Are You Prepared for the Short Term Plan Changes in Colorado in April?

In 2018, Colorado regulators began drafting new regulations for short-term health insurance plans. There was a hearing about the recommended rule changes in early December, and Colorado’s Insurance Commissioner approved the new regulations, which officially became law in January.

For those who may have short-term insurance plans, here are the changes that will take effect this April 2019:

Higher prices for young  adults

Under the Affordable Care Act (ACA), younger people are required to subsidize older individuals’ premiums, so that a 64-year-old is charged no more than three times as much as a 21-year-old, even though their medical costs can be seven times as high.

In Colorado, short term plans will now be treated the same way, raising costs on younger people, while potentially helping older policyholders.

ACA essential benefits are covered, as are preexisting conditions

Another change is that short-term plans will no longer go through an approval process, though they will still be able to exclude pre-existing conditions that were diagnosed, treated, or symptomatic in the past year.

An integral component of Colorado Revised Statute 10-16-102(22) involves the ACA. Starting in April, a provision requires states short-term plans to cover not only state-mandated benefits but also the ACA’s essential health benefits. As a result, short-term plans will be required to cover prescription drugs and mental health care, expenses that have not typically been covered under short-term plans.

Will these changes cause the elimination of short-term plans as an affordable option?

While these changes may sound like good news, they will increase costs and thus premiums for everyone enrolled in a short-term plan. These changes may actually destroy the short-term market because of the huge additional risks they will place on carriers offering this type of coverage.

Short-term plans are most often used by people in between jobs, or recent college graduates who have yet to obtain employment. If these new regulations cause short-term carriers to dramatically raise rates or pull out of the market, the result could be more people going without coverage at all.

How will these changes affect you?

The short-term plan rule changes will be substantial for many, and insurers might opt not to offer short-term health insurance in Colorado as a result.

If you currently have a short-term plan your rates on that plan will not be affected. If you are planning on obtaining short-term coverage in the future, your options may be more expensive, and possibly even nonexistent.

If you are affected by these changes, we encourage you to consider other alternatives, such as healthcare sharing plans. As always, if you need to discuss your current healthcare goals with a personal benefits manager, give us a call at 800-913-6381.


  Date posted: Friday, March 22nd, 2019
Category: Health Care, life insurance, Short-term medical plan

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