Eligibility For Colorado State Mandated Basic And Standard Plans

I was reading an article recently about Aetna being fined by the Colorado Division of Insurance, and found one point that I felt needed clarification, as I thought it might cause some confusion for our clients and anyone else purchasing individual health insurance in Colorado.  The article mentions several violations, including this:

“Aetna Life Insurance Company also had violations for failing to offer coverage under the state mandated basic and standard plans to individuals whose coverage under a small group plan had terminated, or who were denied coverage under an individual plan.”

My concern is that this statement could lead people to believe that just because they get declined for an individual health insurance policy, that they are somehow eligible for a state mandated basic or standard plan.  This is true only if the applicant qualifies as a business group of one.  The Division of Insurance report on the Aetna violations is very clear about the issue:

“Issue H2 concerns the following violation:  Failure in some instances, to provide written notice of the availability of small group coverage to business groups of one upon denial of coverage under an individual plan.” (italics added)

To qualify as a business group of one, a person has to be self employed or a sole proprietor with no employees, and must have been in business for at least a year.  Anyone who does not meet this definition does not qualify as a business group of one, and is thus not eligible for the state mandated basic and standard plans.  All individual health insurance applications in Colorado ask a set of questions to determine if the applicant qualifies as a group of one.  If the applicant does, and is declined for the individual coverage, the insurance carrier must offer group of one coverage instead (although it will be significantly more expensive than the individual policy).  If the person does not meet the definition of a group of one, he or she will be sent a notice by the insurance carrier regarding eligibility for Cover Colorado.

Hopefully this helps to clear up any confusion surrounding the options available to people who are denied coverage for individual health insurance.

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