State law limits changes to health-insurance plans

Colorado health insurance brokers are expecting a surge in individuals and businesses going outside of the health exchange at the end of this year, but state law may discourage many from looking at short-term solutions.

“I think people are looking for plans on the private market, but I don’t think it’s necessarily changed what’s available,” said William Hendrex, an agent with CO Health Brokers in Louisville.

“There are certainly people looking for a plan that has nothing to do with Obamacare,” Hendrex said. “If you make enough money that you are not subsidized under the exchange, then you are really getting the short end of the stick.”

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The Trump Administration has taken several steps concerning health insurance that go into effect in 2019, the most significant of which was abolishing the personal mandate for carrying health insurance. The administration also opened up the market for short-term plans lasting as long as three years, and allowing Association Health Plans (AHPs) that allow small employers and individuals to collectively purchase health insurance through an “association.”

However, in Colorado the state legislature has limited short-term policies to two consecutive terms of six months. While some brokers are waiting to see if insurance companies will come out with new products, many aren’t seeing much interest in these solutions, including Ron Barnes, an agent with Health Shop in Broomfield.

Other brokers, such as Nora Cook of Sage Benefit Advisors in Fort Collins, said they are extremely reticent to write up short-term policies, unless the clients are truly using it as a short-term solution.

“A lot of the carriers don’t have short-term plans available yet,” Cook said. “But normally I don’t think that short-term plans are good for anyone.”

Association plans often have difficulties, as well. Shortly after the administration announced support of the AHPs, the Colorado’s Division of Insurance noted such plans could put “Colorado consumers at risk.”

“Such plans have a history of financial instability, especially if they do not have enough state oversight,” said a prepared statement from the division. “There is also concern that the federal government’s changes would weaken Colorado’s ability to regulate these plans and protect consumers.”

There seems to be little doubt that the administration was largely intent on undermining the Affordable Care Act by eliminating the mandate. Ironically, many of the markets for the health exchange (ACA compliant) plans have stabilized this year, including the Denver market for which rates are expected to decrease.

Cook said the plans regulated under the ACA have many more protections built in, such as covering pre-existing conditions and no limitations on coverage. She said a number of people, and business owners, look at different plans before staying in the exchange.

“I see them asking about it, but when I tell them what they are getting, and what they are paying, they usually don’t go there,” Cook said. “There is lot of protection under the ACA.”

Hendrex said with the ACA perhaps mortally wounded, there have been a number of limited liability plans thrown onto the market. While they are legitimate plans, for as little as $90 a month, they seldom cover even a brief hospital stay and some brokers aren’t worried about the long-term risks associated with these plans.

“There are a lot of unscrupulous brokers preying on people not looking at that — making these sound like magical plans,” he said. “But a lot are really garbage; they’ll pay the first dollar but not much more than that.”

However, Hendrex said some carriers have come up with limited liability plans that will cover $1 million, $3 million and even $5 million. “There are legitimate plans, if they are explained correctly,” he said.

Far more of these plans tend to pay far too little for even limited hospital stays, however.

“If you go into the hospital, some of these plans pay $500 a day, for up to five days,” Hendrex said. Who is going to get a $2,500 bill? You could be looking at hundreds of thousands of dollars.”