Through Section 1332 of the Affordable Care Act (ACA), states may apply for innovation waivers to alter key ACA requirements in the individual and small group insurance markets. States can use the flexibility granted by 1332 waiver authority to shore up fragile insurance markets, address unique state insurance market issues, or experiment with alternative models of providing coverage to state residents. With Congressional efforts to repeal and replace the ACA on hold, attention will likely turn to 1332 waivers as states explore ways to address access and affordability issues in their individual and small group markets.
While the ACA provides states with some flexibility to alter certain provisions using 1332 waiver authority, it establishes guardrails that limit the extent of the changes states may make. The current statutory language requires that state waiver applications must demonstrate that the innovation plan will provide coverage that is at least as comprehensive in covered benefits; at least as affordable (taking into account premiums and excessive cost sharing); cover at least a comparable number of state residents; and not increase the federal deficit. The ACA requirements states may seek to waive using Section 1332 authority include:
Additionally, states may request an aggregate payment of what residents would otherwise have received in premium tax credits and cost-sharing reductions, referred to as subsidy pass-through funding. States may not waive certain provisions through section 1332, including guaranteed issue, age rating, and prohibitions on health status and gender rating. While states can submit ACA innovation waivers in conjunction with Medicaid waivers (under Sec. 1115 of the Social Security Act), innovation waivers cannot be used to change Medicaid program requirements.
The map below shows the status of 1332 waivers requested by states.
Additional details on state waivers are provided below.
|Description||Allow federal pass through funding to partially finance the state’s Alaska Reinsurance Program (ARP). The ARP would fully or partially reimburse insurers for incurred claims for high-risk enrollees diagnosed with certain health conditions.|
|Date Submitted||December 29, 2016|
|Date Approved||July 7, 2017|
|Source||Alaska 1332 waiver application and Waiver approval letter.|
|Description||Waive ACA Small Business Health Options Program (SHOP) requirements that conflict with the state’s Prepaid Health Care Act. Enacted in 1974, the Prepaid Health Care Act requires employers to provide more generous coverage than is required under the ACA. Additionally, waive the requirement that the small business tax credits only be available through the SHOP.|
|Date Submitted||August 10, 2016|
|Date Approved||December 30, 2016|
|Source||Hawaii 1332 waiver application and Waiver approval letter|
|Description of Waiver||Allow federal pass-through funding to partially finance the Minnesota Premium Security Plan (MPSP), a reinsurance program that would reimburse insurers 80% of claims above $50,000 and up to a cap of $250,000.
The waiver also seeks federal pass-through funding equal to the amount the federal government would have spent on tax credits and cost sharing subsidies for residents eligible for the state’s Basic Health Program, MInnesotaCare if the reinsurance program were not in place.
|Date Submitted||May 5, 2017|
|Date Approved||September 22, 2017.
Although the federal government approved pass-through funding for the reinsurance program, it did not approve pass-through funding for BHP, thus providing the state with less federal funding than it had sought.
|Source:||Minnesota 1332 waiver application and supporting materials; Letter from Governor Dayton to HHS Secretary Price; Waiver approval letter.|
|Description of Waiver||Allow federal pass-through funding to partially finance the Oregon Reinsurance Program (ORP). The ORP would reimburse insurers 50% of claims between an attachment point (to be determined) and an estimated $1 million cap.|
|Date Submitted||August 31, 2017|
|Date Approved||October 18, 2017|
|Source||Oregon 1332 waiver application and Waiver approval letter.|
|Description||Waive cost sharing reduction (CSR) payments to insurers in Massachusetts and allow federal pass-through funding of those CSR payments and any advanced premium tax credit (APTC) payments resulting from lower premiums to partially finance a Premium Stabilization Fund (PSF). The PSF will make payments to insurers that are equivalent to the payments that would have been made through the federal CSR program.|
|Date Submitted||September 8, 2017|
|Status||Waiver is currently pending at CMS, but currently on hold.
In a letter to the state dated October 23, 2017, CMS indicated the waiver application was incomplete, and given the required federal comment period, the waiver could not be implemented for the 2018 coverage year. The state is considering revising the waiver and resubmitting to implement changes for 2019.
|Source||Massachusetts 1332 waiver application and CMS letter|
|Description||Allow small employers to enroll directly with health insurance carriers rather than through an online SHOP web portal. The state had adopted the direct enrollment approach for small businesses after the SHOP portal developed by the state failed to launch in 2014.|
|Date Submitted||March 15, 2016|
|Status||Waiver is pending at CMS, but currently on hold.
Guidance from CMS issued on April 18, 2016 delayed the required implementation of the SHOP portal until 2019. Further, the proposed Notice of Benefit and Payment Parameters for 2019 would permanently eliminate the requirement.
|Source||Vermont 1332 waiver application; CMS guidance extending SHOP direct enrollment transition|
|Description||The state requested approval to provide California Qualified Health Plans (CQHPs) to individuals ineligible to purchase coverage through Covered California, the state’s marketplace, due to their immigration status. Individuals purchasing CQHPs would not be eligible for premium tax credits or cost sharing subsidies.|
|Date Submitted||December 16, 2016|
|Status||The state withdrew its waiver application on January 18, 2017|
|Source||California 1332 waiver application; Letter withdrawing application|
|Description of Waiver||The state sought to establish the Iowa Stopgap Measure (ISM) to restructure the coverage offered in the state’s individual market and to establish a reinsurance program.
|Date Submitted||August 21, 2017|
|Status||The state withdrew its waiver application on October 23, 2017|
|Source||Iowa Stopgap Measure, Iowa Insurance Division, August 21, 2017 and Iowa Stopgap Measure Supplement submitted to CCIIO. Additional information available at: https://iid.iowa.gov/iowa-stopgap-measure. Letter withdrawing application|
|Description||The state requested federal pass-through funding to partially finance the Oklahoma Individual Health Insurance Market Stabilization Program (OMSP). The OMSP would reimburse insurers 80% of claims above $15,000 and up to $400,000. The state estimated OMSP would reduce premiums by over 30% and requested that funds the federal government would have paid in premium tax credits to eligible marketplace enrollees had the reinsurance program not been in place be provided to the state to finance the program.|
|Date Submitted||August 15, 2017|
|Status||The state withdrew its waiver application on September 29, 2017|
|Source||Oklahoma 1332 waiver application; Letter withdrawing application|