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| Posted on: Wednesday, July 28, 2004 |
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UPDATE: As of May 26, 2004, the Board of CoverColorado in accordance with the provisions of H.B.01-1319, has determined that there will be no assessment due in May 2005. CoverColorado has successfully secured state revenue sources that eliminate the need to continue assessing insurance carriers, and in turn Employers/Plan Sponsors, for the upcoming assessment period.
CAUTION: This does not mean that there won’t be future CoverColorado fee assessments. If at any point during the year the Board determines that the revenue sources of the program are not adequate to fund the program, insurance carriers will be given twelve (12) months notice of an assessment due. Source: CoverColorado Notice 6/1/2004
ACTION: It is important for employers to be aware of this recent development, but due to the uncertainty of future assessments, current budget and premium collection practices should be maintained as is. However, employers that have been billed separately for the assessment have already had or will have the separate billings cease during this assessment suspension period. For all other employers who likely have prior assessment dues built into the current monthly premium charges, no action needs to be taken at this time.
BACKGROUND
CoverColorado was established by the Colorado state legislature in 1990 to provide individual, major-medical health insurance to Colorado residents who have been denied access to traditional health insurance because of pre-existing medical conditions. A non-profit organization, CoverColorado is currently covering over 5,000 Coloradoans.
Premiums paid by members currently cover about 74% of actual costs, with the remainder of CoverColorado’s funding coming from assessing (ie: taxing) Fully-Insured and Self-Funded employee medical plans. The assessment is based on covered (enrolled) employee count.
LEGISLATION
The State of Colorado’s, General Assembly passed a bill in 2001 (C.R.S. 10-8-530(1.5)(f)), which allows Insurance Carriers to recover these assessments from their policyholders. The law states that, “each insurer is required to recoup over a reasonable length of time a sum reasonably calculated to recoup the amount of any assessment to be paid by the insurer for CoverColorado pursuant to this subsection (1.5). Amounts recouped shall not be considered premiums for any other purpose, including the computation of gross premium tax or agent’s commission.” Further, C.R.S. section 10-16-201.5, allows a carrier to terminate coverage under certain conditions, including non-payment of the assessment fee.
THE ASSESSMENT
The current assessment is $7.45 per covered employee and is for the 8/1/03-4/30/04 period calculated on the Plan’s employee count as of 12/31/02. The next scheduled assessment as of 5/1/04 (for the period 5/1/04-4/30/05) has been calculated to be $26.37 per covered employee. A 12 month advance notice is required to be given to carriers to change the assessment rate.
One way to possibly avoid this assessment in the future, is to do business with Reinsurors who are not “admitted” (approved by the Department of Insurance) in Colorado. They, due to a technicality, cannot currently be compelled to comply, although CoverColorado is attempting to figure out how to assess those plans as well, along with plans that have no reinsurance.
Should you have any additional employee benefit questions or would like to discuss this material in detail, please don’t hesitate to call the Denman Team.
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