Agency Guidance Increases Flexibility for States to Obtain ACA Innovation Waivers

HHS and the IRS have issued joint guidance on the use of innovation waivers under the Affordable Care Act (ACA), superseding guidance issued in December 2015 (see our Checkpoint article). As background, the ACA authorizes states to apply for waivers from certain of its provisions, including requirements regarding qualified health plans (QHPs), Exchanges, premium tax credits, and employer shared responsibility. To obtain a waiver, a state must provide coverage that is at least as comprehensive and affordable as would be provided absent the waiver, and the number of state residents with coverage must be comparable to the number of residents who would have coverage absent the waiver. Also, an innovation cannot increase the federal deficit. (See our Checkpoint article.)

Explaining that the 2015 guidance imposed significant restrictions on states beyond what was required by the ACA, the new guidance is intended to revise the 2015 guidance to provide more flexibility to states. For instance, the 2015 guidance focused on the number of individuals estimated to receive comprehensive and affordable coverage. This guidance, however, focuses on the availability of access to comprehensive and affordable coverage, thereby allowing states to offer access to more options that are less comprehensive but potentially more affordable. The guidance also expands the definition of coverage that must be provided to a comparable number of residents to include access to all forms of private coverage (e.g., short-term, limited-duration insurance, association health plans, and employer-sponsored coverage) and public coverage (e.g., Medicaid). To allow states increased flexibility to pursue a waiver despite timing constraints (e.g., state legislative calendars that result in infrequent legislative sessions), the guidance clarifies that although states are required to enact a law providing for implementation of the waiver, in certain circumstances, existing state legislation, combined with a duly enacted state regulation or executive order, may satisfy the requirement.

EBIA Comment: HHS intends to release more guidance in the near future, with examples of how states can take advantage of the more flexible waivers. In the meantime, this guidance makes clear that waivers could potentially be used by states to implement recently expanded options for association health plans (see our Checkpoint article) and short-term, limited-duration insurance (see our Checkpoint article). For more information, see EBIA’s Health Care Reform manual at Sections XXI.G (“Innovation Waivers Allow State Health Reform Alternatives”) and V.C (“What Is a Group Health Plan?”). See also EBIA’s HIPAA Portability, Privacy & Security manual at Section VI.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”) and EBIA’s ERISA manual at Section XIX.D (“Is There an ERISA Plan at the MEWA Level or at the Participating Employer Level?”).

Contributing Editors: EBIA Staff.