Colorado wisely planning to offer SEP for Short-Term Plan Refugees

Back in January I reported that the state of Colorado is joining several other states in cracking down on non-ACA compliant so-called "Short-Term, Limited Duration" healthcare policies. As of April 1st, STLDs:

  • Can last no longer than 6 months/year (still longer than the 3-mo limit under Obama)
  • Have to stick to the ACA's 3:1 age band limit on premiums
  • Must be guaranteed issue (no more medical underwriting)
  • They can still exclude coverage of pre-existing conditions, but there's a limit of 12 months on the lookback timeframe
  • Must cover all 10 of the ACA's Essential Health Benefits
  • Must follow other ACA community rating requirements (limiting variances to age, tobacco use and geographic area)
  • A minimum Medical Loss Ratio of 80% to match the ACA's MLR (currently CO only requires a 60% MLF)

In other words, Colorado just made STLDs follow most of the same rules as ACA-compliant policies.

This, of course, will also make them far less attractive to carriers looking to foist dirt-cheap junk plans on people. While I applaud this move, it will cause one other problem...what happens to the people currently enrolled in STLDs once they terminate later this year? If it ends before the end of December, they'll be out of luck under the standard ACA Open Enrollment Period rules.

Fortunately, thanks to some foreward thinking and the fact that Colorado runs their own full ACA exchange, they're on it. Today, I noted this tidbit in an update from the Connect for Health Colorado ACA exchange:

In other news, the Colorado Division of Insurance (DOI) is seeking comments on a proposed draft amended regulation about enrollment periods relating to individuals and group health benefit plans. The regulation is being amended to allow a Special Enrollment Period for individuals who purchased a short-term limited-duration policy but then experience an involuntary loss of coverage at the end of the term of policy, with no ability to purchase another short-term policy, due to the short-term policy carrier ceasing its sales of all short-term policies in Colorado.

The DOI is requesting comments by 5 p.m. on Tuesday, April 9.

From the wording of the proposed change, it sounds like STLD refugees would be eligible for the same 60-day Special Enrollment Period which is allowed for by other qualifying life events, like getting married, giving birth, losing your current ACA-compliant coverage and so on. The exact wording also makes it sound (wisely) like this is a one-time would only apply in cases where the STLD carrier completely stopping offering STLDs in the state.