Department of regulatory agencies
Division of Insurance
3 ccr 702-4
Life accident and health
Proposed Regulation 4-2-22
INSURER ASSESSMENTS FOR COVERCOLORADO
Section 1	Authority
Section 2	Scope Background and Purpose
Section 3	Applicability
Section 43	Definitions
Section 54	Determination of Need for Special Fee Assessment Annual Report of Lives 
Section 65	Determination of Amount of Special Fee Assessment to Each Insurer
Section 76	Notice and Collection of the Assessed Special Fees
Section 87	Deferral of or Credit Against Special Fees
Section 98	Severability
Section 10	Enforcement
Section 911	Effective Date
Section 1012	History
Section 1	Authority
This regulation is promulgated under the authority of §§ 10-1-109 and 10-8-530(1.5), C.R.S.
Section 2	Scope Background and Purpose
CoverColorado, formerly the Colorado Uninsurable Health Insurance Plan, was created by legislation in 1990 to provide access to health insurance for those Colorado residents who are termed “high risk” because they are unable to obtain health insurance or unable to obtain health insurance except at prohibitive rates or with restrictive exclusions.  CoverColorado enrollment has increased and will continue to increase as CoverColorado becomes the state alternative mechanism for federally eligible individuals, as defined in the federal Health Insurance Portability and Accountability Act of 1996 (HIPAA).  In order to keep up with the rising medical care costs for eligible individuals, § 10-8-530(1.5), C.R.S. was enacted to permit CoverColorado to assess special fees against certain insurers in Colorado, as necessary, to pay projected administrative expenses and losses of the program.  Such special fees will be used to supplement premiums and other sources of funding, as set forth in § 10-8-530(1), C.R.S., received by the program.
The purpose of this regulation is to establish the procedures for the assessment of special fees for the CoverColorado program.
Section 3	Applicability
This regulation shall apply to insurers that are assessed special fees by CoverColorado.
Section 43	Definitions
For the purposes of this regulation, the following terms shall have the meanings set forth below:
A.	“Benefit design weighted average” means the average actuarial value of the benefits provided under all plans issued in Colorado by the insurer during the previous year, weighted by enrollment in each plan.
B.	“CoverColorado” is the Colorado program which provides health insurance for those individuals who are termed “high risk” because they are unable to obtain health insurance or are unable to obtain health insurance except at prohibitive rates or with restrictive exclusions.  The program is described in §10-8-501 et seq., C.R.S.
C.	“Eligible Individual” is either:
1.	a resident of this state who meets the eligibility requirements set forth in §10-8-513, C.R.S.; or
2.	an individual who meets the eligibility requirements for a federally eligible individual, as set forth in §10-16-105.5(1), C.R.S. §10-8-513.5, C.R.S. 
This term does not include the dependents of eligible individuals.
D.	“Group health plan” has the same meaning as set forth in §10-16-105.5(1)(a), C.R.S. 
E.	“Higher level health benefit plan design” means a health plan benefit design for which the actuarial value of the benefits is at least one hundred percent (100%) but not greater than one hundred twenty percent (120%) of the benefit design weighted average.
F.	“Insurer” is any entity that provides group or individual health benefit plans, as that phrase is defined in §10-16-102(21), C.R.S., and is subject to state insurance regulation in this state, as well as any entity, including a property and casualty insurance company, that, directly or indirectly, provides stop loss or excess loss insurance to a self-insured group health plan.  The phrase “health benefit plans,” as used in this paragraph, shall have the same meaning as set forth in §10-16-102(21), C.R.S.
G.	“Lower level health benefit plan design” means a health benefit plan design for which the actuarial value of the benefits is at least eighty-five percent (85%) but not greater than ninety-nine percent (99%) of the benefit design weighted average. 
H.	“Total funding for the program” means the amount needed in a given calendar year to fund projected claims, administrative expenses, reserves for claims incurred but not reported, and amounts need to ensure that CoverColorado maintains a surplus equal to five percent (5%) of the projected annual claims of the program. 
I.	“Unexpected growth” means an increase in program enrollment or claims expenses in a calendar year of more than one hundred fifteen percent (115%) of the amount of the projected growth in program enrollment or claims expenses of that calendar year. 
Section 54	Determination of Need for Special Fee Assessment Annual Report of Lives
A.	CoverColorado shall, as frequently as shall be deemed necessary by the CoverColorado board, project (i) the cash balance of the CoverColorado cash fund; (ii) the balance of any funds held or invested by the CoverColorado board or the administering carrier; (iii) interest earned on the CoverColorado funds; (iv) premiums received from the enrolled eligible individuals; (v) revenue from the other sources listed in §10-8-530(1), C.R.S.; (vi) payment for claims incurred by enrolled eligible individuals; (vii) a reserve for claims incurred but not reported for enrolled eligible individuals; (viii)  administrative expenses for enrolled eligible individuals; (ix) interest on moneys borrowed to defray the claim costs incurred by enrolled eligible individuals; and (x) a surplus amount equal to ten percent (10%) of projected incurred claims for enrolled eligible individuals.  The projections shall not include any costs related to any dependent coverage offered by CoverColorado.
On March 1 of each year, each insurer shall report to CoverColorado, on the prescribed form, (i) the total number of employees and retired employees or individual policyholders or subscribers enrolled in all, of its health benefit plans offered in this state and (ii) the number of employees/retired employees for whom a premium is paid and coverage is provided under an excess loss, stop loss or reinsurance policy issued by such insurer to an employer or group health plan in this state as of January 1 of that year, beginning in 2009. 
B.	To the extent that the projected operating revenues, cash balance and funds then currently held or invested by the program will be adequate to provide for projected claims, administrative expenses and the IBNR reserve and surplus, no assessment shall be made to insurers.
The Annual Report of Lives shall not include any employees, retired employees or individual policyholders or subscribers who receive health benefits through Medicare, Medicaid, the Children’s Basic Health Plan (pursuant to article 8 of title 25.5, C.R.S.), or the Federal Employees Health Benefit Plan. 
C.	To the extent that the projected operating revenues, cash balance and funds then currently held or invested by the program are not adequate, the projected deficiency amount shall be the basis for the determination of a per capita assessment of special fees.
Insurers providing stop loss, excess loss or reinsurance are permitted to exclude from their Annual Report of Lives those employees/retired employees or individual policyholders/subscribers who have been counted by the primary carrier or primary reinsurer. 
D.	The CoverColorado board shall obtain no less than two actuarial evaluations (obtained from qualified actuaries as defined in Division of Insurance Regulation 1-1-1) before undertaking the first assessment and before undertaking any increase in the amount of the assessment in any subsequent year.
Section 65	Determination of Amount of Special Fee Assessment to Each Insurer

A.	Commencing on January 15, 2002 and every March 1 thereafter, each insurer shall report to CoverColorado, on the form prescribed, (i) the total number of employees and retired employees or individual policyholders or subscribers enrolled in all of its health benefit plans offered in this state and/or (ii) the number of employees/retired employees for whom a premium is paid and coverage is provided under an excess loss, stop loss or reinsurance policy issued by such insurer to an employer or group health plan in this state, as of December 31 of the previous year. The totals to be reported shall not include those employees, retired employees or individual policyholders or subscribers who receive health benefits through Medicare, Medicaid or the Children’s Basic Health Plan (pursuant to article 19 of title 26, C.R.S.).  CoverColorado shall allow those insurers providing stop loss, excess loss or reinsurance to exclude from their counts those employees/retired employees or individual policyholders/subscribers who have been counted by the primary carrier or the primary reinsurer.
For calendar year 2009 and thereafter, CoverColorado shall, on an annual basis and by August 1 of the preceding calendar year, determine the amount of special fees needed to pay twenty-five (25%) of the total funding for the program (e.g. the total amount of special fees needed for calendar year 2009 will be determined by August 1, 2008).  The total funding for the program for any calendar year shall be determined by the board based on the incurred claims and administrative expenses of the program in the immediately preceding calendar year, the expected annual program growth, existing cash balances and interest earned thereon, and other actuarial considerations of the program.  The projections shall not include any costs related to any dependent coverage offered by CoverColorado. 
B.	The projected deficiency, if any, determined amount of special fees needed by CoverColorado in accordance with pursuant to Section 4.C 6.A.above shall be assessed in an equitable manner upon insurers, as follows:
1.	The projected deficiency amount of special fees shall be divided by the total number of employees, retired employees and individual policyholders or subscribers reported by all insurers, to arrive at a per capita amount.
2.	The special fee assessed to each insurer shall be equal to the number of employees and retired employees or individual policyholders or subscribers reported by that insurer, in the calendar year in which the assessment is due and owing, month of March immediately preceding the calendar year in which the special fees will be paid multiplied by the per capita amount (e.g. the Report of Lives submitted by an insurer in March 2008 will be used to calculate the special fees to be paid in calendar year 2009). 
C.	In no event shall CoverColorado increase the amount of special fees to be collected from insurers in any calendar year because of unexpected growth during that calendar year.  If CoverColorado’s incurred administrative expenses or losses exceed the amounts collected through special fees and other sources in any calendar year, the amount needed to pay for such excess expenses and losses shall be requested from the Colorado Unclaimed Property Trust Fund in accordance with § 10-8-530(1)(d), C.R.S. 
Section 76	Notice and Collection of the Assessed Special Fees
A.	Special fees may be assessed as needed by CoverColorado, but in no event more than twice in any calendar year in accordance with this section.  As actual claim and administrative expense information is obtained, it will be incorporated into the succeeding projection. 
B.A	Insurers Each insurer shall receive written notice of the first per capita assessment, as determined in Section 5.B.1 above, if any, on February 1, 2002 and as needed thereafter, subject to section 6.A above special fee to be paid by such insurer in a calendar year no later than September 1 of the preceding calendar year (e.g. an insurer will receive notice of the special fees owing in calendar year 2009 no later than September 1, 2008).  Each notice of an actual assessment, whether on February 1, 2002 or thereafter, a special fee shall include (i) the per capita amount, determined as in Section 6.B.1 above; (ii) a calculation of the assessment special fee due and owing (based on the per capita amount multiplied by the number of employees and retired employees of individual policyholders or subscribers reported in the month of March immediately preceding issuance of the notice); and (iii) a summary of the projections and underlying assumptions which support the need for the assessment special fee in general and the per capita amount in particular. 
C.B	Insurers Each insurer shall pay each assessment of the special fees to CoverColorado on the first day of the month thirteen (13) months after issuance of the notice of assessment (“the Due Date”) (e.g., the assessment noticed on August 1, 2002 will be due and payable on August 1, 2003).  No later than ninety (90) days before a noticed assessment is due, CoverColorado shall send a general reminder of the assessment Due Date to all insurers in two installments, with the first installment due on July 1 and the second installment due on December 1 of each calendar year.   
D.C	CoverColorado, or its designated agent, shall collect all assessed special fees and deposit the fees into the accounts specifically maintained by the CoverColorado board for this purpose.  Any amounts not immediately needed to pay the expenses and losses for eligible individuals shall be invested by the board in accordance with the investment guidelines adopted by the board and filed with the Division of Insurance as part of CoverColorado’s plan of operations. 
E.D	If the special fees collected in any calendar year exceed the amount actually needed, the excess shall be invested by the board in accordance with the investment guidelines adopted by the board and filed with the Division of Insurance as a part of CoverColorado’s plan of operations and shall, in accordance with Section 4.A.6.A above, be included as funds held by CoverColorado when the next projections are made.  Notwithstanding the foregoing, any insurer who has received a deferred status, pursuant to Section 7.A. below, at the time fees are assessed may be entitled to a deferral of the fees, at the discretion of the commissioner.
F.E	In the event that any insurer fails to pay its special fee as assessed by CoverColorado, CoverColorado shall send one notice of nonpayment thirty (30) days after the Due Date July 1 or December 1.  If CoverColorado has not received payment of all amounts due from an insurer within thirty (30) days after the date of the notice of nonpayment, CoverColorado shall report same to the commissioner. 
G.F	An insurer receiving a certificate of authority to do business in the State of Colorado market on or after the date of issuance by CoverColorado of a notice of assessment special fee assessment notice shall receive notice of the assessment special fee at the time of licensure and shall be liable for any assessment(s) a prorated amount of the special fee due and owing in the calendar year of licensure. following the year in which the certificate of authority was granted, and thereafter Thereafter, a new insurer shall be liable for the special fee in the normal course of the assessment process.  Such new insurer shall not be liable for any assessment due an owing in the calendar year in which the certificate of authority is granted. 
H.G	Any insurer withdrawing from the Colorado market after a special fee assessment notice has been issued shall only be liable for any a prorated amount of the assessment owing in the that calendar year of withdrawal and shall not be liable for any assessment owing thereafter.  The date of withdrawal shall be the date on which the last contract or policy of the insurer in Colorado expires, is terminated by the insurer in accordance with Colorado insurance laws or is voluntarily terminated by the policyholder/subscriber, whichever is sooner.  Any insurer discontinuing a type of health coverage (e.g. small group coverage) in the Colorado market shall be liable in the calendar year of discontinuation for any a prorated amount of the assessment due an owing in that calendar year, and the amount of assessment due and owing shall be calculated pursuant to section 6.B., regardless of any reduction in the number of employees and retired employees or individual policyholders or subscribers in that calendar year by reason of the discontinuation. 
Section 87	Deferral of or Credit Against Special Fees
A.	Any insurer that believes that the payment of special fees would endanger its financial ability to fulfill its contractual obligations to its insureds may submit, no later than one hundred twenty (120) days before an assessment is due and owing (i.e., 120 days before the Due Date) October 1 of the year preceding the calendar year for which payment is due, a written request for deferral of its the payment of its assessed special fees to the commissioner, with a copy sent to CoverColorado.  The written request for deferral shall be accompanied by certified copies of statutory annual and quarterly statements and any other documents necessary to demonstrate the claimed adverse financial position.  Based on the Division of Insurance’s risk-based capital guidelines, the commissioner may defer, in whole or in part, payment of the special fees owing on the Due Date in the for the coming the calendar year in which the request is made. The commissioner’s determination regarding deferral shall be made no later than November 1 (e.g.within sixty (60) thirty (30) days of receipt of a written request for deferral), with written notice of the determination sent to CoverColorado.  The insurer receiving the deferment shall remain liable to CoverColorado for the deferred amount, and the deferred amount shall be incrementally reassessed to the insurer over such period as is deemed reasonable by CoverColorado, in consultation with the commissioner and the insurer, but in no event longer than three (3) years. 
B.	In the event a special fee assessed against an insurer is deferred, in whole or in part, the amount by which the special fee is deferred may be assessed against the other insurers in a manner consistent with the basis for assessments set forth in Section 6 5 above ( the resulting additional special fees shall be called “excess special fees”).  Written notice of excess special fees shall be sent to all insurers no later than sixty (60) days prior to the Due Date January 1 of the calendar year of payment.  Such excess special fees amount shall be included by the insurer in its July 1 payment of previously assessed special fees to CoverColorado on the Due Date.  As the deferred assessment is repaid in subsequent assessments by the deferring insurer, as provided in subsection 7 8.A above, each insurer that paid such excess special fees shall receive a pro rata credit for its share of previously paid excess special fees. 
C.	An insurer shall be entitled to a credit, in the amount set forth in 7 8.D below, against special fees assessed (exclusive of excess special fees) if it meets any of the following criteria and has enrolled the required number of individuals in the health benefit plans described during the previous twelve-month period:
1.	Any insurer that voluntarily and actively markets and offers, continuously over the twelve-month period preceding the calendar year in which an a special fee assessment is due and owing, two different individual health benefit plans to an applicant who has a medical condition on the presumptive conditions list maintained by the CoverColorado board, with the premium for such plans no higher than 125% of the rate charged for a similarly situated (considering age and geographic location) but medically acceptable applicant.  The two different plans shall be either:
a.	The two plans that are generally available and actively marketed to the public and are the plans with the largest and next to largest premium volume of all individual health benefit plans offered by the insurer in this state; or
b.	A lower level health benefit plan design and a higher level benefit plan design, both of which include benefits similar to other individual health benefit plans offered in the state.
2.	Any insurer that voluntarily and actively offers, continuously over the twelve-month period preceding the calendar year in which an a special fee assessment is due and owing, two different small group health benefit plans to an applicant who is a business group of one under all of the following conditions:  (i) outside of the open enrollment periods established by §10-16-105(7.3)(i), C.R.S.; and (ii) without regard to the health status of the applicant or any dependents.  The two different plans shall meet either of the criteria set forth in Paragraphs 7 8.C.1(a) and (b) above, except that the two plans are those offered by the insurer to small groups, including business groups of one, in Colorado.
3.	Any insurer that voluntarily and actively offers, continuously over the twelve-month period preceding the calendar year in which an a special fee assessment is due and owing, two different individual conversion health benefit plans to an applicant, (i) without regard to the health status of the applicant; and (ii) at a premium rate that is 10% or more below the CoverColorado rate for a similarly situated individual (considering age, sex, smoking status and geographic location).  The two different plans shall meet one of the criteria set forth in Paragraphs 7 8.C.1(a) and (b) above. 
D.	Under any of the criteria in Paragraphs 7 8C.1, 7 8.C.2 or 7 8.C.3 above, the insurer shall be entitled to a credit against any special fee assessment due and owing in a calendar year equal to three percent (3%) for enrolling the following number of individuals in the above-described plans during the preceding twelve-month period:
1.	If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado (pursuant to Section 5.A above) is 25,000 or less, 25 individuals;
2.	If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado is more than 25, 000, but less than 75,000, 50 individuals; or
3.	If the number of employees/retired employees or individual policyholders/subscribers reported by an insurer on its annual report to CoverColorado is 75,000 or more, 100 individuals. 
E.	Any insurer that believes that it is entitled to a credit shall submit a written request for credit, along with supporting documentation satisfactory to the commissioner, of compliance with Paragraph 7 8.C.1, 7 8C.2 or 7 8.C.3 above no later than March 1 of the calendar year in which any assessment is due and owing.
F.	The commissioner shall make a determination regarding a credit within sixty (60) days of submission of a written request.  All credits will be reported by the commissioner to CoverColorado.
Section 98	Severability
If any provision of this regulation or the application of it to any person or circumstance is for any reason held to be invalid, the remainder of this regulation shall not be affected.
Section 10	Enforcement
Noncompliance with the Regulation may result, after proper notice and hearing, in the suspension or revocation of the certificate of authority to transact insurance business in this state of any insurer which fails to pay a special fee assessment.  
Section 911	Effective Date
This Amended Regulation shall become effective on July 1, 2002September 1, 2008.
Section 1012	History
New regulation effective on January 1, 2002.
Amended, effective July 1, 2002
Amended, effective September 1, 2008.