The Georgia insurance commissioner has shut down the insurance company Friday Health, which insures more than 35,000 Georgians on the Affordable Care Act marketplace exchange.
Friday Health policyholders in Georgia now must switch insurance companies by July 31 or go uninsured.
The company, stretched for cash, announced on its website this week that it would “wind down” operations in all seven states where it operates. Georgia announced Wednesday it was placing Friday Health in receivership, joining all six other Friday Health states in saying that they had to take action to protect customers because they feared the company didn’t have enough money coming in to be sure it could pay customer claims.
The company said in a statement that it was “deeply disappointed,” but that it agreed.
The ACA exchange on Thursday opened a special enrollment window for Friday policyholders in Georgia, so they can switch to a new health insurance company. The office of Georgia insurance commissioner John King said policyholders who switch by July 31 should avoid any lapse in coverage. However, for those who miss the cutoff date, their coverage will lapse but then they can still buy new health insurance on healthcare.gov up until Sept. 29.
The fact that Friday Health is winding down doesn’t mean that doctors and hospitals don’t have to respect their contracts, King’s office emphasized. The insurance still holds for now, and the covered services and negotiated prices must be honored until the end of the day July 31.
“Our office has closely monitored the Company and determined that continued operation of Friday Health Plans was not possible without putting policyholders at risk, so we are acting to protect them,” King’s office said in a news release.
Friday Health, a 2015 Colorado startup, aimed to bring startup culture to health insurance in select states. The company raised more than $300 million in venture capital, Modern Healthcare reported, citing Crunchbase data. It expanded fast, and entered the Georgia market last year, with policies starting coverage January 2022 in 20 of Georgia’s 159 counties.
Friday’s entry to Georgia was a sign of the ACA insurance industry’s robust expansion in the state generally, after years of struggle. A total of 11 health insurance companies offered policies, from old-line stalwarts like Blue Cross, to returning companies, to startups.
Friday aimed to stand out, promising unlimited free primary care visits and unlimited free mental health counseling sessions for Georgians.
But venture capitalists prefer big profits, and the ACA is built for modest profits. Provisions in the ACA law mandate that outsized profits in any given year be refunded to customers. Investors realized these limits and interest cooled, Modern Healthcare found.
Texas declared the company insolvent in March.
On March 3, Friday Health reported to the state insurance commissioner’s office it didn’t have as much of the surplus money it was supposed to have in order to safely keep paying claims. On March 8, the company was placed under administrative supervision for close monitoring.
As of this week, regulators in all states where Friday Health does business —Colorado, Georgia, Nevada, New Mexico, North Carolina, Oklahoma and Texas— barred Friday Health from taking on additional members.
KEY DATES
June 1, 2023: A Special enrollment period begins for Friday Health customers to choose new plans on the ACA marketplace exchange, healthcare.gov.
July 31, 2023: Friday Health coverage will cease being valid at the end of this day. Those who fail to choose a new insurance plan by this date will have no coverage on August 1.
September 29, 2023: The Special Enrollment Period ends. Those who have not yet chosen a new plan will have to wait until regular open enrollment in the fall to choose a new plan and for its coverage to begin in 2024.
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