Welcome to my first blog!! 

My intention in this series is to bring in insurance and financial education in simple-to-understand terms.  This is not a “cut and paste” blog.  I hope you hear the voice and concern of the author and feel free to give me feedback.  I want to help you make good decisions, so give me a call or email and we can talk over the situation with no obligation to secure me as a consultant through either a transactional or fee arrangement.

Question:  What is going on in the state of Colorado with child-only health insurance prior to full implementation of health-care reform?  How does a parent or guardian deal with the child-only policy situation in the State of Colorado, and what is the law, generally speaking? 

The child’s insurance situation (if the child is on his own for health insurance) falls into 2 categories:

1. Those that have a “qualifying event”
2. Those that do not have a “qualifying event”

“Qualifying Event”:  What is a “qualifying event”?  The Colorado State legislature defines that as follows: 

• Birth, adoption, marriage, dissolution of marriage, or
• Loss of employer-sponsored insurance, loss of eligibility under the Colorado Medical Assistance Act in Parts 4, 5, and 6 of Title 25.5 of the Colorado Revised Statutes, or
• Loss of eligibility under the Children’s Basic Health Plan in Article 8 of Title 25.5 of the Colorado Revised Statues, entry of a valid court or administrative order mandating the child be covered, or involuntary loss of other existing coverage (for any reason other than fraud, misrepresentation or failure to pay premium).

 If you have one of these events, you can get immediate coverage (depending on the carrier, you may have to wait 15 days for an effective date) for your child under age 19.  However, you must apply for the insurance within 30 days after the qualifying event! 

No “Qualifying Event” 

If you don’t have one of these events, things are going to be a bit more complicated, depending on when you apply for coverage.  You can only apply during an “open enrollment” month, and there are 2 of these events each calendar year: 

• January and July, early applications are not accepted (this means you can only apply for this policy during these months)
• The effective date for the policy applied for will be 1 month after the close of the open enrollment month:  March or September.  

So, if it is September (for example), you are too late and will wait for January to apply.  For these folks, you could consider an ancillary policy that may fill in the gap while you are waiting for the next effective date. 

Side note on older strategy:  People used to have the child apply with another adult in the family, and then a parent would drop off the plan to create a De facto child-only policy.  This is no longer allowed with most carriers (this is managed on the carrier level).  If a child would be the only person left on a policy, the policy would be canceled.

Why is the state of Colorado doing this?  The state is complying with the Affordable Care Act that requires children to be issued insurance on a guaranteed-issue basis.  The state is also trying to protect the insurance companies that do business in the state:  They are afraid that families will leave their children uninsured until something happens – and then call up for their guaranteed-issue policy – per federal requirements.  The state is therefore trying to find a balance between complying with the law and protecting stakeholders.

Policy to fill in the gap if you didn’t apply for coverage in time for the open enrollment season: 

If you are caught in a situation where your child is waiting for coverage to begin, and you don’t have access to a group plan or other family options, you can get a temporary policy for the gap in the child’s coverage.  These policies do require underwriting, but generally the underwriting is just a few “knock-out” questions (the knock-out conditions vary with the carriers).  You also need to understand a couple of critical issues: 

• These policies don’t cover pre-existing conditions
• These policies don’t offer preventative care (like well-child checks)
• Many companies that sell these policies don’t offer policies to very young children (younger than 2 if they are stand-alone policies)
• You have to be careful of the list of exclusions with some of these companies 

However, they offer cheap, catastrophic coverage.  Please see the “short-term health insurance” under the “Individual & Family” menu of this web site for additional information on this topic [short-term medical link].

 Explanation and History

The new 2010 federal legislation (Affordable Care Act) required all children under 19 to be accepted for insurance regardless of their medical condition as of September the 23^rd 2010 (in other words, pre-existing conditions cannot stop a child from being covered).  As a result, all health insurance companies except for Kaiser Permanente and Rocky Mountain Health Plans left the child-only health market for individual coverage in 2010.  It should also be stressed that just because the policy is guarantee issue, does not mean the premium for the policy is zero.  If fact, these policies can experience an increase in premium of up to 400% of a standard-issue policy – depending on the child’s pre-existing conditions and the company you apply to.

So what was the big deal in 2010?  Consider this scenario:  A Mom or Dad applies for insurance along with their minor child through a major carrier.  The parent is told she is uninsurable due to a pre-existing condition, so the company will not offer the parent a policy.  Here is the rub:  they won’t offer the child a policy either because they don’t offer a child-only policy!  Here is the next rub:  the parent can apply to the state or federal high-risk pool (Cover Colorado or Getting Us Covered), but the child will not be accepted by these programs unless the child was deemed uninsurable by underwriters.  The parent’s only choice now is to go to Kaiser Permanente or Rocky Mountain Health Care.  Here is the next rub:  child-only applications are only accepted in open-enrollment periods (January and July) –and, if the January application is late, the child will not be able to apply until July 1^st.

Until legislation was altered in 2011, other carriers would not come back into the market.  They were afraid that families will leave their children uninsured until something happens – and then call up for their guaranteed-issue policy.  The 2011 legislation mandates that all companies have at least one plan to offer children with a qualified event immediately, and must offer a plan during open enrollment.  The open-enrollment season includes 2 months of waiting for an effective date to protect carriers from family’s that take on the risk of leaving their children uninsured (and leaving the carrier with the bill).

How are different carriers handling this situation?

Anthem (Blue Cross Blue Shield):  “Smart Sense” plan with a $2,500 deductible.

Assurant:  Any plan for a qualifying event, only “Core-Med” plans for open enrollment.

Cigna: $5,000 deductible “Open Access” plan.

Kaiser Permanente:  Any of their plans

Rocky Mountain Insurance Plans:  Any of their plans

There are also a couple of carriers that have cut brokers out of the process entirely.  These carriers may be appropriate for a client to use if they have a situation where the underwriting outcome may be more favorable.  The best company to use in my experience for this situation is Madison National, but Golden Rule may also be considered.  Please contact me for further evaluation of the situation (303) 682-3225.