Short-term health plans in Colorado
- Colorado has had its own regulations for short-term health insurance for many years, but tightened the rules substantially in 2019.
- Starting in April 2019, Colorado began imposing several new rules for short-term plans.
- Short-term health insurance in Colorado must have loss ratios of at least 80 percent, (it was 60 percent prior to April 2019).
- Short-term plans in Colorado are required to cover state-mandated benefits, including maternity (but the scope of this is limited due to pre-existing condition rules and the duration of short-term plans).
- Purchasing short-term health insurance in Colorado is prohibited if you 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,
- No insurers have offered short-term health insurance in Colorado since April 2019.
- In the fall of 2019, Colorado offered a special enrollment period in the individual market for people whose short-term plans terminated and could not be replaced due to the exit of all short-term insurers from the market.
Colorado’s short-term health insurance regulations
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 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 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 health insurance in Colorado.
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 was 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 healthcare benefits (this was already required pre-2019), 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.
- Note that short-term healthcare plans in Colorado are required to provide coverage for maternity care, as 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 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 wished to sell short-term insurance plans in the state, including a requirement that rates for short-term plans could 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 requires a minimum loss ratio of at least 80 percent.
Short-term plan duration in Colorado
Under long-standing Colorado state rules, short-term plan duration can’t exceed 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 health insurance in Colorado 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. Under the terms of this rule, the state has always prevented people from stringing together multiple short-term plans instead of purchasing regular health insurance. But it’s fairly irrelevant now that there are no longer any short-term plans available in Colorado.
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 were no longer available as of December 2018. 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.
In 2019, the Colorado Division of Insurance finalized a new special enrollment period [Amended Regulation 4-2-43, Section 5(d)(4)(v)] for people whose short-term plans expired and could not 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.
The new special enrollment period rule took effect September 1, 2019. It allowed a person to enroll in an individual market plan within 60 days of the termination of their short-term plan. Or, for people who hade already lost coverage under a short-term plan since April 2019 (when Colorado’s new rules for short-term plans took effect and insurance companies stopped selling short-term plans in the state), a special enrollment period was available for 60 days, starting on September 1, 2019.
Who can get short-term health insurance in Colorado, and when should I consider it?
Since short-term health plans are not currently available in Colorado, we advise you to check to see whether you’re eligible to enroll in an ACA-compliant major medical plan. Open enrollment for these plans runs from November 1 to January 15 in Colorado’s marketplace/exchange (this is an extended enrollment window that Colorado established; it continues for an extra month after open enrollment ends in most of the rest of the country).
If you’re trying to buy coverage outside of that window, you may be eligible for a special enrollment period that would allow you to buy an ACA-compliant plan (through the marketplace, Connect for Health Colorado, or directly from a health insurance company), if you experience a qualifying life event.
ACA-compliant plans are purchased on a month-to-month basis, so you can enroll in coverage even if only for a few months before another policy takes effect. So if you’ll soon be enrolled in Medicare or a new employer’s plan, for example, and just need coverage for a few months until your other plan takes effect, you can still use an ACA-compliant plan for that purpose and then cancel it once you have coverage under another plan. And if your total household income for the year makes you eligible for a premium subsidy, you may end up with monthly premiums that are much less costly than you thought they would be.
Depending on your income you may also qualify for health insurance in Colorado under expanded Medicaid coverage. When the Affordable Care Act was enacted in 2010, Medicaid expansion was a cornerstone of lawmakers’ efforts to expand realistic access to healthcare to as many people as possible. If you have a household income up to 133 percent of poverty (138 percent with the 5 percent income disregard) would be able to enroll in Medicaid.
Some Colorado residents opt to use other non-ACA-compliant health plans, including direct primary care and health care sharing ministry plans (Colorado is among the states with the highest enrollment in health care sharing ministry plans). But these plans are not considered health insurance, and do not come with the regulatory oversight and legal requirements that go along with health insurance. Enrolling in them is very much a “buyer beware” situation, and it’s important to fully understand their limitations and exclusions before attempting to use them in place of real major medical health insurance. And if you’re considering using these sorts of plans to cover the gap before you’re enrolled in Medicare, know that they would not count as the creditable coverage that would be necessary in order to avoid a pre-existing condition waiting period for Medigap plans.
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.