Colorado lawmakers are considering a bill that would prevent customers from incurring extra out-of-pocket costs if their insurer goes bankrupt in the middle of the year.
The legislation, which passed the Colorado House of Representatives 43-17, was created in response to the abrupt closure of Friday Health Plans, according to a Feb. 20 news release from the Colorado House Democrats. Colorado-based Friday Health declared bankruptcy in June 2023, leaving at least 30,000 members in the state searching for new insurance.
The proposed legislation would credit any money members spent on deductibles or out-of-pocket maximums to their new insurer if their current provider left the market mid-year.
When Friday Health collapsed, Colorado's insurance commission urged insurers to honor what Friday members had paid toward their deductibles. At least one insurer, Kaiser Permanente, said it would count what members had already paid that year.
Colorado Rep. Kyle Brown, a sponsor of the bill, said it would prevent members from having to pay their deductible twice in the event their previous insurer can no longer pay claims.
"While it's rare for health insurers to go bankrupt, we need to ensure Coloradans don't lose the money they already spent reaching their deductible," Mr. Brown said in the news release.