Employee Benefits Compliance, Exchanges, Exchanges / Marketplaces / Subsidies, Laws, Regulations & FAQs, Marketplaces, State-Specific Information

HHS Gives Conditional Approval to Eight States’ Exchanges and Washington, DC and Issues FAQs on Exchanges

(Update to this article as initially posted:  HHS now has also given conditional approval to State Exchange plans of Kentucky, New York and the District of Columbia.)

HHS announced last week that it is giving conditional approval to Exchange plans of  six states who applied early and have made enough progress setting up their own state Exchanges that HHS believes they will be able to meet all Exchange deadlines.  The six states are: Colorado, Connecticut, Massachusetts, Maryland, Oregon, and Washington.
Additionally, on December 10, 2012, HHS also issued Frequently Asked Questions on Exchanges, Market Reforms and Medicaid.  These FAQs on Exchanges answer important questions about Federally-Facilitated Exchanges (FFEs), State-Based Exchanges, and State-Federal Partnership Exchanges.

At least 10 other states (one of them is California) plus the District of Columbia have notified HHS that they intend to operate State-based Exchanges.  At least 19 have announced their intention not to, and others are undecided or continuing to evaluate the decision. Many of these other states have requested additional information from HHS to help them decide whether they want to establish their own State Exchanges.  The December 10th FAQs provide additional information and answer some questions states have been asking.  Some of the information provided in the FAQs (which may also be of interest to employers) includes:

  • HHS intends to fund the Federally-Facilitated Exchange by imposing a monthly fee on participating issuers.  The proposed fee for 2014 is 3.5% of premium, although this may be adjusted in the final Payment Notice.   (Q/A 8)
  • HHS will not further extend deadlines for states to decide their level of involvement in implementing Exchanges for 2014.  The deadline was Friday, December 14, 2012 for states to submit their applications to operate a State-Based Exchange in 2014 (the prior deadline was November 16).  States that want to implement a State Partnership Exchange in 2014 must submit their Declaration Letter and Blueprint Application no later than February 15, 2013.  HHS encourages states to submit prior to the deadline and will make approval determinations on a rolling basis.  (Q/A 1)
  • States may apply at any time to run an Exchange in future years.  (Q/A 1)  HHS will continue to work with states who decide after the initial deadline to implement their own state-based exchanges in 2015, 2016 and beyond.
  • States have the flexibility in Medicaid and the Children’s Health Insurance Program (CHIP) to provide premium assistance for Exchange plans as well as to adopt “bridge plans” that offer coverage through both Medicaid and Exchanges – so families can have the same plan and network if, for example, the children have coverage through CHIP and the parents purchase coverage in the Exchange and receive a tax credit or cost-sharing reduction.    (Q/A 14)
  • Qualified individuals will be able to purchase health insurance in the Exchange even if they are not eligible for Medicaid, CHIP or a premium tax credit.  (Q/A 21)
  • Unlike the deadlines for state notification of their Exchange decisions, there is no deadline by which a state must notify the federal government whether it intends to implement the Medicaid expansion.  Nor is there any particular reason for a state to link its decision on the Exchange with its decision on Medicaid expansion.  (Q/A 24)
  • If a state implements the Medicaid expansion, it can later drop out of the expansion program.  (Q/A 25)
  • There is no option under the Affordable Care Act (ACA) for states to receive 100% federal matching funds if they phase in the Medicaid expansion or only partially implement it. (The ACA Medicaid expansion provision calls for states to expand Medicaid eligibility to all state residents with household incomes up to 133% of the Federal Poverty Level.)  However, HHS will consider state proposals that further the purposes of the program, at the regular matching rate now. Also, HHS will consider broad-based State Innovation Waivers in 2017 when the 100% federal funding for the expansion group is slightly reduced.  (Q/A 26)
  • Several Q/As address how Exchanges and Medicaid administrative costs will be funded and how HHS will work with States to provide support for the administrative costs of eligibility changes (individuals moving between Exchange, CHIP and Medicaid coverage).