State officials have secured a one-year waiver from the U.S. Department of Health and Human Services (HHS) authorizing state health insurers to maintain the use of small group rating factors that are permitted under state law, but not aligned with the Affordable Care Act (ACA).

The Baker Administration cited concerns that transitioning to federal market rules could cause health insurance premiums to spike for some small businesses and disrupt the insurance market.
Massachusetts in 2013 received a waiver to allow a gradual transition to full compliance with the ACA. The waiver recognized the success of the  state’s health reform law passed in 2006 – which led to a 96.4 percent of Massachusetts residents having health insurance coverage – with latitude to continue certain state insurance practices, such as rating factors permitted under state law. These state rating factors offer insurers greater flexibility to price insurance plans according to the traditional practices of the Massachusetts market, preventing disruption in pricing.

The original waiver allowed small group insurers to continue to use two-thirds of the state rating factors in effect in July 2013 through Jan. 1, 2017, after which rating factors would be reduced to one-third until Dec. 31, 2017, and phased out entirely on Jan. 1, 2018.

Under this agreement Massachusetts small group insurers can continue to use one-third of the state rating factors in effect in July 2013 through Dec. 31, 2018.