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Guaranty funds start paying CoOportunity claims

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The life and health insurance guaranty associations in Iowa and Nebraska have started paying claims for CoOportunity Health enrollees.

An Iowa state court issued a final liquidation order for CoOportunity Health — one of the nonprofit, member-owned plans created by the Patient Protection and Affordable Care Act (PPACA) — earlier this month.

Last summer, before news of financial problems surfaced, CoOportunity had about 100,000 enrollees. When the court made the liquidation official, the Iowa-based insurer had only 2,619 enrollees in Iowa and 11,135 in Nebraska.

The Iowa Life & Health Insurance Guaranty Association and the Nebraska Life & Health Insurance Guaranty Association are responsible for handling about $80 million in outstanding eligible health claims, according to Nick Gerhart, the Iowa insurance commissioner.

The CoOportunity liquidation will give agents, brokers and others a chance to see how guaranty funds and regulators handle health insurer liquidations.

Some enrollees may have stayed with the CoOportunity coverage to avoid having to pay higher premiums, or to avoid having to meet the deductible at a new plan.

Gerhart, the CoOportunity liquidator, confirmed earlier warnings that the guaranty associations will cap benefits payments at $500,000 per enrollee. PPACA forbids a PPACA-compliant major medical plan from putting annual or lifetime caps on benefits payments.

The guaranty funds can also cancel individual coverage with 180 days’ notice, or sometime after August. 

The creditors of CoOportunity include health insurance agents and brokers who are owed sales commission payments.

Iowa division officials noted in the guaranty-fund-takeover announcement that what will be paid to creditors will depend on the “money recouped from the federal reinsurance, risk corridor and risk adjustment program on behalf of CoOportunity Health.”

Before Gerhart can use proceeds from the PPACA “three R’s” risk-management programs to pay general creditors, he must use the three R’s money to reimburse the guaranty funds for paying the CoOportunity enrollees’ medical bills.

See also: Guaranty group organizes session on LTCI administration