California Considering Section 1332 Waivers

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Section 1332 of the Affordable Care Act (ACA) allows states to apply for a State Innovation Waiver that will let them implement innovative strategies to ensure their residents have access to affordable, high quality health care while maintaining the basic protections of the ACA.  Waiver proposals must be submitted and approved by the Department of Health and Human Services and the Department of the Treasury.

States may submit broad or narrow proposals but they must demonstrate that coverage will remain comprehensive, accessible and affordable without adding to the federal deficit.  The waivers are valid for a five-year period, are renewable and may take effect as early as January 1, 2017.

Examples of what can be waived or modified under section 1332:

  • Use of Exchanges as the mechanism for determining subsidy eligibility and certification of Qualified Health Plans
  • Rules governing Premium Tax Credits and Cost-Sharing Subsidies
  • Penalties under the Employer and Individual Mandates

Examples of what cannot be waived or modified under section 1332:

  • Dependent coverage to age 26
  • Ban on lifetime and annual dollar limits
  • Prohibition against pre-existing condition exclusions

Covered California is exploring options and evaluating whether to pursue a 1332 Waiver.  It recently held a public meeting to discuss the Waiver process, including federal requirements and guardrails, plus possible issues that could be addressed by a Waiver, such as the affordability “family glitch” and allowing undocumented individuals to purchase coverage.

Factors Covered California has stated it will consider when evaluating recommendations include whether the proposed Waiver is directly related to Covered California’s mission, achieves cost savings or administrative simplification and improves processes rather than completely redesigns them.

S.B. 1364 was also recently introduced by Senator Bill Monning (D-Carmel) that declares “the intent of the Legislature to enact legislation that would create a competitive marketplace for health care coverage consistent with the State Innovation Waiver requirements.”

Covered California’s Board of Directors is set to discuss and make initial recommendations on possible 1332 State Innovation Waivers at its next meeting on April 7, 2016.