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30,000 people will lose health insurance next month as Colorado shuts down Friday Health Plans. Here’s what’s next.

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Friday Health Plans started in Colorado in 2015 with hopes of revolutionizing the health insurance market. Nearly a decade later, the company has imploded, leaving tens of thousands of people scrambling to find new health insurance in Colorado and beyond.

State regulators in Colorado are moving to “liquidate” the company, meaning its assets will be divided up and the business closed. As a result, all of Friday Health’s plans in Colorado will end on Aug. 31 — affecting roughly 30,000 customers here.

The company was already set to close, seeming to collapse after an over-aggressive expansion. But state regulators decided to speed up the shutdown amid growing concerns about the company’s financial health, including from doctors who were refusing to honor its health plans.

“We encourage people to act as soon as possible because if they don’t take action, they will become uninsured, which is, not great for people, obviously,” said Vincent Plymell, spokesperson for the state Division of Insurance.

What does the shutdown mean for Friday Health Plans customers in Colorado?

Friday Health was a health-insurance startup that aimed to serve the new markets created by the Affordable Care Act. Its plans were almost entirely marketed to customers who don’t get insurance through work, including self-employed people, gig workers and contractors.

With the end of those insurance plans, the company’s customers in Colorado have a chance to switch insurance plans. The state’s insurance regulators will open a “special enrollment period” for Friday Health members, allowing them to buy a new policy.

The special enrollment period opened July 17. If you want to ensure you have continuous insurance coverage, you should enroll in your new plan by Aug. 31.

Most Friday Health customers will be able to register for the special enrollment period and find new plans on the Connect for Health Colorado exchange or find coverage through their insurance broker. Plymell suggested sticking with the platform and broker that you previously used.

“We found the majority of Friday enrollees have enrolled through Connect for Health Colorado, Plymell said, “so it would just make sense to go that same route.”

However, even if you miss that Aug. 31 deadline and your insurance expires, you can still choose a new plan. The special enrollment period will remain open through Oct. 31, and after that the regular enrollment period will open.

Learn more from the state’s Division of Insurance here.

Some doctors are already refusing to accept Friday Health plans — but their customers have an option.

The demise of Friday Health is already affecting customers. A number of doctors are refusing to accept the plan, apparently concerned that they won’t be paid by the insurer.

Customers stuck in that situation still have an option. The state has also opened an “emergency special enrollment period,” effective July 17 through July 31. This will give a month-long headstart to people who are having trouble getting care through their Friday Health plan, allowing them to get new insurance by Aug. 1.

The state recommends going through a certified insurance broker and reporting a loss of coverage date of July 31.

By the way: Doctors shouldn’t actually be worried about getting paid, according to state insurance officials. Friday Health plans are covered by the state’s Guarantee Association, which provides a financial backstop even if the company’s funds are exhausted, Plymell said.

Division staffers are asking doctors and others to keep honoring Friday Health plans. But they have no regulatory authority to force doctors to fulfill their obligations, Plymell said — and it’s a “difficult question” whether anyone in state government has that power, he added.

“Trying to chase down and enforce each and every one of those contracts was just going to be a monumental job,” Plymell said. Instead, the division decided that simply offering a new enrollment period would be more effective.

“It was one of the key reasons of pulling this Band-Aid off now,” Plymell said.

Switching carriers could come with a nasty financial surprise: a new deductible.

Once customers find their new insurance policy, they may face another challenge.

Insurance plans generally require that customers pay a certain amount of money before the insurance benefits fully kick in. But by switching over midyear, Friday Health customers could see their progress reset on their deductible and out-of-pocket costs.

For example, someone who had paid $2,500 of a $3,000 deductible could be sent back to zero, putting them much further away from getting the full benefits of health insurance.

The Division of Insurance is asking insurers to allow former Friday Health customers to carry over their progress on deductibles and out-of-pocket costs. So far, only Kaiser Permanente has agreed to honor that request.

Denver Health is still making a decision, while Anthem, Cigna and Rocky Mountain Health Plans have decided not to honor Friday Health customers’ deductibles and out-of-pocket accumulations, according to the Division of Insurance. Spokespeople for those companies did not immediately respond to requests for comment.

“I can’t speak to the decision of any one company,” said Saskia Young, executive director of the Colorado Association of Health Plans, an industry group. “So many factors are involved in that kind of decision, but I can say that each of CAHP’s members recognizes how difficult the situation is and is doing what it can to ensure a smooth transition for Friday members.”

Friday Health customers will also be able to try to recover some of their lost deductibles and other costs from the corpse of the insurance company. But Plymell could not say how much money was left in the company’s assets. State insurance officials are developing a way for people to request money from the company’s assets.

What happened to Friday Health Plans?

Trouble for the company has been bubbling up since last year. Colorado placed the company under supervision about a year ago, citing concerns about its finances.

Later in the year, the company said it would pull out of New Mexico and Texas. At the time, company officials said that they had grown too fast in Texas, resulting in “increased costs of operations,” as The Alamosa Valley Courier and Becker’s Payer Issues reported.

Texas was by far the company’s largest market, exploding from just 60,000 members in 2021 to more than 300,000 in 2022, according to S&P Global Market Intelligence. The company’s growth was powered by hundreds of millions of dollars in investment capital.

Startups like Friday Health and Bright Health were trying to use investment capital to capture a greater share of the insurance market that was created by the Affordable Care Act — an ultimately unsustainable strategy that led to “irrational” prices, S&P reported.

Texas regulators ordered the company to stop operations late last year, and it pulled out of New Mexico, too, citing slow growth in that state. A spokesperson claimed at the time that Friday Health was “very strong” in its remaining five states.

Instead, the entire business unraveled over the months to come. Regulators in all seven of Friday Health’s states barred the company from selling new policies, The Atlanta Journal-Constitution reported, and began putting the company’s state-level businesses into receivership, much to over concern that the company would run out of money to pay out claims. State regulators in Colorado also put the company’s Colorado arm into receivership, putting the state in control of its assets.

By June, the company was planning to shut down, saying that it was unable to raise the “substantial” financial capital that would be needed to survive, according to Colorado regulators.

Even last month, state regulators said Friday Health had enough money to serve its remaining Colorado customers through the end of 2023. But as state regulators got more involved, they discovered that the company’s finances were too shaky to carry on.

“They hadn’t paid taxes to the feds. They hadn’t paid their fees to Connect for Health Colorado,” Plymell said. In addition, Friday Health’s national parent company announced that it would shut down earlier than expected — a move that would have left the state with a far greater administrative burden to process claims and do Friday Health’s business.

“It kind of snowballed,” Plymell said. The shutdown could also affect other insurers and their premiums, said Young of the Colorado Association of Health Plans, since they’ll be forced to take on unexpected new customers midyear.

The shutdown has drawn criticism of state regulators from Colorado’s Health Care Future, a dark-money advocacy group that has tried to stop Gov. Jared Polis’ health care reforms.

The group pointed out that the shutdown comes just months after Bright Health, another insurance startup, pulled out of the Colorado market.

“In both cases, regulators approved underpriced health plan products in hopes that artificially low premiums would fuel growth for the startup insurers and disrupt Colorado’s health system for the better. Simply put, this experiment failed,” the group wrote in a press release, arguing that the Division of Insurance was not properly policing insurance companies.

Insurance commissioner Michael Conway responded in a statement: “We have consistently pushed Friday Health Plans’ rates higher than what they requested because we were concerned about the financial strength of the company. If Colorado’s Health Care Future – or perhaps the hospitals and insurance companies that fund this special interest group – are interested in having a fact-based conversation instead of trying to score political points based on inaccurate information, my door is always open.”

Regulators are currently considering insurance plans proposed for next year.

Editor’s note: This article was updated July 18, 2023, with comment from state insurance commissioner Michael Conway.