Insurance regulators in Colorado have announced two decisions in favor of tight individual major medical plan compliance with Patient Protection and Affordable Care Act (PPACA) underwriting and enrollment period periods.
The Colorado Division of Insurance, part of the state’s Department of Regulatory Agencies (DORA), says the remaining “grandmothered” major medical plans will have to shut down in 2016.
Officials have also declined to offer a broad PPACA special enrollment period (SEP) for consumers who say they learned about the PPACA individual mandate penalty system when they filed their 2014 income taxes.
PPACA imposed many new underwriting and benefits rules on individual and small-group major medical plans starting Jan. 1, 2014. The law exempts “grandfathered plans,” or plans in effect when PPACA became law, on March 23, 2010, from most PPACA rules.
Federal regulators and many state regulators originally said that plans that failed to comply with PPACA and were sold from March 23, 2010, through Dec. 31, 2013, would expire Jan. 1, 2014, to get consumers into PPACA-compliant plans.
President Obama stumped for PPACA by saying, “If you like your plan, you can keep it.” After consumers and political groups complained that killing the non-PPACA-compliant plans on Jan. 1, 2014, would violate Obama’s promise, the U.S. Department of Health and Human Services (HHS) let states keep non-grandfathered, non-PPACA-compliant plans in place after Dec. 31, 2013.
Some observers dubbed the surviving non-grandfathered, non-PPACA-compliant plans “grandmothered plans.”
Colorado now has about 190,000 people in grandmothered plans, including about 75,000 with grandmothered individual coverage and about 115,000 people in 11,000 grandmothered small-group plans.
For PPACA grandmothering purposes, Colorado now uses “small group” to refer to employers with two to 50 employees.
Many workers, employers and brokers prefer grandmothered and grandfathered plans to PPACA-compliant plans, but insurers and their actuaries argue that allowing large blocks of grandmothered coverage to persist complicates the pricing and administration of health insurance and may lead to big, hard-to-predict risk-management problems.