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Focus on Regulation

CMS Awards Two More Loans to CO-OPs

The Center for Consumer Information and Insurance Oversight (CCIIO) within the Centers for Medicare & Medicaid Services (CMS) announced it is awarding loans to two additional Consumer Operated and Oriented Plans or “CO-OPs” on August 31, 2012. 

A CO-OP is a new type of nonprofit private health insurer that is directed by its customers, uses profits for its customers’ benefit, and is designed to offer individuals and small businesses affordable and high quality health insurance plan.  Starting on January 1, 2014, CO-OPs will be able to offer health plans through the states’ health insurance Exchanges as well as offer plans outside of the Exchanges. 

The Affordable Care Act created a program to help establish CO-OPs by making available two types of loans: “Start-Up Loans” to assist with the start-up activities associated with developing a CO-OP, and “Solvency Loans” to assist the CO-OP with meeting State reserve requirements.  Non-profit, not-for-profit and public member benefit organizations organized under state law that intend to become CO-OPs and that meet the requirements specified in federal regulations may apply for these loans.  Loan recipients must meet certain milestones outlined in their loan agreeements in order to obtain the loaned funds and must repay the loans within 5 years (for Start-Up Loans) or 15 years, with interest (for Solvency Loans). 

The CO-OP loan program received a one-time appropriation of $3.8 billion to support these loans.  On August 31, CCIIO announced two new loans

  • An award of approximately $88.5 million to Minutemen Health Inc. in Massachusetts, an organization sponsored by two hospital systems, Tufts Medical Center and Vanguard Health Systems, that plans to offer regional coverage and later expand its coverage statewide; and
  • An award of approximately $73.3 million to Community Health Alliance Mutual Health Insurance Company in Tennessee, an organization sponsored by several different business coalitions and professional services organizations that offer financial, accounting and other services to small employeres, that plans to offer coverage statewide.

Including these two loans, CCIIO has awarded to date more than $1.5 billion to 20 non-profit organizations offering coverage in 20 states.