliminated from the list of things on which insurers can base premiums).
The filing requirements previously included 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). The updated version of Regulation 4-2-59 calls for a minimum loss ratio of at least 80 percent.
Short-term plan terms limited to six months in Colorado
Under long-standing rules in Colorado, short-term plan terms can’t last more than six months, and cannot be renewable (see Colorado Revised Statutes Title 10 Insurance § 10-16-102 Definitions, section 60).
In addition, short-term plans cannot be issued to anyone who has had coverage under more than one short-term plan in the prior 12 months. These are both longstanding rules in Colorado that predate the Obama and Trump Administrations.
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 has always prevented people from stringing together multiple short-term plans instead of purchasing regular health insurance.
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.
Which insurers offer short-term plans in Colorado?
Everest and Everest Prime had been offering short-term plans in Colorado as of October 2018, but their plans no longer appeared to be available as of December.
Independence American, LifeShield, and National General were still offering short-term plans in Colorado as of January 2019, but all of them had stopped offering coverage by April, when the state’s strict new rules for short-term plans took effect.
As noted above, the Colorado Division of Insurance has finalized a special enrollment period for people whose short-term plans expire and cannot be replaced due to the lack of short-term plan availability under the state’s new rules. The new special enrollment period allows these residents to purchase an ACA-compliant individual market plan when their short-term plan expires.
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.