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Life Health > Health Insurance

CO-OP enrollees may face $500,000 guaranty fund cap

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Iowa insurance regulators say they think the liquidation of a health insurer might affect an enrollee’s ability to buy new major medical coverage.

Officials at the Iowa Division of Insurance talk about their concerns in a new batch of guidance for agents and brokers. The officials wrote the guidance in response to questions about CoOportunity Health, a troubled Consumer Operated and Oriented Plan (CO-OP) that covers about 100,000 people in Iowa and Nebraska.

A state court in Iowa has put CoOportunity in rehabilitation.

Drafters of the Patient Protection and Affordable Care Act (PPACA) provided a limited amount of cash groups could use to create member-owned, nonprofit health insurers, and they also created three risk-management programs to help PPACA public exchange plans deal with unexpected spikes in claims. CoOportunity ran into problems partly because of uncertainty about when it will get cash from the PPACA programs, officials have said.

Officials have noted that the CO-OP could enter liquidation. If the CO-OP enters liquidation, guaranty funds in Iowa and Nebraska would provide up to $500,000 in protection per individual.

Officials say in a new set of answers to questions about CoOportunity that the $500,000 guaranty fund protection would apply to the contracted rates the carrier uses to pay claims to providers, not the providers’ billed charges.

The $500,000 limit does not include any amounts patients pay through cost-sharing arrangements, officials say.

“Any medical and pharmacy claims in excess of $500,000 would be the member’s responsibility,” officials say.

See also: Agent says carrier blocked him from joining CO-OP’s board

Officials also talked about what might happen to enrollees who stay with CoOportunity until after Feb. 15 — the end of the 2015 PPACA individual major medical coverage open enrollment period.

Under the new PPACA open enrollment system rules, individuals need to have a specified reason, such as a move to a new community, to buy major medical coverage during a special enrollment period (SEP) outside the open enrollment period.

See also: 5 exchange plan re-enrollment stories

If CoOportunity enters liquidation, and an enrollee sticks with the CO-OP until after the end of the open enrollment period, “policyholders may not be able to choose another carrier until the open enrollment period in the fall of 2015,” officials say, in boldface type.


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