New Support for Consumer-driven Non-profit Health Plan in Nevada

— CMS awards loan to Hospitality Health Co-Op —

The Affordable Care Act creates a new type of nonprofit health insurer, called a Consumer Oriented and Operated Plan, or “CO-OP.”  CO-OPs are directed by their customers and designed to offer individuals and small businesses more affordable, consumer-friendly and high quality health insurance options. 

Starting January 1, 2014, CO-OPs, will be able to offer health plans through the new, competitive health care marketplaces in each state, called the Affordable Insurance Exchanges.  In addition to offering health plans through an Exchange, CO-OPs may also offer health plans outside of an Exchange.

CO-OP loans are only made to private, non-profit entities that demonstrate a high probability of financial viability. All CO-OPs receiving loans were selected by CMS on a competitive basis based on external independent review by a multi-disciplinary team. Only when CO-OPs meet or exceed developmental milestones are funds allowed to be incrementally drawn down.

The Centers for Medicare & Medicaid Services (CMS) recently awarded a loan to Hospitality Health CO-OP in Nevada to launch a new private non-profit, consumer-governed health insurance company, called a Consumer Operated and Oriented Plan (CO-OP).

Hospitality Health CO-OP
Service Area: Nevada
Award Amount: $65,925,396
Award Date: May 18, 2012

Hospitality Health CO-OP is sponsored by the Culinary Health Fund, its national parent Unite HERE Health, and the Health Services Coalition. Hospitality Health CO-OP will operate for everyone in the Exchanges and the individual and small group markets. Hospitality Health CO-OP plans to provide health insurance coverage statewide.

Created by the Affordable Care Act, the CO-OP Program encourages eligible groups to create new, innovative and consumer-responsive health insurance companies to increase competition in the individual and small business markets. 

“CO-OPs will promote competition and give consumers more health insurance choices,” said Marilyn Tavenner, CMS acting administrator.  “These new private non-profit insurers will be run by consumers and are designed to offer individuals and small businesses more affordable consumer-friendly and high quality health insurance plans.”

In addition to giving consumers more choices and improving competition in their states, as consumer-run insurers, CO-OPs will operate differently from traditional insurance companies.  More than half of the Board of Directors must be the customers or members of the CO-OP, and all directors must be elected by a majority vote of the members, improving accountability and transparency.  Under the Affordable Care Act, profits gained by a CO-OP must go directly back to their enrollees, to be used to lower premiums, expand benefits, or improve quality.

To ensure CO-OPs are truly new entities, the health care reform law prohibits any state-licensed health insurance company that existed on July 16, 2009, from qualifying for the CO-OP program.

CMS will closely monitor CO-OPs to ensure they are meeting program goals.  To ensure strong financial management, CO-OPs are required to submit quarterly financial statements, including cash flow and enrollment data, receive site visits and undergo annual external audits.  This monitoring is concurrent with the financial and operational oversight by state insurance regulators.  The CO-OPs are required to meet state and federal standards for qualified health plans to sell coverage through the Exchanges and the State’s Small Business Health Option Programs.

The CO-OP program offers low-interest loans to eligible nonprofit groups to help set up and maintain these issuers.  To date, a total of 12 non-profits offering coverage in 12 states have been awarded $982,472,104.

For more information on the CO-OP program and recent awardees, please visit For more information on CO-OPs, including what federal loans are available, who can apply and licensing requirements, please visit: