Washington’s Section 1332 Waiver: Extending Health Insurance to Undocumented Immigrants

In 2021, the Washington State Legislature authorized the state’s Affordable Care Act (ACA) health insurance exchange, the Washington Health Benefit Exchange to find ways for residents who don’t qualify for state or federal health insurance subsidies to obtain health insurance overage. Specifically, the legislature permitted the state’s health insurance exchange to seek a federal 1332 waiver while requiring a state-based solution by 2024.

As a result, Washington recently filed its Section 1332 waiver application with the Centers for Medicare and Medicaid Services (CMS). In it, they asked for CMS approval to implement a plan that would make it one of the first states to allow undocumented immigrants to purchase health and dental insurance on the state’s health insurance exchange.

Additionally, the state would extend access to the state’s Cascade Care savings program, a new premium assistance program set to go into effect this fall, to all state residents, regardless of immigration status.

Below is more information about Washington’s Section 1332 Waiver:

What is a Section 1332 Waiver?

Funny, you should ask. We wrote an entire post about Section 1332 Waivers a while back. Essentially, Section 1332 waivers allow states to waive certain ACA requirements to customize their health insurance programs. In this case, Washington would like to waive the restriction that bars those that are not US citizens, US nationals, or aliens lawfully present in the US from being considered qualified individuals who may enroll in a health plan on the exchange. The waiver also would allow the state to offer Cascade Care Savings subsidies to undocumented residents.

To comply, the waiver request must show that the state meets certain guardrails. These include that they meet the following:

  • comprehensiveness requirement
  • affordability requirement
  • scope of coverage requirement
  • deficit neutrality requirement

The state’s waiver request includes how they will meet or exceed each of these requirements.

What is Cascade Care Savings?

As previously mentioned, Cascade Care Savings is an affordability program. It provides subsidies to certain eligible populations, lowering the premium cost of health insurance. The federal government has a similar affordability program, offering premium tax credits (PTC) to qualified individuals. The state of Washington isn’t seeking to allow undocumented residents access to federal premium tax credits. However, the state is seeking to allow access to Cascade Care Savings.

To be eligible for premium assistance through the Cascade Care Savings program, an individual must:

  1. Be a resident of Washington
  2. Be eligible for a qualified health plan
  3. Have income up to 250% of the federal poverty level (FPL)
  4. Enroll in a plan eligible for premium assistance

The state has set aside $55 million annually for Cascade Care Savings.  The state earmarked $5 million of that $55 million for those who can’t access federal premium tax credits. Actual premium assistance amounts will be calculated annually. The program becomes effective for the 2023 plan year.

What impact will the waiver have on enrollment in the state’s health insurance exchange?

According to the state, 23% of the state’s uninsured population can’t purchase insurance on the exchange because they aren’t considered lawfully present. As a result, opening the exchange to undocumented immigrants would lead to a 1.1% enrollment increase in 2024. By year 5, 2028, they’d see a 1.4% enrollment increase. Specifically, the state expects enrollment to go from a baseline of 237,900 individual enrollments to an expected enrollment of 240,500 in 2024, an increase of 2,600.

How much will Washington’s Section 1332 Waiver cost the federal government?

Because one of the requirements is that the waiver does not increase the federal government’s cost, from a federal government perspective, costs won’t increase. Why? Because undocumented immigrants will gain access to health insurance on Washington’s state exchange, they won’t gain access to federal tax credits as a result. The state estimates that adding to the pool of insured could drive down insurance premium rates, which in turn drives down premium tax credits paid by the federal government. As a result, they estimate savings of over $11 million during the first five years.

What does the implementation plan look like?

The state has requested approval of its Section 1332 waiver by August of 2022. In September, Washington will finish modeling subsidy amounts for the Cascade Care Savings program. In November, the waiver population will begin enrolling in health plans, and beginning in January of 2024 affordability funds from the Cascade Care Savings program will be made available to the waiver population.

What’s next for Washington’s Section 1332 Waiver?

The federal government has up to 45 days to review the application, which is followed by a month-long public comment period. Then, the federal government has up to 180 days to respond to the request.

Certifi helps state health insurance exchanges improve enrollment and build a better member experience with state insurance exchange premium billing and payment solutions.

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