Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Health Care & Wellness Committee

SB 6488

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Description: Directing the health care authority to apply for a federal innovation waiver to expand an employer-based coverage option with a portable health care account.

Sponsors: Senators Becker, Parlette, Dammeier, Schoesler, Brown, Bailey, Honeyford and King.

Brief Summary of Bill

  • Requires the Health Care Authority to apply for a federal waiver to integrate certain employer health care arrangements with individual market policies.

Hearing Date: 2/24/16

Staff: Jim Morishima (786-7191).

Background:

Employer Health Care Arrangements.

Guidance issued by the federal government indicates that an employer health care arrangement involving an employer reimbursing its employees for their purchase of individual market policies is considered to be group health coverage. Such an arrangement is therefore subject to market reforms under the Affordable Care Act (ACA), including the prohibition on annual limits for essential health benefits and the requirement to provide preventive services without cost-sharing. This type of arrangement may satisfy the market reforms if it is integrated with a group health plan, but it may not be integrated with individual market policies to satisfy the market reforms. An employer who participates in this type of arrangement may be subject to federal tax penalties. In addition, an employee who participates in this type of arrangement would be ineligible for premium tax credits, because he or she would be considered to be covered by a group health plan.

Second-Party Payments.

Issuers must accept payments made by a second-party payment process, and these payments may be made with any legal tender denominated in United States dollars. "Second-party payment process" means a process in which:

An issuer is not required to accept payment by a second-party payment process if the second-party payer is controlled by, or receives funding from, an entity that may be reimbursed by an issuer for providing health care services, or if the account is funded by such an entity, except for the third-party entities from which federal law requires the issuer to accept payment.

Section 1332 Waivers.

Section 1332 of the ACA authorizes states to apply to the Secretary of Health and Human Services (HHS) and the Secretary of the Treasury for a waiver from certain provisions of the ACA for plan years beginning in 2017. A waiver may be granted if the state plan will provide coverage that is at least as comprehensive and affordable as coverage under the ACA to at least a comparable number of people, without increasing the federal deficit. The application must include a description of the state legislation and program to implement a plan meeting the requirements for a waiver, as well as a 10-year budget plan that is budget neutral for the federal government.

Summary of Bill:

The Health Care Authority (HCA), in consultation with the Office of the Insurance Commissioner, must apply for a federal waiver to integrate employer health care arrangements with individual market policies. The health care arrangements must be account-based plans that:

When preparing the application, the HCA must provide documentation necessary to support the estimates included in the waiver, including actuarial analyses and actuarial certifications, economic analyses, data assumptions, targets, an implementation timeline, and a 10-year budget. The documentation must meet the following requirements, as required by federal law:

The HCA must provide public notice and opportunity for comment to the public, including a separate process for consulting with federally recognized Tribes. The HCA must provide status reports to the Joint Select Committee on Health Care Oversight upon request. Upon receipt of the waiver, the HCA must notify the Governor and the Legislature.

The act is null and void, unless specific funding is provided by July 1, 2016, in the omnibus operating appropriations act.

Appropriation: None.

Fiscal Note: Available.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.