Colorado to halt health plans that don’t comply with Affordable Care Act

Health insurance plans for individuals and for small employers that do not meet Affordable Care Act requirements cannot continue into 2016, the state Division of Insurance said Friday, a move anticipated by many in the industry.

The ruling means that insurance companies will not continue offering plans that fail to comply with the Affordable Care Act, and consumers will not be able to renew these plans. The decision does not affect grandfathered plans, defined by the Affordable Care Act as plans with an effective date before March 23, 2010.

For 2016, individuals and small businesses not enrolled in grandfathered plans must enroll in Affordable Care Act compliant plans in order to receive healthcare coverage.

Almost 190,000 people will have their individual or small group plans that do not comply with the Affordable Care Act compliant discontinued by the end of 2015, based on a survey by the state of Colorado. They will have to choose a new ACA-compliant plan for 2016.

Almost 75,000 people are enrolled in non-compliant individual plans, while another nearly 115,000 people are enrolled in non-compliant small group plans, representing more than 11,000 employers.

Insurance brokers in Northern Colorado and the Boulder Valley have complained that the Affordable Care Act compliant plans cost their clients more money, though they expected the state of Colorado to discontinue non-compliant plans. Many Colorado businesses already have made the transition.

“If you look at a noncompliant ACA health plan, and try to replace that with a compliant ACA plan, those rates are anywhere from 25 to 60 percent higher,” Jim Marsh, president of Hofgard Benefits in Boulder, told Bizwest recently. “A lot of small businesses that went through an ACA-compliant plan took some pretty good hits.”

In May 2014, the Division of Insurance allowed insurance companies to continue non-compliant plans for individuals and small groups, defined as employers with two to 50 employees, through Dec. 31, 2015. The decision followed an announcement by President Obama that states could choose whether to continue plans.

At the time, Insurance Commissioner Marguerite Salazar stressed the importance of giving people more time to transition to the Affordable Care Act and its requirements. Now that preparations for 2016 health coverage are under way, Salazar plans to phase out all remaining non-Affordable Care Act plans in order to move forward, the Division of Insurance said.

“The ACA became law in 2010, Connect for Health Colorado came online in 2013, and plans that meet the requirements of the ACA began in 2014,” she said in a statement. “We’re now in 2015, and it’s time to complete the transition to ACA plans.”

The Colorado Consumer Health Initiative applauded Salazar’s decision, saying it represented a significant step toward completing Colorado’s “transition to our new health insurance market and ending market distortion.” The advocacy group explained that non-compliant insurance plans functioned under different rules, threatening to undermine transparent competition for consumers.

“It is important that health insurance policies provide the coverage and protections that Coloradans deserve and that are required by the ACA and state law,” said Adela Flores-Brennan, the advocacy group’s executive director, in a statement.

Insurance companies are supposed to notify all of their individuals and small employers who have non-compliant plans of the discontinuation, according to the Division of Insurance. These notices must contain information on available options. That includes whether the company will offer plans that meet ACA requirements, finding ACA-compliant plans offered through Connect for Health Colorado and the ability to purchase plans from other insurance companies.

The notices will be provided no later than 90 days before the policy expires, or 180 days in advance if the insurance company is leaving the Colorado market. Insurance companies cannot automatically enroll a current policyholder into a new plan from their company.

Once individuals and small employers’ current plans are discontinued, they can enroll through their broker, with an insurance company directly or through Connect for Health Colorado, which is the only way individuals can qualify for a subsidy to help with health insurance costs.

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