June 04, 2019
HHS and Treasury issued guidance that gives states more flexibility in benefit design and loosens the affordability requirement for Innovation Waivers, which permit alternatives to the state exchange requirements in the individual & small group markets under the ACA. Specifically, the Agencies indicate that they will look favorably on new waiver applications that would:
- Permit individuals to purchase a broader range of private coverage, including association health plans and short-term, limited-duration insurance (plans that don’t have to comply with ACA requirements), as long as ACA compliant plans are still available. Previous guidance would deny waiver requests for non-ACA compliant plans, if it led to any reduction in people electing ACA compliant coverage;
- Permit insurers to offer plans that would meet affordability thresholds in the aggregate (e.g. offer less expensive coverage for most people even if some experience higher costs by not meeting the affordability criterion);
- Increase insurer participation and competition in the exchanges;
- Encourage states to reduce federal spending growth by promoting more cost-effective coverage and eliminating or reducing state-level regulation of health plans that limit market choice;
- Support and empower those in need (low-income or those that have high health care costs); and
- Promote consumer-driven health care.
Impact on Employers and Employees
In states with approved waivers, employees and retirees using the exchanges may have access to a broader choice of subsidized plans, but some of those plans may not be as comprehensive as ACA coverage. Depending on how many people enroll in less expensive coverage, it could destabilize the exchanges for people in the original exchange plans.
Employers could see an uptick of states applying for waivers, some of which could seek to tax employers (insured and self-insured programs) to fund state market stabilization efforts.
It’s unclear how many additional states will apply for waivers, but CMS Administrator Verma indicated that the 8 states that have been approved for waivers “barely scratches the surface of what might be possible.” CMS is seeking comments by 12/23/2018 and may modify or add to the guidance.