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Colorado firm on PPACA compliance

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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.

Grandmothered plans

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.

Marguerite Salazar, the Colorado insurance commissioner, said in a statement that she believes Colorado consumers have now had enough time to adjust to PPACA, which she prefers to call “ACA.” “We’re now in 2015, and it’s time to complete the transition to ACA plans,” Salazar said.

An insurer should send notices about the change 180 days in advance if it’s leaving the Colorado market, and 90 days in advance if it’s staying in the market, officials said.

Consumers who lose the grandmothered coverage must take active steps to enroll in new coverage, officials said.

Officials noted that the decision on grandmothered plans has no effect on grandfathered plans. Consumers can keep grandfathered plans if insurers are willing to continue to provide the plans.

Tax season SEP

Regulators and insurers normally require consumers to sign up for major medical coverage during a designated open enrollment period, to keep consumers from using the new PPACA underwriting restrictions as a chance to pay for coverage only when they think they might be sick.

Regulators have developed a long list of reasons consumers can use to get a special enrollment period (SEP), or opportunity to apply for coverage outside the usual open enrollment. 

The recent open enrollment period started Nov. 15, 2014, and officially ended Feb. 15.

This year, in the states that use the HHS HealthCare.gov exchange enrollment system, HHS is providing a SEP to any consumers who say they first learned about the PPACA penalty to be imposed on many individuals who fail to have “minimum essential coverage” (MEC) for enough of the year. The tax season SEP is set to last from March 15 through April 30.

The open enrollment period system and the tax season SEP affect all buyers of individual coverage, inside or outside the public exchange system, not just exchange users.

Colorado has decided not to provide a tax season SEP because of a feeling that doing so would be expensive, costly for the exchange, costly for insurers, and unfair to the consumers who are already paying for coverage, officials said.