Last month, Colorado legislators approved Senate Bill 128, and on Friday Governor Hickenlooper signed it into law. SB128 will require all health insurance carriers in Colorado that offer individual policies for adults to also offer child-only policies during two open-enrollment periods each year.
The law stipulates that the first open enrollment period will begin “on the first of the month closest to ninety days after the effective date of this section.” The bill was signed into law on April 29, 2011. Ninety days from then would be the end of July, so it appears that the first open enrollment period will be during the month of August this year. The law then notes that in future years, the open enrollment period will be January and July each year, which was already established last fall.
Other interesting things to note about SB128…
- The law allows carriers to deny coverage for a child-only policy if the child is eligible for other creditable coverage. They specifically note that eligibility for high-risk pool coverage (like CoverColorado or GettingUsCovered) does not count, but that current coverage in a high-risk pool does. So a parent cannot transfer a child out of a high-risk pool and onto a child-only policy. But this paragraph in the bill (see the bottom of page 4) could be a sticking point for a lot of child-only applications. It’s often the case that an employer who is offering group health insurance will pay for the employee’s coverage (or at least a portion of it) but require the employee to pay the premiums for dependents. Some parents find that it’s less expensive in that situation to purchase a child-only policy for their child, and keep themselves on their employer’s policy. But presumably if the child is eligible for coverage through a parent’s employer, individual health insurance carriers would not be required to offer the child a child-only policy. As we’ve noted in the past, child-only policies represent a very small fraction of the individual health insurance market, but within the child-only market, it would seem that there are a lot of children who are also eligible for other creditable coverage (albeit more expensive coverage…). It will be interesting to see if this becomes an issue once all the carriers return to the child-only market.
- The law allows carriers to impose a surcharge (of up to 50% of the normal premiums) for up to 12 months if a child is enrolled in a child-only policy, drops the coverage for more than 63 days, and then re-enrolls in a new child-only policy. This is obviously an effort to prevent parents from buying coverage only when their children are in need of treatment. Combined with the presence of open-enrollment periods (rather than continuously available policies), hopefully adverse selection in the child-only market will be limited.
- Carriers are required to issue “at least one child-only plan“. It remains to be seen whether the carriers will opt to allow children to enroll in any of their normal individual policies, or whether they will limit parents seeking child-only coverage to one specific plan.
Hopefully SB128 will be successful at bringing back child-only coverage while still keeping things as fair as possible for both the health insurance carriers and the parents who are seeking coverage for their children.