Division of Insurance moves to protect Colorado consumers, takes action against HealthOP
Colorado Health Insurance Cooperative not available for 2016
DOI took this action as 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.
DOI has had the HealthOP under supervision since February, during which time it continued to meet the capital and surplus requirements. However, not receiving the risk corridor payment means the Colorado HealthOP's rainy day fund will be completely wiped out, and is in fact expected to be in the negative by $34 million by the end of the year.
“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 Colorado Insurance Commissioner Marguerite Salazar. “It is a key function of Colorado Divison of Insurance 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.”
Commissioner Salazar added, “It is truly unfortunate, but the Division had to act now, before open enrollment gets started November 1st. To delay any longer would undermine the open enrollment process, impacting the entire health insurance market in Colorado and negatively impacting Colorado consumers. And it would have been even more costly to consumers if this action had to take place once 2016 started.”
What this means 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 can select coverage through Connect for Health Colorado, or off-exchange, but are reminded that tax credits are only available when purchasing coverage through Connect for Health.
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.
A representative of the association, Chris Chandler, said, “If called upon, the Life and Health Insurance Protection Association is prepared to provide a safety net for members and ensure the payment of claims consistent with its statutory mission of protecting policyholders.”
Colorado HealthOP members must still pay their premiums for their coverage to remain effective. They will still be required to pay for their share of charges such as deductibles, co-payments and co-insurance, as required by their plans.
What this means 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. HealthOP plans will also not be available for small employers to buy or renew through Connect for Health’s SHOP program
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.
The approved plans and premiums for 2016 should be available from DOI in the coming days.
As with every open enrollment, Colorado consumers should review all of their health insurance options and are free to explore all of the plans available in their area to determine the best fit for their health and financial needs.
While Colorado consumers generally will be able decide between staying with their current plan or moving to a different plan, Colorado HealthOP members MUST choose a plan from a different insurance company for 2016.
Who to contact with questions
Colorado HealthOP members enrolled through Connect for Health Colorado - contact Connect for Health Colorado with questions about renewals and choosing new options - 855-752-6749. Consumers with questions about payment of claims by the HealthOP should contact Colorado HealthOP member services - 866-915-6619.
FAQs (Revised 11/18/15)
Can I enroll in or renew a Colorado HealthOP plan through Connect for Health Colorado for 2016?
No. Plans from Colorado HealthOP will not be available on Connect for Health Colorado for 2016.
What do I need to do to get coverage for 2016?
If you have an individual policy from the HealthOP, you will need to 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.
If you are a small employer with small group coverage from Colorado HealthOP, your small group policy will terminate December 31, 2015. You will also need to select coverage from another carrier to be effective January 1, 2016 to avoid a gap in your employees' coverage.
What happens to my current Colorado HealthOP coverage? When will it expire?
For individual policyholders, your current coverage will remain effective until December 31, 2015. For those with small group policies, your coverage will also terminate December 31, 2015, and your employer will have to choose a plan from another carrier to be effective January 1, 2016 to avoid a gap in coverage. Contact your employer or employer's human resources office for more information about your options.
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.
The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA) regulates the insurance industry and assists consumers and other stakeholders with insurance issues. Visit dora.colorado.gov/insurance for more information or call 303-894-7499 / toll free 800-930-3745. DORA is dedicated to preserving the integrity of the marketplace and is committed to promoting a fair and competitive business environment in Colorado. Consumer protection is our mission. Visit dora.colorado.gov for more information or call 303-894-7855 / toll free 1-800-886-7675.