Frequently Asked Questions

  • They don’t know. Section 6 of the article lists 11 broad categories of the types of benefits that must be included and a catch-all clause allowing the Board to authorize benefits that don’t clearly fall into one of these categories. No further detail is provided. In contrast, health insurance providers today are required by law to explicitly enumerate what benefits insured members receive, allowing consumers to compare plans and select the coverage that is best for them and their family. The Board also has the sole power to limit or remove benefits.

  • They don’t know. State analysts estimate that the tax burden will be $25 billion. However, that is just an estimate based on significant assumptions that could vary widely. Proponents recognized the likelihood of this variability and empowered the Board of Trustees to ask “members” of the plan to approve tax increases, if needed. It is important to note that “members” are not the same as Colorado voters (non citizens and felons who are incarcerated or on-parole can vote as “members” of the plan, despite the fact that they are ineligible to vote in Colorado elections.)   Further, while the article allows for the Board to establish “procedures for managing surplus funding by maintaining necessary operating reserves, increasing benefits or issuing refunds to members,” it is silent on if and how the constitutionally established tax rates could be reduced, absent another constitutional change.

  • They don’t know. The assumption is that health care providers – doctors, clinics, hospitals, and nursing homes – will be able and willing to find acceptable terms with the new government-run health care system. However, that is not guaranteed. Colorado risks losing its health care workforce – or at least some of it – if the business terms offered by the government health plan aren’t feasible.  Colorado will be far less attractive to specialists who provide critical care to patients with complex cases. This is also why Children’s Hospital opposes Amendment 69, because they will be unable to attract the best and brightest physicians and researchers who are finding cures for childhood diseases.

  • They don’t know. In addition to establishing a whole new government-run health care system, this measure calls for an entirely new statewide election process for “members” of the plan to elect the all-powerful Board of Trustees and to approve annual tax increases.   There are a number of concerns:
    – While non-citizens and incarcerated or on-parole felons may not vote in the current electoral system, they are eligible to vote in Amendment 69 elections.
    – The Interim Board of Amendment 69 can create its own set of rules regulating the qualifications of candidates, campaign contributions and expenditures, and the certification of election results.
    – Amendment 69 is silent as to how the integrity and security of the elections will be protected.

  • Requirements for Participation in Elections

    Typical CO Election COCare Election
    18 years of age and older Yes Yes
    Lived in CO for 22 days immediately prior to election
    Citizen Yes No
    Not a felon incarcerated or on parole Yes No

  • They don’t know. Other than requiring that the Board of Trustees and the predecessor Interim Board comply with Colorado’s sunshine laws, there are no safeguards to ensure public input, transparency or accountability for Amendment 69 operations. This entity exists outside state government and is not accountable to the legislature or governor. A 21 person Board of Trustees, with virtually no required qualifications for serving other than age, will be entrusted with a huge amount of power and authority and will not be subject to recall.

    Take budgeting as just one example of how the Amendment 69 process could differ from typical public processes. The state budget – which is about the same size as the Amendment 69 budget – is set through a transparent public process that unfolds over five months and entails hundreds of hours of public hearings. The state budget is ultimately voted on 101 elected officials (100 state legislators and the Governor). In contrast, a 21 person Board of Trustees will set the Amendment 69 budget through an undefined process.

  • They don’t know. All companies, regardless of size, tax structure or location of corporate headquarters will be subject to the payroll tax for their Colorado workforce. National companies and labor unions will either have to exclude their Colorado employees from the health insurance benefits provided to employees/members in other states and replace those benefits with Amendment 69, thus creating a different set of benefits for employees based on location. (In this scenario, depending on the benefits that Amendment 69 offers, employers may have to consider purchasing a supplemental plan to ensure benefit parity for all employees.) Or, their other choice is to pay for private health insurance benefits for all employees/members AND pay the payroll tax on their Colorado employees, in order to offer all employees the same benefits. In the latter scenario, Amendment 69 will act as a secondary insurance benefit to Colorado employees, paying deductible and co-pays under their employer/union plan.

  • They don’t know. This new tax will disproportionately hurt businesses who have structured their businesses for tax purposes as “pass through” entities. This includes sole proprietors, partnerships, S corporations, LLCs, LLPs, many trusts, and income from farms and rental property. In fact, anyone receiving income on a Schedule K-1, rental income, or income from a farm will have to pay the full 10 percent tax on all their business profits, whether or not those profits are ever withdrawn from the business and realized to the individual. In contrast, businesses that pay corporate taxes will not be subject to this 10 percent tax on their business profits. This tax is in addition to the payroll tax that all businesses – regardless of tax structure – will pay to employees that work for them. Since most entrepreneurs, small and family businesses use pass-through entities for structuring their business activities, the Amendment 69 tax will disproportionately fall on them. In 2015, Colorado had 52,032 corporate filers and 235,733 pass-through filers (partnerships, LLCs, and S corporations).

    Illustrative Example: Jack and Jill are starting a new business and incorporate as a regular “C” corporation. Including themselves, the Corporation has ten employees with total salaries of $480,000 and makes a profit in the first year of $80,000. They re-invest the profit in additional equipment. The corporation’s total Amendment 69 tax on salaries will be 10% of the $480,000 or $48,000 (6.67%, or $32,016, will have to be paid by the Corporation and 3.33%, or $15,984, will be withheld from the employee’s wages). There is no Amendment 69 tax on the profits earned by the Corporation.

    However, if Jack and Jill start a new business and decide to establish it as a partnership rather than a corporation, they will pay more in taxes under A69. Including themselves, the Partnership has ten employees with total salaries of $480,000 and makes a profit in the first year of $80,000. They re-invest the profit in additional equipment. The Partnership’s total Amendment 69 tax on salaries will be 10% of the $480,000 or $48,000 (6.67%, or $32,016, will have to be paid by the Partnership and 3.33%, or $15,984, will be withheld from the employee’s wages). However, Jack and Jill will also have to pay 10%, or $8,000, Amendment 69 tax on the Partnership’s profits and will only have $72,000 in reinvest. In short, starting out as a pass-through entity (partnership, LLC, LLP, or S corporation) will cost Jack and Jill an additional $8,000 in Amendment 69 taxes.

  • All businesses, regardless of tax status, are subject to the 10 percent payroll tax.

  • While a portion of retirement income, Social Security, pensions, annuities and IRA income, is exempt from the new 10 percent non-payroll tax, any amount taxable in the state of Colorado will be subject to the new tax. Coloradans with retirement income of more than $24,000 could be taxed on the incremental amount above $24,000. If you are a Medicare-eligible retiree, you could be paying for health care twice, once through Medicare and again with this 10 percent tax. In that case, Amendment 69 becomes a secondary insurer to Medicare.

  • People who live in other states, but do business in and have taxable Colorado-source income are required to report taxable income generated in Colorado. These people file a non-resident Colorado tax return. These people would be subject to the new 10 percent health care tax, but would not be eligible for health care services under Amendment 69 because they do not meet the definition of “beneficiary” under Amendment 69.

    Illustrative example: AAA Architecture is a regional accounting firm established as a partnership that does business and generates revenue in Kansas, Colorado and Oklahoma. Revenue generated in all three states is shared among the partners. Those partners whose primary residence is in Kansas and Oklahoma are required to file a non-resident tax return in Colorado. Under Amendment 69, that revenue will be subject to the new 10 percent tax, even though those partners will not qualify as “beneficiaries” under the new program because their primary residence is not in Colorado.

  • They don’t know. While it appears that proponents have assumed that this tax will be treated the same as an income tax, it is unclear from the way the Amendment is drafted if that is the case. The new tax structure may be viewed by the Internal Revenue Service (IRS) and the CO Dept of Revenue as a “payroll tax” similar to federal tax withholdings under the Federal Insurance Contributions Act (FICA) or a health insurance premium tax. How IRS and CO Department of Revenue classify the tax will determine whether or not it is deductible income for federal tax purposes.

  • Under Amendment 69, all employers will be required to pay the payroll tax on all employees, which means that Amendment 69 69 shifts a portion of health care costs for all employees to the employer, not just those employees who participate in the company’s health care plan today. While this is changing due to the employer requirement in the Affordable Care Act, some employers do not offer health insurance benefits to their employees today. Other employers offer health insurance only to a portion of their workforce – e.g. full -time employees only. Other employers offer health insurance to all to their employees, but only a portion of their workforce participates in the employer’s health plan because the employees choose to get their health benefits through a spouse/partner or through the individual market.

  • The new state-run health care system, Amendment 69, will replace our existing workers compensation system.  It is not clear how Amendment 69 will address appeals by workers or employers or how the new system will be accountable to the state as the current system is now.

  • While the amendment language doesn’t specifically address personal injury protection under auto insurance, it does say: “ColoradoCare shall pay for health care services to beneficiaries regardless of the cause of their injuries or illnesses.” As such, it would seem that personal injury protection on auto insurance policies would no longer be necessary for “beneficiaries” of Amendment 69. However, it is unclear what happens in the event that a non-beneficiary (someone whose primary residence is outside of Colorado) is injured in a car accident in Colorado.

  • They don’t know. The amendment says that Amendment 69 will “establish policies and procedures to pay benefits for health care services referred to a beneficiary who is temporarily living or traveling in another state.” What those policies and procedures will be remains to be seen. It is unlikely that hospitals, doctors and health care providers outside of Colorado will be willing to accept the negotiated rates that Amendment 69 pays for services provided within the state.

  • They don’t know. The amendment is silent on how health care services for non-beneficiaries (non-residents) would be handled.  One can assume that hospitals, doctors and health care providers would bill the non-resident’s insurance company for services rendered in Colorado. As such, health care providers would need to maintain billing an entirely separate infrastructure to engage with private insurance companies, minimizing the potential administrative simplifications that advocates say will save costs over the current system.

  • They don’t know. Amendment 69 will need to stand up a massive new bureaucracy to support operations of this new health care entity. Further, it will require staffing and process to support a statewide election process to administer elections of Amendment 69 Trustees and any tax increase measures. It is safe to assume that it will require hundreds, if not thousands of employees and contracted staff.

About Us

Coloradans for Coloradans is a bi-partisan, statewide organization that represents Coloradans from every industry and corner of our state who share a commitment to moving our state forward. We promote solutions that are by Coloradans and for Coloradans that lead to a stronger state.

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