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Section 1332 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) provides states with the option to waive specified requirements of the ACA. In the absence of these requirements, a state is to implement its own plan to provide health insurance coverage to state residents that meets the ACA's terms.
Under a state innovation waiver, a state can apply to waive ACA requirements related to qualified health plans, health insurance exchanges, premium tax credits, cost-sharing subsidies, the individual mandate, and the employer mandate. The state can apply to waive any or all of these requirements, in part or in their entirety.
To obtain approval for a waiver application, a state must show that the plan it will implement in the absence of the waived provision(s) meets certain requirements. Under current guidance, the state's plan must provide coverage to as many state residents as would be covered absent the waiver and must make available to a comparable number of residents coverage that is both as affordable and as comprehensive as would beensure that a comparable number of state residents have health insurance coverage under the plan as would have had coverage absent the waiver. It also must provide a comparable number of residents with the opportunity to purchase coverage that is as affordable and comprehensive as would have been available absent the waiver. However, applications do not need to demonstrate that the affordable and comprehensive coverage will be purchased by a comparable number of state residents. Additionallycomparable number of residents would be enrolled in the affordable and comprehensive coverage, as would have been required under previous guidance. Finally, the state's plan cannot increase the federal deficit.
The Secretary of the Department of Health and Human Services (HHS) and the Secretary of the Treasury share responsibility for reviewing state innovation waiver applications and deciding whether to approve applications. The earliest a state innovation waiver could have gone into effect was January 1, 2017.
In October 2018, the Centers for Medicare & Medicaid Services (CMS) released updated guidance regarding the state innovation waiver process that superseded previously issued CMS guidance from December 2015. In general, the updated guidance attempts to make it easier for a state plan to be approved. The updated guidance applies to all waiver applications that had not been approved prior to the date of the guidance's release. Waivers approved under the previously issued guidance did not require reconsideration.
As of the date of this report, eight13 states—Alaska, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Montana, New Jersey, OregonNorth Dakota, Oregon, Rhode Island, and Wisconsin—have approved state innovation waivers. AllEight of these waivers were considered and approved under the initial state innovation waiver guidance, and all but one of the five were considered and approved under the current state innovation waiver guidance. Twelve of the 13 approved waivers implement a variant of a statewide individual market reinsurance program.
Idaho, Massachusetts, Ohio, and Vermont have submitted applications and received notification that their applications were incomplete. It does not appear that any of these states has modified its application in response to the notification (as of the date of this report). If these states take action, any further review of their waiver application would be under the updated state innovation waiver guidance. Three states—California, Iowa, and Oklahoma—submitted waiver applications and have since withdrawn their applications.
Section 1332 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) allows states to apply for waivers of specified provisions of the ACA. Under a state innovation waiver, a state is expected to implement a plan (in place of the waived provisions) that meets certain minimum requirements. The Centers for Medicare & Medicaid Services' (CMS's) initial interpretation of these requirements was published in guidance released in 2015 but has since been superseded, as with other aspects of the waiver process, in updated guidance released by the agency on October 24, 2018.1
Under current guidance, the state's plan must provide health insurance coverage to as many state residents as would be covered absent the waiver and must make available to a comparable number of residents coverage that is both as affordable and as comprehensive as it would beensure that a comparable number of state residents have health insurance coverage under the plan as would have had coverage absent the waiver. It also must provide a comparable number of residents with the opportunity to purchase coverage that is as affordable and comprehensive as would have been available absent the waiver. However, applications do not need to demonstrate that the affordable and comprehensive health insurance coverage will be purchased by a comparable number of state residents. Additionallycomparable number of residents would be enrolled in the affordable and comprehensive coverage, as would have been required under previous guidance. Finally, the state's plan cannot increase the federal deficit.
This report answers frequently asked questions about how states can use and apply for state innovation waivers. It also addresses recent changes to the Section 1332 waiver process, as made by the 2018 CMS guidance.
A state may apply to waive any or all of the ACA provisions listed below for plan years beginning on or after January 1, 2017.2
Each part noted above is comprised of many provisions, which makes the scope of the provisions that can be waived under a state innovation waiver quite broad. For example, Part I of Subtitle D of the ACA includes provisions that outline requirements for health plans to be certified as QHPs. It defines the essential health benefits (EHB) package that each QHP must offer, places limitations on the enrollee cost sharing that QHPs may impose, and requires that QHPs provide coverage meeting a minimum level of actuarial value.7 Additionally, Part I of Subtitle D establishes requirements for catastrophic health plans and determines eligibility for such plans.
The Secretary of the Department of Health and Human Services (HHS) is to review and grant waiver requests for provisions not included in the IRC; the Secretary of the Treasury is to review and grant requests to waive provisions in the IRC (the availability of premium tax credits and the application of the employer and individual mandates).8
The Secretary of HHS or the Treasury is to assess a waiver application to determine whether the state's plan meets the requirements related to coverage, affordability, comprehensiveness, and federal-deficit neutrality outlined in statute and further described in guidance.9 These requirements are described in Table 1. The Secretary or Secretaries (as appropriate) may grant a request for a state innovation waiver if a state's application meets the requirements. In making this determination, the Secretaries will "consider favorably" any waiver that incorporates some or all of the following principles: provide increased access to affordable private market coverage, encourage sustainable spending growth, foster state innovation, support and empower those in need, and promote consumer-driven health care.10
In guidance, HHS and the Treasury note that their assessment of a state's waiver application considers changes to the state's health care system that are contingent only upon approval of the waiver.11 Their assessment does not consider policy changes that are dependent on further state action or other federal determinations. For example, the Secretary's or Secretaries' (as appropriate) assessment of a state innovation waiver application would not consider changes to Medicaid or the state Children's Health Insurance Program (CHIP) that require approval outside of the state innovation waiver process, and savings accrued as a result of changes to Medicaid or CHIP would not be considered when determining whether the state innovation waiver meets the deficit-neutrality requirement. HHS and the Treasury indicate that this is the case regardless of whether a state's application for a state innovation waiver is submitted alone or in coordination with another waiver application. (For more information about the coordinated waiver process, see "May States Submit State Innovation Waiver Applications in Coordination with Other Federal Waiver Applications?")
Table 1. Requirements for a Successful State Innovation Waiver Application
(as described in statute and guidance)
|
Statute |
Current Guidance |
Previous Guidance |
|
Coverage: The state's plan must provide coverage to at least a comparable number of individuals as the provisions of Title I of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) would provide. |
At least In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, will be considered. Whether the plan sufficiently prevents gaps in or discontinuations of coverage also will be considered. |
At least as many individuals who In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, will be considered and the plan's effects on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.c A state plan that satisfied this requirement in the aggregate but reduced coverage for vulnerable populations would not be approved. Whether the plan sufficiently prevents gaps in or discontinuations of coverage also will be considered. |
|
Affordability: The state's plan must provide coverage and cost-sharing protections that are at least as affordable as the provisions of Title I of the ACA. |
Affordability is generally measured by comparing the sum of an individual's premium contributions and cost-sharing responsibilities for a health plan or direct payments for health care to the individual's income. In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, and the plan's effects on all groups of individuals in the state, including low-income residents and those with high expected health care costs, will be considered. In assessing the plan, access to affordable coverage will be considered according to the number of individuals for whom available coverage has become more affordable and the magnitude of such changes. |
In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, will be considered, and the plan's effects on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.c A state plan that satisfied this requirement in the aggregate but reduced affordability for vulnerable populations would not be approved. In assessing the plan, the affordability of coverage on average will be considered, and how the plan affects the number of individuals who have large heath care spending burdens relative to their incomes will be examined. |
|
Comprehensiveness: The state's plan must provide coverage that is at least as comprehensive as the essential health benefits (EHB),e as certified by the Office of the Actuary of the Centers for Medicare & Medicaid Services (CMS). |
Comprehensiveness is measured by comparing coverage under the plan to coverage under the state's EHB benchmark plan, any other state's benchmark plan chosen by the state, or any benchmark plan chosen by the state that could potentially become its EHB benchmark plan. In considering whether this requirement is met, the proposal's impact on all state residents, regardless of coverage type, will be considered. |
In considering whether this requirement is met, the proposal's impact on all state residents, regardless of coverage type, will be considered, and the effects of the proposal on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.c A state plan that satisfied this requirement in the aggregate but reduced comprehensiveness for vulnerable populations would not be approved. |
|
Deficit Neutral: The state's plan must not increase the federal deficit. |
Projected federal spending net of federal revenues must be equal to or lower than it would be absent the waiver. The state's plan must not increase the federal deficit over the period of the waiver or in total over the 10-year budget plan submitted by the state as part of its application. |
Projected federal spending net of federal revenues must be equal to or lower than it would be absent the waiver. The state's plan must not increase the federal deficit over the period of the waiver or in total over the 10-year budget plan submitted by the state as part of its application. |
Source: Congressional Research Service's compilation and summary of statute (42 U.S.C. §18052(b)(1)) and guidance (80 Federal Register 78131, December 16, 2015, and 83 Federal Register 53575, October 24, 2018). The requirements are not covered in regulations.
Notes: Previous guidance applies to all waivers approved prior to October 24, 2018. The Secretary of the Department of Health and Human Services (HHS) is to review requests to waive provisions not included in the Internal Revenue Code (IRC); the Secretary of the Treasury is to review requests to waive provisions in the IRC (the availability of premium tax credits and the application of the employer and individual mandates).
a. Health care coverage includes all types of coverage that would qualify as MEC in the tax code (26 U.S.C. §5000A(f)) or would be included in the definition of the term in regulations (45 C.F.R. §144.103). MEC is defined in the tax code (26 U.S.C. §5000A(f)) and includes most types of comprehensive coverage, including public coverage, such as coverage under programs sponsored by the federal government (e.g., Medicaid, Medicare), as well as private insurance (e.g., employer-sponsored insurance, non-group coverage). Health insurance coverage is defined in regulations (45 C.F.R. §144.103) to include group health insurance coverage (e.g., employer-sponsored insurance, association health plans), individual health insurance coverage, and short-term, limited-duration insurance.
b. MEC is defined in the tax code (26 U.S.C. §5000A(f)) and includes most types of comprehensive coverage, including public coverage, such as coverage under programs sponsored by the federal government (e.g., Medicaid, Medicare), as well as private insurance (e.g., employer-sponsored insurance, non-group coverage).
c. Vulnerable individuals include "low-income individuals, elderly individuals, and those with serious health issues or who have a greater risk of developing serious health issues" (80 Federal Register 78131, December 16, 2015, p. 78132).
d. The affordability and comprehensiveness guardrails are considered in conjunction and not in isolation (i.e., a state plan must make coverage that is both comprehensive and affordable available to a comparable number of individuals).
e. Under the ACA, certain health plans must cover the EHB. The ACA does not explicitly define the EHB; rather, it lists 10 broad categories from which benefits and services must be included and requires the Secretary of HHS to further define the EHB. For information about the 10 categories as well as how the EHB are currently defined, see CRS In Focus IF10287, The Essential Health Benefits (EHB).
f. The state innovation waivers cannot extend longer than five years unless a state requests continuation and such request is not denied by the appropriate Secretary. Statute requires that an application for a waiver include a 10-year budget plan that is budget neutral for the federal government (42 U.S.C. §18052(a)(1)(B)(ii)). This determination takes into account costs associated with changes to federal administrative processes.
g. This determination takes into account costs associated with changes to federal administrative processes.
Although not possible initially, HHS and the Treasury indicated in the updated guidance released in October 2018 that technical enhancements have made it feasible for CMS to support some federally facilitated health insurance exchange (FFE) variation.12 For example, waivers that would require a state to create its own website to replace the consumer-facing aspects of HealthCare.gov also can incorporate CMS's enrollment functionalities (e.g., account creation, application, enrollment and coverage maintenance experience for consumers). States are asked to work with HHS early in the waiver application process to determine whether specific modifications can be accommodated.
States are responsible for funding all FFE modifications and associated operational support. Therefore, these costs are not consideredAny changes to CMS administrative processes are taken into account when determining whether a waiver application satisfies the deficit neutrality requirement; however, any other changes to CMS administrative processes are taken into account.
In guidance issued in October 2018, HHS and the Treasury describedescribed some federal operational considerations that may limit the scope of the waivers.1314 Specifically, the Internal Revenue Service (IRS) generally is not able to accommodate any state-specific changes to tax rules. The
However, the IRS may be able to accommodate small changes to the administration of federal tax provisions, in particular when such changes overlap with the IRS's current capabilities.15 For example, waivers that would require the IRS to expand premium tax credit eligibility to individuals with household income under 100% of the federal poverty level may be feasible, because it incorporates a similar special rule that the IRS currently administers.14
States are responsible for funding all changes to IRS administrative processes associated with wavier implementation. These costs are incorporated into the assessment of whether a waiver application satisfies the deficit neutrality requirement.
A state seeking a state innovation waiver must enact a law that allows the state to carry out the actions under the waiver prior to submitting an application for a waiver.1517 In certain circumstances, a state can be considered to have enacted such a law by coupling a state law that enforces ACA provisions and/or the state plan with administrative or executive actions.1618 Prior to submitting an application, a state must provide a public notice and comment period and conduct public hearings regarding the state's application.1719 Upon conclusion of these activities, a state may submit its application to the Secretary of HHS. The Secretary of HHS is to transmit any application seeking to waive requirements in the IRC to the Secretary of the Treasury for review.
The Secretary or Secretaries (as appropriate) are to review a state's application to determine whether it is complete. A state's application is not considered complete unless it includes the materials identified in regulations.1820 The materials include, but are not limited to, information about the enacted state legislation allowing the state to carry out the actions under the waiver, a description of the plan or program the state expects to implement in place of the waived provisions, and analyses showing that the state's plan or program meets the requirements for granting a waiver. If a state's application is not complete, the state is to be notified about the missing elements and given an opportunity to submit them. Once the Secretary or Secretaries (as appropriate) make a preliminary determination that a state's application is complete, the entire application is to be made available to the public for review and comment.1921
The final decision of the Secretary or Secretaries on a state's application must be issued no later than 180 days after the determination that the Secretary of HHS received a complete application from a state.20
It is possible for a state to receive federal funding under an approved waiver. A state's receipt of a state innovation waiver could result in the residents of the state not receiving the "premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E for which they would otherwise be eligible."2123 If this occurs, the state is to receive the aggregate amount of subsidies that would have been available to the state's residents had the state not received a state innovation waiver—this is referred to as pass-through funding. The amount of pass-through funding is to be determined annually by the appropriate Secretary and may be updated at any time to account for changes in state or federal law. The state is to use the pass-through funding for purposes of implementing the plan or program established under the waiver.22
State innovation waivers cannot extend longer than five years, unless a state requests continuation and such request is not denied by the appropriate Secretary.23the appropriate Secretary does not deny such request.25 Requests for continuation are to be deemed granted if they are not denied by the appropriate Secretary within 90 days of submissionunless, within 90 days of submission, the appropriate Secretary either denies the request or informs the state that additional information is needed for the Secretary to consider such request.
The Secretaries arewere required to develop a process for coordinating applications for state innovation waivers and applications for other existing waivers under federal law relating to the provision of health care, including waivers available under Medicare, Medicaid, and CHIP.
Under the coordinated process, a state must be able to submit a single application for a state innovation waiver and any other applicable waivers available under federal law.2426 The single application must comply with the procedures described for state innovation waiver applications and the procedures in any other applicable federal law under which the state seeks a waiver.25
As discussed in the answer to the question "What Are the Minimum Requirements for a Successful Application?," HHS and the Treasury have indicated that an application for a state innovation waiver will be assessed on its own terms and that assessment of the state innovation waiver will not consider the impact of changes that require separate federal approval. This is the case even if the state submits a single application for multiple waivers.
As of the date of this report, 1420 states have submitted applications for state innovation waivers—Alaska, California, HawaiiColorado, Delaware, Hawaii, Idaho, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Vermont, and Wisconsin.2628 HHS and the Treasury have approved eight13 applications, from Alaska, Colorado, Delaware, Hawaii, Maine, Maryland, Minnesota, Montana, New Jersey, OregonNorth Dakota, Oregon, Rhode Island, and Wisconsin. AllEight of these waivers were considered and approved under the initial state innovation waiver guidance, and all but one of the five were considered and approved under the current state innovation waiver guidance. Twelve of the 13 approved waivers implement a variant of a statewide individual market reinsurance program.27
Idaho, Massachusetts, Ohio, and Vermont received notification from HHS and the Treasury that their applications were incomplete, and it does not appear that any of these states has modified its application in response to the notification. If one of these threefour states does take action, any further review of its waiver application would be under the updated state innovation waiver guidance (even if such state initially submitted its waiver under the initial guidance). California, Iowa, and Oklahoma have withdrawn their applications.2830
See Table 2 for more details.
|
State |
Application Information |
Waiver Information |
|||||||||||||
|
Submitted |
Status |
Overview |
Estimated Pass-Through Funding a |
Effective Period |
|||||||||||
|
Approved Waivers |
|||||||||||||||
|
Alaska |
December 29, 2016 |
Approved—July 17, 2017 |
Alaska established a state-based reinsurance program, the Alaska Reinsurance Program (ARP), to help health insurance issuers offering plans in the individual market offset the cost of covering enrollees with 1 or more of 33 specified high-cost conditions. Under the approved waiver, the Patient Protection and Affordable Care Act (ACA; P.L. 111-148) provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The expected effect of allowing issuers to consider the ARP payments when setting market-wide rates is to reduce premiums in the individual market, and the expected effect of the reduced premiums is reduced federal spending on premium tax credits for residents of Alaska. The state is to receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Alaska is to use the pass-through funding to support ARP and corresponding payments to issuers beginning in calendar year (CY) 2018. The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Alaska. |
The Centers for Medicare & Medicaid Services (CMS) | CY2018-CY2022
|
CY2018-CY2022
|
Colorado
|
May 20, 2019
|
Approved—July 31, 2019 Colorado established a state-based reinsurance program. From CY2020 through CY2021, the program will reimburse issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. The reimbursement percentage will vary across geographic rating areas in the state. Colorado's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,b which will allow issuers to consider Colorado reinsurance program payments when setting market-wide index rates. The expected effect is that individual market premiums will decrease and federal spending on premium tax credits for residents of Colorado will decrease. The state will receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Colorado is to use the pass-through funding to support the reinsurance program and corresponding payments to issuers beginning in CY2020 and continuing through CY2021.cThe approved waiver does not modify the eligibility criteria for premium tax credits for residents of Colorado.
|
Colorado estimated it would receive $162.8 million for CY2020 and $337 million over the CY2020-CY2021 period.
|
CY2020-CY2021
|
Delaware
|
July 10, 2019
|
Approved—August 20, 2019 Delaware established a state-based reinsurance program, the Delaware Health Insurance Individual Market Stabilization Reinsurance Program. Starting in 2020, the program will reimburse issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Delaware's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,b which will allow issuers to consider Delaware reinsurance program payments when setting market-wide index rates. The expected effect is that individual market premiums will decrease and federal spending on premium tax credits for residents of Delaware will decrease. The state will receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Delaware is to use the pass-through funding to support the reinsurance program and corresponding payments to issuers beginning in CY2020.The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Delaware.
|
Delaware estimated it would receive $20 million for CY2020 and $122.2 million over the period CY2020-CY2024. CY2020-CY2024 |
|
Hawaii |
June 16, 2016 |
Approved—December 30, 2016 |
Under the approved waiver, multiple ACA provisions relating to the establishment and operation of a Small Business Health Options Program (SHOP) exchange, as they pertain to small employers and SHOP exchanges, are waived. |
CMS |
CY2017-CY2021 |
||||||||||
|
Maine |
May 9, 2018 |
Approved—July 30, 2018 |
Maine established a hybrid state-based reinsurance/invisible high-risk pool program administered by the Maine Guaranteed Access Reinsurance Association (MGARA) Maine's approved waiver is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Maine. |
CMS estimated Maine would receive $65.2 million for CY2019. |
CY2019-CY2023 |
||||||||||
|
Maryland |
May 31, 2018 |
Approved—August 22, 2018 |
Maryland established a state-based reinsurance program administered by the Maryland Health Benefit Exchange Maryland's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Maryland. |
CMS |
CY2019-CY2023 |
||||||||||
|
Minnesota |
May 5, 2017 |
Approved |
Minnesota established a state-based reinsurance program, the Minnesota Premium Security Plan (MSPS), which reimburses issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Minnesota's approved waiver is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Minnesota. |
CMS | CY2018-CY2022
|
CY2018-CY2022
|
Montana
|
June 19, 2019
|
Approved—August 16, 2019 Montana established a state-based reinsurance program administered by the Montana Reinsurance Association Board of Directors and the Montana Commissioner of Securities and Insurance. Starting in 2020, the program will reimburse issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Montana's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,b which will allow issuers to consider Montana reinsurance program payments when setting market-wide index rates. The expected effect is that individual market premiums will decrease and federal spending on premium tax credits for residents of Montana will decrease. The state will receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Montana is to use the pass-through funding to support the reinsurance program and corresponding payments to issuers beginning in CY 2020.The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Montana.
|
Montana estimated it would receive $22.1 million for CY2020 and $123.5 million over the period CY2020-CY2024. CY2020-CY2024 |
|||||
|
New Jersey |
July 2, 2018 |
Approved—August 16, 2018 |
New Jersey established a state-based reinsurance program, the Health Insurance Premium Security Plan New Jersey's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of New Jersey. |
CMS | CY2019-CY2023
|
CY2019-CY2023
|
North Dakota
|
May 10, 2019
|
Approved—July 31, 2019 North Dakota established a state-based reinsurance program, the Reinsurance Association of North Dakota (RAND). Starting in 2020, the program will reimburse issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. North Dakota's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,b which will allow issuers to consider RAND payments when setting market-wide index rates. The expected effect is that individual market premiums will decrease and federal spending on premium tax credits for residents of North Dakota will decrease. The state will receive the resulting reductions in federal spending as pass-through funding. Under the waiver, North Dakota is to use the pass-through funding to support RAND and corresponding payments to issuers beginning in CY 2020.The approved waiver does not modify the eligibility criteria for premium tax credits for residents of North Dakota.
|
North Dakota estimated it would receive $26.1 million for CY2020 and $144.1 million over the period CY2020-CY2024. CY2020-CY2024 |
|||||
|
Oregon |
August 31, 2017 |
Approved—October 18, 2017 |
Oregon established a state-based reinsurance program, the Oregon Reinsurance Program (ORP), which reimburses issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Oregon's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Oregon. |
CMS
|
CY2018-CY2022
|
Rhode Island
|
July 8, 2019
|
Approved—August 26, 2019 Rhode Island established a state-based reinsurance program. Starting in 2020, the program will reimburse issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Rhode Island's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,b which will allow issuers to consider Rhode Island reinsurance program payments when setting market-wide index rates. The expected effect is that individual market premiums will decrease and federal spending on premium tax credits for residents of Rhode Island will decrease. The state will receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Rhode Island is to use the pass-through funding to support the reinsurance program and corresponding payments to issuers beginning in CY2020.The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Rhode Island.
|
Rhode Island estimated it would receive $6.4 million for CY2020 and $35.3 million over the period CY2020-CY2024.
|
CY2020-CY2024 |
CY2018-CY2022 |
||||
Wisconsin |
April 18, 2018 |
Approved—July 29, 2018 |
Wisconsin established a state-based reinsurance program, the Wisconsin Healthcare Stability Plan (WIHSP) Wisconsin's approved wavier is similar to other reinsurance-type waivers in that the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived, The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Wisconsin. |
CMS |
CY2019-CY2023 |
||||||||||
|
Pending Applications |
|||||||||||||||
|
Idaho July 15, 2019 Received notification of incomplete application—August 29, 2019 At the time the application was submitted, Idaho residents with incomes between 100% and 138% of the federal poverty level (FPL) who purchased health insurance through the individual exchange were eligible for premium tax credits and cost-sharing reductions (assuming other eligibility criteria also were met). However, Idaho was in the process of expanding Medicaid eligibility to individuals with incomes between 100% and 138% of the FPL, which was assumed by Idaho to be effective beginning CY2020. Once the Medicaid expansion went into effect, those who were newly eligible for Medicaid would no longer be eligible for premium tax credits and cost-sharing reductions through the exchange. By waiving the specified provisions, Idaho indicates that individuals with incomes between 100% and 138% of the FPL would be able to choose between subsidized exchange coverage and Medicaid. Idaho is not requesting pass-through funding. N.A. |
September 8, 2017 |
Received notification of incomplete application—October 23, 2017 |
Massachusetts is seeking to create a Premium Stabilization Fund (PSF), which would be used to reimburse issuers amounts equal to what would have been provided by cost-sharing reduction payments. At the time the application was submitted, cost-sharing reduction payments were still being made to insurers; however, there was uncertainty as to whether the current administration would continue to make payments moving forward. Massachusetts sought to use the waiver process to avoid the need for a rate revision in the event that cost-sharing reduction payments stopped. Under the proposed waiver, the ACA provision that provides for cost-sharing subsidy payments to issuers from HHS would be waived, Under the proposed waiver, Massachusetts would use the pass-through funding for PSF payments to issuers for an initial period of one year, beginning in CY2018, and the state would request the opportunity to renew the waiver through CY2022. |
Massachusetts estimated it would receive between $143 and $146 million for CY2018 . |
N.A. |
||||||||||
|
Ohio |
March 30, 2018 |
Received notification of incomplete application—May 17, 2018 |
Ohio is seeking to waive the requirement that individuals must maintain minimum essential coverage, as established under the ACA's individual mandate provision. |
Ohio is not requesting pass-through funding . |
N.A. |
||||||||||
|
Vermont |
March 15, 2016 |
Received notification of incomplete application—June 9, 2016 |
Vermont is seeking an exemption from the requirement that a state must establish a SHOP exchange for small employers. Under the proposed waiver, Vermont seeks to waive multiple ACA provisions relating to the establishment and operation of a SHOP exchange. |
Vermont is not requesting pass-through funding |
N.A. |
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Withdrawn Applications |
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California |
December 6, 2016 |
Withdrawn—January 18, 2017 |
California sought to provide undocumented immigrants with the ability to purchase unsubsidized insurance through its exchange. Under this waiver, the ACA provision that prohibits the marketing of nonqualified health plans (QHPs) on the exchanges would have been waived, |
California did not request pass-through funding . |
N.A. |
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Iowa |
August 21, 2017 |
Withdrawn—October 23, 2017 |
Iowa sought to allow issuers in its individual market to offer one standard health plan, to provide age- and income-based premium tax credits to individuals purchasing the standard plans, and to support a state-based reinsurance program. Under this waiver, Iowa sought to waive the following ACA provisions.
The Iowa waiver would have begun in CY2018 and would have allowed Iowa to request renewal of the program for CY2019 if necessary. |
Iowa estimated it would have received $422 million for CY2018 . |
N.A. |
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Oklahoma |
August 16, 2017 |
Withdrawn—September 29, 2017 |
Oklahoma established a state-based reinsurance program, the Oklahoma Individual Health Insurance Market Stabilization Program (OMSP), though the operation of the program was conditional upon receiving federal funds to implement and sustain the OMSP. Had the waiver been approved, the OMSP would have reimbursed issuers selling coverage in the state's individual market for a percentage of enrollees' claims between an attachment point and a cap. Oklahoma's withdrawn waiver was similar to |
Oklahoma estimated it would have received $309 million for CY2018 and $1,395 million over the period CY2018-CY2022 . |
N.A. |
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Source: Various documents available on the CMS website, "Section 1332: State Innovation Waivers," at https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-.html, viewed June 5, 2018November 1, 2019.
Notes: Estimated pass-through funding describes either the amount of pass-through funding that a state estimates it will receive in its waiver application or, when available, the amount of pass-through funding CMS estimates it will provide to the state as determined annually by the Secretary of the Department of Health and Human Services and/or the Secretary of the Department of the Treasury (as appropriate). For more information on reinsurance, see CRS In Focus IF10707, Reinsurance in Health Insurance, by [author name scrubbed].
a.
a. CMS has not communicated the amount of pass-through funding for approved waivers in CY2020.
b. Specifically, ACA §1312(c)(1).
b. The actual amount received by the state is subject to a final determination by the Department of the Treasury and, subsequently, budget sequestration.
cc. Although waivers can be approved for a period of up to five years, the Colorado application requested, and was approved for, an effective period from CY2020 through CY2021.
d. Specifically, the following ACA §§: 1301(a)(1)(C)(ii); 1301(a)(2); 1304(b)(4)(D)(i) and (ii); 1311(b)(1)(B); 1312(a)(2); 1312(f)(2)(A); and 1321(c)(1).
de. The final amounts of pass-through funding received by Hawaii account for budget sequestration.
f. The final amount of pass-through funding received by Maine in 2019 is subject to a final administrative determination by the Department of the Treasury and any changes in Maine law or regulations that would affect the waiver (e.g., Medicaid expansion).
g. Although Maryland's waiver application anticipated having enough funds to operate the Maryland State Reinsurance Program from CY2019 through CY2021, the application requested, and was approved for, an effective period from CY2019 through CY2023.
eh. In addition to what is described in the table about Minnesota's approved waiver, Minnesota's waiver application also requested that the state receive, in pass-through funding, the amount that the federal government would save in payments to Minnesota's Basic Health Program because of premium reductions due to MSPS. This request was not granted under the approved waiver. For details, see Letter from Mark Dayton, Governor of Minnesota, et al. to Thomas Price, Secretary of the U.S. Department of Health and Human Services, September 19, 2017, http://mn.gov/gov-stat/pdf/2017_09_19_Governor_Dayton_Letter_to_Secretary_Price_1332_Waiver.pdf, and Letter from Mark Dayton, Governor of Minnesota, to Seema Verma, Administrator of the Centers for Medicare & Medicaid Services, October 16, 2017, https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Downloads/Approval-Letter-MN.pdf.
fi. The final amount of pass-through funding received by Oregon in 2019 is subject to a final administrative determination by the Department of the Treasury.
j. Idaho applied to waive ACA §1402 and 26 U.S.C. §36B(c)(2)(B), the latter of which was added to the Internal Revenue Code by ACA §1401.
k. Massachusetts applied to waive ACA §1402(c)(3)(A).
gl. Ohio applied to waive 26 U.S.C. §5000A(a), which was added to the Internal Revenue Code by ACA §1501.
hm. Ohio's House Bill 49 requires Ohio's department of insurance to submit a 1332 waiver application that includes a request to waive the ACA's individual and employer mandates. In its waiver application, Ohio acknowledges that the 2017 tax revision (P.L. 115-97) effectively eliminates the penalty associated with the individual mandate beginning in CY2019 but points out that the law does not eliminate the individual mandate. As such, Ohio's 1332 waiver application requests to waive the individual mandate (however, the application does not include a request to waive the employer mandate).
in. Vermont applied to waive the following ACA §§: 1311(b)(1)(B); 1311(c)(3); 1311(c)(4); 1311(c)(5); 1311(d)(1); 1311(d)(2); 1311(d)(4)(A); 1311(d)(4)(B); 1311(d)(4)(C); 1311(d)(4)(D); 1311(d)(4)(E); 1311(d)(4)(G); 1311(k); 1312(a)(2); 1312(f)(2)(A).
jo. California applied to waive ACA §1311(d)(2)(B)(i).
kp. Iowa applied to waive ACA §§1402; 1401(a); 1302(d); and 1332(d).
Author Contact Information
Acknowledgments
Earlier versions of this report were authored by Annie Mach, former Specialist in Health Care Financing.
| 1. |
The requirements are not specified in regulations. Department of the Treasury, Department of Health and Human Services (HHS), "Waivers for State Innovation," 80 Federal Register 78131, December 16, 2015. Department of the Treasury, HHS, "State Relief and Empowerment Waivers," 83 Federal Register 53575, October 24, 2018 (Hereinafter "State Relief and Empowerment Waivers guidance"). |
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| 2. |
42 U.S.C. §18052(a)(2). |
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| 3. |
A qualified health plan (QHP) is a plan that meets certain requirements and is certified to be sold through a health insurance exchange (in the non-group or small-group market). Although QHPs are certified to be sold through exchanges, they also can be sold in the non-group or small-group market outside of exchanges. For more information, see CRS Report R44065, Overview of Health Insurance Exchanges. |
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| 4. |
For more information about the current status of the cost-sharing subsidies, see archived CRS Insight IN10786, Payments for Affordable Care Act (ACA) Cost-Sharing Reductions. |
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| 5. |
For more information about the employer mandate, see CRS Report |
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| 6. |
For more information about the individual mandate, see CRS Report R44438, The Individual Mandate for Health Insurance Coverage: In Brief. The 2017 tax revision, P.L. 115-97, effectively eliminates the individual mandate penalty beginning in 2019. |
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| 7. |
For more information about the essential health benefits package, see CRS Report R44163, The Patient Protection and Affordable Care Act's Essential Health Benefits (EHB). |
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| 8. |
42 U.S.C. §18052(a)(6). |
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| 9. |
42 U.S.C. §18052(b)(1) and State Relief and Empowerment Waivers guidance. |
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| 10. |
State Relief and Empowerment Waivers guidance. |
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| 11. |
State Relief and Empowerment Waivers guidance. |
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| 12. |
HHS administers all FFEs, and it operates the same infrastructure technology platform in each state that has an FFE. State Relief and Empowerment Waivers guidance. |
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| 13. |
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| 14.
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State Relief and Empowerment Waivers guidance. 15.
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States are responsible for funding all changes to IRS administrative processes associated with wavier implementation. These costs are incorporated into the assessment of whether a waiver application satisfies the deficit neutrality requirement.
16.
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For more information about how household income is calculated to determine premium tax credit eligibility, see CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs. |
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42 U.S.C. §18052(b)(2). |
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State Relief and Empowerment Waivers guidance. |
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The public notice and comment period is to be "sufficient to ensure a meaningful level of public input for the application for a section 1332 waiver." 45 C.F.R. §155.1312. |
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45 C.F.R. §155.1308(f). |
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The public notice and comment period is to be "sufficient to ensure a meaningful level of public input and does not impose requirements that are in addition to, or duplicative of, requirements imposed under the Administrative Procedures Act, or requirements that are unreasonable to unnecessarily burdensome with respect to state compliance." 45 C.F.R. §155.1316(b). |
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42 U.S.C. §18052(d)(1) and 45 C.F.R. §155.1316(c). |
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42 U.S.C. §18052(a)(3). |
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42 U.S.C. §18052(a)(3). |
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42 U.S.C. §18052(e). |
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42 U.S.C. §18052(a)(5). |
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45 C.F.R. §155.1302(a). |
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For information about each state's application, see CMS, Center for Consumer Information and Insurance Oversight (CCIIO), "Section 1332: State Innovation Waivers," at https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-.html. |
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For more information on reinsurance, see CRS In Focus IF10707, Reinsurance in Health Insurance. |
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To read the withdrawal letters, see CMS, CCIIO, "Section 1332: State Innovation Waivers," at https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-.html. |