Summary of Washington’s Draft Premium Assistance Policy
On October 13, 2021, the Washington Health Benefit Exchange released the preliminary draft policy for the new State Premium Assistance Program (Program), one of the reforms enacted in Engrossed Second Substitute Senate Bill 5377 intended to lower premiums for consumers enrolled in Cascade plans (i.e., standard plans) or Cascade Select plans (i.e., public option plans). In conjunction with the release, the Exchange hosted a stakeholder webinar to discuss the draft policy and alternative proposals.
The preliminary policy establishes the rules governing the Program, such as eligibility, premium assistance amount, and Exchange and issuer responsibilities. Senate Bill 5377 also made major policy changes to provider participation and reimbursement aimed at increasing the availability of public option plans and reducing health care costs (full summary available here).
The Program is effective for plan year 2023, and Engrossed Substitute Senate Bill 5092 appropriated $50 million to implement the program in its first year. State legislators will need to provide new funds for plan year 2024 and beyond. Notably, Senate Bill 5377 directs the state to “explore all opportunities” to apply for a federal waiver to garner pass-through funding to help pay for the Program.
Regarding the rulemaking process, the Exchange seeks comments on the preliminary draft policy through November 12, 2021. Additional key dates:
June 2022: Exchange publishes draft premium assistance policy and seeks public comments through July.
July 2022: Exchange holds a public hearing on the draft premium assistance policy.
August 2022: Exchange finalizes the premium assistance policy.
September 2022: Exchange finalizes premium assistance amount based on final 2023 health plan filings data. Concurrently, beginning in December 2021, the Washington Health Care Authority (HCA) will undergo procurement of public options planned offered under Cascade Care.
November 2022: Open enrollment begins.
A summary of key provisions follows:
Eligibility and Special Enrollment Period (Sections 4 and 9)
Consistent with the eligibility criteria in Senate Bill 5377, an individual is eligible for state premium assistance if the individual is a Washington State resident, enrolls in a silver or gold Cascade plan, applies for and accepts all federal premium tax credits, and is ineligible for Medicare or Medicaid. The Exchange states that in households with individuals in multiple enrollment groups, only individuals enrolled in a silver or gold Cascade plan are eligible for state premium assistance. Senate Bill 5092 limits eligibility to individuals with an income at or below 250 percent of the federal poverty level (FPL).
Under current federal law, there is no upper income limit for federal premium tax credits through 2022. Absent congressional action to make changes from the American Rescue Plan Act of 2021 (P.L. 117-2) permanent, the upper income limit will return to 400 percent of FPL in 2023. The lower income threshold for state premium assistance accounts for the availability of appropriated funds, $50 million for 2023. See below for more details on the Exchange’s contingency plan if the projected premium assistance distribution exceeded the total amount of appropriated funds.
Roughly 44 percent (about 95,000) of total qualified health plan (QHP) enrollees (about 217,000) have a household income at or below 250 percent FPL, according to the Exchange. Within this group, about 3,500 do not receive any federal subsidies due to the “family glitch” or other reasons. Among the estimated 465,000 residents who are uninsured, roughly 52 percent (242,000) have a household income at or below 250 percent FPL. Within this group, nearly 70,000 are estimated to not have a federally recognized immigration status and, therefore, are ineligible for federal premium tax credits. In fall 2023, Washington intends to pursue a federal 1332 waiver aimed at providing access to QHP plans for people without federally recognized immigration status.
An eligible enrollee would remain eligible for state premium assistance for the duration of the plan year unless the enrollee reports a change in circumstances that no longer makes the individual eligible. Additional details about the eligibility determination and verification processes are on p. 3.
The Exchange would provide an Exceptional Circumstances Special Enrollment Period (SEP) to an individual that becomes newly eligible for the state premium assistance or ineligible for state premium assistance. Of note, the Exchange is considering alternative policy proposals: (1) restricting customers newly eligible for the state premium assistance to an assistance-eligible plan within the same carrier; or not offering an SEP for change in state premium assistance eligibility.
Premium Assistance Amount (Section 5)
The Exchange proposes to calculate the state premium assistance amount using the following formula – a base fixed-dollar premium assistance amount capped at the lesser of a household cap or benchmark plan cap.
Base fixed-dollar premium assistance amount – Based on an actuarial analysis of annual program funding, the projected eligible enrollee population for that plan year, and the qualified health plan rates.
Household cap – Calculated by multiplying the base fixed-dollar amount by the number of eligible enrollees in the eligible household, not to exceed the number of applicants aged 21 or up, plus up to three depends under the age of 21.
Benchmark plan cap – The net premium all eligible enrollees in the household would pay if each eligible enrollee in the household were enrolled in the lowest cost standard silver plan in the household’s county of residence. Alternatively, the Exchange is considering using the second lowest cost silver plan, second lowest cost standard silver plan, or another plan as the benchmark.
If an eligible household has multiple enrollment groups, the household’s premium assistance amount will be allocated across the enrollment groups. The Exchange proposes allowing state premium assistance to cover portions of the household’s premium that are not attributable to essential health benefits. Federal premium tax credits can only be applied to an individual’s premium that is for essential health benefits.
Payment Procedures (Sections 6,7, 8, and 10)
Like federal premium tax credits, state premium assistance will be paid to issuers on a monthly basis. The Exchange also proposes to use an appeals process that mirrors the federal process (e.g., written notice, hearing). Issuers are required to accept state premium assistance in order to be certified to offer qualified health plans on the Exchange. The Exchange proposes that issuers distribute Medical Loss Ratio (MLR) rebates on behalf of enrollees receiving state premium assistance directly to the Exchange. Additionally, the Exchange plans to contract with an independent firm to audit the Program.
Contingency for Low Funds (Section 11)
If the projected total amount for premium assistance exceeds the total amount of appropriated funds ($50 million for plan year 2023), the Exchange proposes to decline providing assistance to newly eligible households not already receiving assistance. Priority would be given to enrollees receiving assistance for that plan year to maintain access to health care. The Exchange may only modify eligibility determinations “if enrollments in the Program jeopardize the ability of the Exchange to operate the program within available state funding appropriated for the Program.” If the projected total amount for premium assistance is less than the total amount of appropriated funds, the Exchange may increase the amounts distributed to enrollees.
The Exchange is considering alternative contingency plan proposals: (1) establishing and operating a program waitlist; or (2) reducing premium assistance amounts for existing recipients.
With Support from Arnold Ventures