New Rules for Section 1332 Waivers: Changes and Implications
|Appendix Table 1: Descriptions of ACA Provisions That May Be Waived under Section 1332 Authority|
|Individual Mandate||Requirement for individuals to have minimum essential health insurance coverage or pay a tax penalty.|
|Large employer mandate||Requirement for firms with more than 50 employees to provide affordable health benefits to full time workers and their dependents or pay a tax penalty.|
|Qualified health plan (QHP) standards||Includes requirements that health plans offered through the exchange must cover 10 essential health benefits, limit annual cost sharing for covered benefits, and be offered with a variety of cost sharing levels that correspond to metal tiers (bronze, silver, gold, platinum). These standards include other cost sharing rules (including requirement for non-network emergency services to be covered at in-network coinsurance levels), and the option for states to prohibit abortion coverage under QHPs offered through the Exchange.|
|Standards for health insurance exchanges||Includes requirements for the establishment of state exchanges that operate web sites displaying plan choices, provide navigator and call center assistance, offer annual open enrollment periods, determine eligibility for financial assistance, and certify that QHPs meet requirements for network adequacy, fair marketing practices, and other standards.|
|QHP cost sharing subsidies||Requirement that insurers offering exchange plans offer enhanced silver plans, with lower deductibles and other cost sharing, for eligible enrollees with income up to 250% of the poverty level.|
|QHP premium subsidies||Requirement to provide sliding scale premium tax credits for eligible QHP enrollees with income between 100% and 400% of the poverty level. The tax credit amount is based on the cost of the second lowest cost silver plan in the Exchange. Subsidies are only payable for QHP coverage enrolled through an Exchange. The ACA premium tax credit provisions also require that eligible individuals must be citizens or lawfully present residents of the US and cannot be eligible for other minimum essential coverage.|
|Subsidy pass through||Allows states to request to have premium tax credit and cost-sharing subsidies, that residents would otherwise have received, instead provided in an aggregate amount to be used to implement the state waiver.|
Key Provisions in the 2015 1332 Waiver Guidance
The 2015 guidance defined “coverage” as minimum essential coverage (MEC). MEC includes employer-sponsored coverage, Medicaid and other public program coverage, and private individual health insurance. Importantly, the definition of MEC specifically excludes short-term, limited duration health insurance policies.
The coverage guardrail required that a comparable number of residents be covered. The 2015 guidance required waiver applications to forecast that a comparable number of state residents would have coverage under the waiver as would have coverage absent the waiver.
The comprehensiveness guardrail was evaluated in relation to the essential health benefit (EHB) benchmark plan. In most states, the EHB benchmark, which is used to define covered benefits offered through the marketplace, is based on coverage typically purchased by small employers or offered to state employees. The 2015 guidance said that to meet the comprehensiveness guardrail, a state waiver could not reduce the number of state residents with coverage at least as comprehensive as the benchmark plan in all ten categories of EHB, as well as in any one of the EHB categories.
The affordability guardrail measured residents’ out-of-pocket spending for premiums (net of subsidies) and cost-sharing and out-of-pocket costs. The 2015 guidance specified that “increasing the number of state residents with large health care spending burdens would cause a waiver to fail the affordability requirement, even if the waiver would increase affordability for many other state residents.” Additionally, to meet the affordability standard, coverage under the waiver could not reduce the number of people with coverage meeting the 60% actuarial value standard and with minimal protections against excessive out-of-pocket costs.
Waiver effects were assessed for residents overall, and for vulnerable populations. The 2015 guidance required waivers to meet the coverage, comprehensiveness, and affordability standards in conjunction – that is, at least a comparable number of state residents would have coverage that would be at least as comprehensive and as affordable as in the absence of the waiver. In addition to evaluating the waiver’s aggregate impact, the coverage, comparability, and affordability tests would also be applied to vulnerable populations within the state – those with low incomes and those with (or at risk of developing) serious pre-existing health conditions. For example, a waiver could not reduce affordability for low-income people in the state as a group.
Standards would be evaluated year-by-year. The 2015 guidance required that the guardrails be met in each year that the state waiver program is in place, as well as over the length of the waiver period.