Updated regulation to govern short-term health plans in Colorado
Plans must cover essential health benefits, cannot deny applicants based on health status.
DENVER (Jan. 28, 2019) – The Colorado Division of Insurance (DOI), part of the Department of Regulatory Agencies (DORA), has amended the regulation governing short-term limited duration health benefit plans, requiring these plans to provide many of the same protections afforded by Affordable Care Act (ACA) qualified plans.
“With this regulation, we offer stronger consumer protection for Coloradans,” said Colorado Insurance Commissioner Michael Conway. “While short-term plans may not offer the most comprehensive health coverage, people who truly need short-term health insurance won’t have to worry about their health conditions raising their premiums. And under this updated regulation, those who enroll in these plans will see more health care services covered.”
Amended regulation 4-2-59 offers key changes for short-term, limited duration health benefit plans.
- Because short-term plans meet the state definition of health benefit plans, they must cover essential health benefits mandated by Colorado law, such as preventive services, prescription drugs, hospitalization and maternity and newborn care.
- Premiums for such plans can vary only due to the same factors as ACA-qualified plans: family (individual vs. family plan), geographic rating area, age (with premiums for the oldest to be no more than three times the cost of the youngest, a 3:1 ratio), tobacco use and the benefits of the plans themselves.
- The health status of enrollees, and their claims history, cannot be used to calculate or vary premiums.
- Policies are guaranteed-issue, meaning that anyone who applies must be accepted. However, such plans DO NOT have to cover pre-existing conditions and may exclude such conditions from coverage.
- Like ACA individual and small group plans, short-term plans must spend at least $0.80 of every dollar collected in premiums on health care claims. This is known as a medical loss ratio (MLR) of 80%.
"We are happy to see that these plans will now provide coverage beyond the catastrophic for things like preventive care, hospitalization and prescription drugs -- services that will actually make a difference for Coloradans who need coverage for just a short time," said Debra Judy, Policy Director at the Colorado Consumer Health Initiative. "While we are still concerned that these plans don't cover pre-existing conditions -- which highlights the need for insurers to provide clear disclosures to avoid consumer confusion -- these changes address health care that impacts people's day-to-day health."
Short-term, limited duration health benefit plans garnered more attention in the summer of 2018 when the Trump administration released new federal rules loosening restrictions on such plans. However, due to Colorado law already in place, those looser restrictions did not take effect in our state.
After a rulemaking hearing on December 3, 2018, the amended regulation was adopted by Commissioner Conway on January 16, and will become effective on April 1, 2019.
As is the standard process for new or amended regulations, this particular change was put out for informal, public comment on October 18. On November 1, it was noticed for a December 3 rule-making hearing, and the formal comment period opened with that notice. However, the comment period extended past the hearing, and closed on December 6.
Division of Insurance regulations, including regulations adopted, but not yet effective, draft regulations posted for informal public comment, and the notices for rulemaking hearings on proposed or amended regulations can be found on the DOI webpage “Statutes, Regulations and Bulletins.”
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.