Colorado introduces health plan fees to help fund state HIX

By Kathleen Koster  August 12, 2014  Employe Benefit Advisor

Looking to generate additional funds for Colorado’s state health insurance exchange, the board responsible for securing its financing has levied a new fee on all insurance policies issued in Colorado, including those sold off of the exchange.

The fee of $1.25 per member per month will be imposed on individual insurance stop-loss coverage and large- and small-group employer policies issued in Colorado from July 1, 2014 through June 30, 2015, an additional expense that employers in the state will need to factor in as they build their benefits package.

“I don’t think [this new fee] in and of itself will encourage employers to drop coverage. It may become part of their calculus, but it’s not a straw to break the camel’s back,” says Scott Behrens, assistant vice president of ERISA compliance services at the international benefits firm Lockton.

However, he adds, “the more fees that are charged and the greater outflow related to health plan expenses, the more the chief financial officer may question the broker’s fee.”

The Rocky Mountain state was one of 17 states and the District of Columbia that built and operate their own exchange marketplaces, while the majority of states chose to use federally created exchanges.

On a national level, the transitional reinsurance fee is in place, which will apply to all self-insured health plans and providers and is used to stabilize market premiums. This fee will continue to apply regardless of any state fees, says Behrens.

“States that have set up their own exchanges may look to this fee in Colorado and may look to replicate it if they’re coming up short with dollars to fund their exchanges,” Behrens explains.

While Colorado authorities have yet to release any official guidance on the new fee, Lockton brokers expect the fee to only apply to Colorado residents who are covered under a health insurance policy issued in Colorado. Lockton experts expect future guidance will need to address whether the fee applies to fully insured dental, vision and hospital indemnity insurance as well.