As state policymakers look to control rising health insurance premiums and enhance affordable coverage options, many states have applied for and implemented Section 1332 waivers—also known as State Innovation Waivers or State Relief and Empowerment Waivers. Section 1332 of the Affordable Care Act (ACA) allows states to waive certain ACA requirements in order to customize their health insurance systems to better meet the state’s context and needs while retaining the basic protections of the ACA. States must seek federal approval for a Section 1332 waiver from the Centers for Medicare and Medicaid Services (CMS). The waivers were first made available in 2017.
State Action on Section 1332 Waivers
As of November 2020, CMS has approved waiver applications for 16 states. Additionally, at least six other states have enacted legislation authorizing a Section 1332 waiver application but have yet to submit a waiver to CMS.
Approved
Pending
Enacted Legislation
N/A
USA States
Click on a state for details.
Alabama
Alaska
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2017
Authorizing Legislation: HB 374
Arizona
Arkansas
California
Colorado
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2019
Authorizing Legislation: HB 1168
Connecticut
Delaware
Description: Federal pass-through funding for a reinsurance program.
Date Approved: August 2019
Authorizing Legislation: SCR 70, HB 193
District of Columbia
Florida
Georgia
Description: Federal pass-through funding for a reinsurance program. Additionally, the state received approval for transitioning away from HealthCare.gov to the Georgia Access Model—a decentralized marketplace for selling both qualified health plans (QHPs) and non-QHPs.
Date Approved: November 2020
Authorizing Legislation: SB 106
Hawaii
Description: Relates to the requirement that states must operate a Small Business Health Options Program.
Date Approved: December 2016
Authorizing Legislation: SB 2775
Idaho
Illinois
Indiana
Description: Authorizes the commissioner of insurance and governor to apply for a Section 1332 waiver.
Year Enacted: 2018
Authorizing Legislation: HB 1301
Iowa
Kansas
Kentucky
Description: Authorizes the commissioner of insurance to apply for a Section 1332 waiver with respect to health insurance.
Year Enacted: 2017
Authorizing Legislation: HB 242
Louisiana
Maine
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2018
Authorizing Legislation: LD 659
Maryland
Description: Federal pass-through funding for a reinsurance program.
Date Approved: August 2018
Authorizing Legislation: HB 1795, SB 387
Massachusetts
Michigan
Minnesota
Description: Federal pass-through funding for a reinsurance program.
Date Approved: September 2017
Authorizing Legislation: HF 5
Mississippi
Missouri
Montana
Description: Federal pass-through funding for a reinsurance program.
Date Approved: June 2019
Authorizing Legislation: SB 125
Nebraska
Nevada
Description: Authorizes the commissioner of insurance to apply for a Section 1332 waiver with respect to health insurance coverage.
Year Enacted: 2019
Authorizing Legislation: SB 482
New Hampshire
Description: Federal pass-through funding for a reinsurance program.
Date Approved: August 2020
Authorizing Legislation: HB 469
New Jersey
Description: Federal pass-through funding for a reinsurance program.
Date Approved: August 2018
Authorizing Legislation: SB 1878
New Mexico
Description: Authorizes the superintendent of insurance, in consultation the governor, to apply for a Section 1332 waiver to establish a program relating to access and affordability of health insurance coverage.
Year Enacted: 2019
Authorizing Legislation: HB 436
New York
North Carolina
North Dakota
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2019
Authorizing Legislation: HB 1106
Ohio
Oklahoma
Oregon
Description: Federal pass-through funding for a reinsurance program.
Date Approved: October 2017
Authorizing Legislation: HB 2391
Pennsylvania
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2020
Authorizing Legislation: HB 3
Rhode Island
Description: Federal pass-through funding for a reinsurance program.
Date Approved: August 2019
Authorizing Legislation: HB 8351
South Carolina
South Dakota
Tennessee
Texas
Description: Authorizes the commissioner of insurance to apply for a Section 1332 waiver relating to small employer health benefit plans.
Year Enacted: 2017
Authorizing Legislation: SB 1406
Utah
Vermont
Virginia
Description: Authorizes the secretary of health and human resources to develop and apply for a Section 1332 waiver to implement innovative solutions to help stabilize the individual insurance market. Solutions may include a state reinsurance program or market stabilization program payments, among other solutions.
Year Enacted: 2018
Authorizing Legislation: HB 5002a
West Virginia
Washington
Wisconsin
Description: Federal pass-through funding for a reinsurance program.
Date Approved: July 2018
Authorizing Legislation: HB 770
Wyoming
American Samoa
Virgin Islands
Guam
Mariana Islands
Puerto Rico
Some states withdrew their waiver application or CMS deemed their application incomplete. For a list of these states, please visit the CMS website.
How States Are Using Section 1332 Waivers
Most states (15 out of 16 with federal approval) have leveraged Section 1332 waivers to seek federal approval and pass-through funding for state-based reinsurance programs, which aim to lower health insurance premiums for plans sold in the individual insurance market. A reinsurance program is a reimbursement system that protects insurers from high medical claims for beneficiaries with complex and costly medical needs. It usually involves a third party acting as an insurer for the insurance company by paying part of a claim once it surpasses a certain amount, or by covering part or all of the claims for individuals with pre-determined, high-cost conditions.
Reinsurance programs are funded by a mix a state and federal dollars. Through a Section 1332 waiver, states receive federal pass-through funding—or the amount the federal government saves in premium subsidies resulting from the reinsurance program. States then provide additional funding for the reinsurance from several sources, including assessment fees on insurers and providers or state general funds.
Beyond reinsurance programs, states can use 1332 waivers for a variety other purposes—such as waiving requirements for how states operate their insurance marketplaces. For example, Hawaii’s waiver allows the state to cease operation of the ACA’s Small Business Health Options Program (SHOP), which conflicts with certain elements of a long-standing state law requiring small and large employers to provide comprehensive coverage beyond what the ACA requires. The waiver also allows the state to receive federal pass-through funding equal to what the state would receive in small business tax credits if it were to operate SHOP.
Georgia received approval for a two-part 1332 waiver. First, CMS approved and will provide pass-through funding for a reinsurance program beginning in 2022. Additionally, CMS authorized the state to exit the federally facilitated marketplace and instead operate a decentralized, private-sector enrollment platform run by web-brokers and insurers. Beginning in 2023, consumers will go to an individual web-broker or insurer’s website to buy coverage rather than go to HealthCare.gov. Web-brokers and insurers may offer both ACA-compliant health plans and other health insurance plans that do not have to comply with ACA requirements, such as short-term limited duration health plans.
Federal Approval Process
To pursue CMS approval of a Section 1332 waiver, states must develop and post a draft application for public comment and input. State legislation authorizing a certain entity—such as a state department of insurance or governor’s office—to apply for a waiver is also often required.
Additionally, states must demonstrate through actuarial analysis how their Section 1332 waiver application meets the following statutory requirements, or “guardrails:”
- Provides coverage that is at least as comprehensive as would be provided without the waiver.
- Provides coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable for the state’s residents as would be provided absent a waiver.
- Provides coverage to at least a comparable number of state residents.
- The proposal will not increase the federal deficit.
Earlier CMS guidance provided a strict interpretation of Section 1332 waiver guardrails. CMS, however, released guidance in October 2018 that provides a broader interpretation of guardrail requirements. The new guidance establishes several “less restrictive” changes for evaluating Section 1332 waivers. These include relaxing the comprehensive and cost-sharing standards, allowing states to establish state-based private exchange websites to sell both ACA- and non-ACA compliant-plans, and allowing states to pursue executive orders and regulations in conjunction with existing state laws in order to seek 1332 waivers.
Additional Resources
NCSL Resources
Federal Resources