State’s exchange has increased its fees as a way to generate more revenue
Colorado’s health insurance exchange has raised its fees. The exchange’s board of directors had been considering raising fees in order to make the exchange more sustainable and financially secure. The fees will be paid by all those that are purchasing insurance coverage through the exchange and those that already have policies from the exchange as well. The fee increase may be somewhat modest for most consumers, but could translate into much higher revenue for the exchange itself.
Fees will grow by a modest degree
Fees on policies sold through the state’s health insurance exchange had been set at 1.4% of the policy’s premium. Now, the fees are set at 3.5% of premiums. The board of directors have also increased the fee that is charged for policies being sold in the state from $1.25 to $1.80. This is a flat fee that is imposed on all health insurance policies sold through the state’s insurance exchange. The exchange accounts for some 1.2 million active policies. With the increased fees, the exchange may see a 44% increase in revenue from the flat fee alone.
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Higher revenue will help the exchange cover the costs of technology and infrastructure
The funds that are acquired through these fees are used to cover the costs associated with the health insurance exchange. This includes the costs of new technology and the infrastructure needed to allow consumers to effectively navigate the exchange itself. The exchange had been built using funding from the federal government, but this funding is not meant to be in place forever. As such, the exchange must find ways to sustain itself. Higher fees are part of that plan.
Raising fees is becoming a popular option for exchanges in smaller states
Health insurance exchanges throughout the country have been looking for ways to become more financially stable. In relatively small states, raising fees is becoming an attractive option. Larger states have found more financial success with their exchanges, largely due to the size of the population needing health insurance coverage.