Last year I wrote about how CoverColorado is funded, including the assessment that is added to all of the health insurance policies that are regulated by the Colorado Division of Insurance (large self-insured group plans do not pay any CoverColorado fees). As the cost of healthcare continues to rise, CoverColorado – just like every other insurer – needs more and more money to cover the cost of claims. Their website shows the fees that have been assessed over the past few years, and the increased fee that will go into effect next month for 2012.
Because the CoverColorado assessment is collected by health insurance carriers and passed on to CoverColorado, the fee is added to each policy’s premium every month. The end result is that we all pay a few dollars more per month than the actual cost of our policy. This can be confusing, especially if people are new to individual health insurance and haven’t had experience with paying their own health insurance premiums in the past. The amount that is going to be drafted from your bank account or billed to you will be a few dollars higher than your stated premiums because it includes the CoverColorado assessment.
The assessment for 2012 will be roughly $3.79/month per subscriber ($45.48 per year, billed over 12 months). Rocky Mountain Health Plans released a memo earlier this fall stating that they will be collecting this amount on all of their policies next year. Anthem Blue Cross Blue Shield also released a briefing regarding the 2012 CoverColorado assessment. Per Colorado law, CoverColorado uses each insurer’s membership numbers as of January 31 to calculate the total assessment for that insurer for the following calendar year. Anthem’s Colorado business mix has changed a bit over the past year, and they also have fewer members subject to the assessment than they did in January of this year. So each member will have to pay slightly more next year in order to generate the total assessment amount due in 2012. For Anthem members, the total CoverColorado assessment will be $52.32 next year, or $4.36/month.
The variation between carriers in terms of the CoverColorado assessment does cause some confusion, and I’m hoping that an overly simplified example will help to clear it up. Say a carrier has 1000 active policies on January 31, 2011, and the CoverColorado assessment for 2012 is set at $45.48 per policy, or $3.79/month. That means that the carrier will have to give CoverColorado $45,480 in 2012 ($45.48 per policy times 1000 policies). That amount doesn’t change once it’s determined based on the member count in January. But let’s say that the carrier loses 100 members during the course of 2011 and only has 900 members subject to the assessment in 2012. They still have to come up with the same $45,480 for CoverColorado, but now the amount is spread over 900 policies instead of 1000 policies. Thus the total amount charged to each policyholder will be $50.53 ($45,480 divided by 900) or $4.21 per month.
Just to clarify, health insurance carriers in Colorado do not make or lose any money from the CoverColorado assessment program. The carriers are simply used as a conduit to get the money from the insured public and pass it through to CoverColorado.