Title 42, The Public Health and WelfareRelease 119-110
§300gg–44 State Flexibility in Individual Market Reforms
Title 42 › CHAPTER 6A — PUBLIC HEALTH SERVICE › SUBCHAPTER XXV — REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE › Part B — Individual Market Rules › subpart 1 — portability, access, and renewability requirements › § 300gg–44
Summary
States can avoid certain federal rules for individual-market health plans if they put in place an approved alternative system that gives all eligible people a choice of coverage, does not use preexisting condition exclusions, includes at least one plan similar to comprehensive or standard coverage, and uses one of three approved approaches (a NAIC model law, a qualified high‑risk pool, or another system that spreads risk or gives full choice). The alternative can be public or private and can be things like a high‑risk pool, guaranteed‑issue plans, open enrollment, or a mix of these. To get the relief, a governor had to notify the federal Secretary by April 1, 1997 that the State had enacted or would enact required laws by January 1, 1998 (or by July 1, 1998 for States whose legislatures did not meet in the 12‑month period beginning August 21, 1996) and must give information for review. Those delayed States had to re‑notify by April 1, 1998. States must update the Secretary every 3 years. The Secretary reviews the plan, warns the State if changes are needed, and may end the relief if the plan is not acceptable or not being run. If a State files after January 1, 1997 and the Secretary does not make the required finding within a 90‑day review period, the mechanism is treated as acceptable starting 90 days after that review period ends. The NAIC model acts were adopted June 3, 1996, and the high‑risk pool standards refer to rules as of August 21, 1996.
Full Legal Text
Title 42, §300gg–44
The Public Health and Welfare, Source: USLM XML via OLRC
(a)Waiver of requirements where implementation of acceptable alternative mechanism
(1)In general
The requirements of section 300gg–41 of this title shall not apply with respect to health insurance coverage offered in the individual market in the State so long as a State is found to be implementing, in accordance with this section and consistent with section 300gg–62(b) of this title, an alternative mechanism (in this section referred to as an “acceptable alternative mechanism”)—
(A)under which all eligible individuals are provided a choice of health insurance coverage;
(B)under which such coverage does not impose any preexisting condition exclusion with respect to such coverage;
(C)under which such choice of coverage includes at least one policy form of coverage that is comparable to comprehensive health insurance coverage offered in the individual market in such State or that is comparable to a standard option of coverage available under the group or individual health insurance laws of such State; and
(D)in a State which is implementing—
(i)a model act described in subsection (c)(1),
(ii)a qualified high risk pool described in subsection (c)(2), or
(iii)a mechanism described in subsection (c)(3).
(2)Permissible forms of mechanisms
A private or public individual health insurance mechanism (such as a health insurance coverage pool or programs, mandatory group conversion policies, guaranteed issue of one or more plans of individual health insurance coverage, or open enrollment by one or more health insurance issuers), or combination of such mechanisms, that is designed to provide access to health benefits for individuals in the individual market in the State in accordance with this section may constitute an acceptable alternative mechanism.
(b)Application of acceptable alternative mechanisms
(1)Presumption
(A)In general
Subject to the succeeding provisions of this subsection, a State is presumed to be implementing an acceptable alternative mechanism in accordance with this section as of July 1, 1997, if, by not later than April 1, 1997, the chief executive officer of a State—
(i)notifies the Secretary that the State has enacted or intends to enact (by not later than January 1, 1998, or July 1, 1998, in the case of a State described in subparagraph (B)(ii)) any necessary legislation to provide for the implementation of a mechanism reasonably designed to be an acceptable alternative mechanism as of January 1, 1998, (or, in the case of a State described in subparagraph (B)(ii), July 1, 1998); and
(ii)provides the Secretary with such information as the Secretary may require to review the mechanism and its implementation (or proposed implementation) under this subsection.
(B)Delay permitted for certain States
(i)Effect of delay
In the case of a State described in clause (ii) that provides notice under subparagraph (A)(i), for the presumption to continue on and after July 1, 1998, the chief executive officer of the State by April 1, 1998—
(I)must notify the Secretary that the State has enacted any necessary legislation to provide for the implementation of a mechanism reasonably designed to be an acceptable alternative mechanism as of July 1, 1998; and
(II)must provide the Secretary with such information as the Secretary may require to review the mechanism and its implementation (or proposed implementation) under this subsection.
(ii)States described
A State described in this clause is a State that has a legislature that does not meet within the 12-month period beginning on August 21, 1996.
(C)Continued application
In order for a mechanism to continue to be presumed to be an acceptable alternative mechanism, the State shall provide the Secretary every 3 years with information described in subparagraph (A)(ii) or (B)(i)(II) (as the case may be).
(2)Notice
If the Secretary finds, after review of information provided under paragraph (1) and in consultation with the chief executive officer of the State and the insurance commissioner or chief insurance regulatory official of the State, that such a mechanism is not an acceptable alternative mechanism or is not (or no longer) being implemented, the Secretary—
(A)shall notify the State of—
(i)such preliminary determination, and
(ii)the consequences under paragraph (3) of a failure to implement such a mechanism; and
(B)shall permit the State a reasonable opportunity in which to modify the mechanism (or to adopt another mechanism) in a manner so that may be an acceptable alternative mechanism or to provide for implementation of such a mechanism.
(3)Final determination
If, after providing notice and opportunity under paragraph (2), the Secretary finds that the mechanism is not an acceptable alternative mechanism or the State is not implementing such a mechanism, the Secretary shall notify the State that the State is no longer considered to be implementing an acceptable alternative mechanism and that the requirements of section 300gg–41 of this title shall apply to health insurance coverage offered in the individual market in the State, effective as of a date specified in the notice.
(4)Limitation on secretarial authority
The Secretary shall not make a determination under paragraph (2) or (3) on any basis other than the basis that a mechanism is not an acceptable alternative mechanism or is not being implemented.
(5)Future adoption of mechanisms
If a State, after January 1, 1997, submits the notice and information described in paragraph (1), unless the Secretary makes a finding described in paragraph (3) within the 90-day period beginning on the date of submission of the notice and information, the mechanism shall be considered to be an acceptable alternative mechanism for purposes of this section, effective 90 days after the end of such period, subject to the second sentence of paragraph (1).
(c)Provision related to risk
(1)Adoption of NAIC models
The model act referred to in subsection (a)(1)(D)(i) is the Small Employer and Individual Health Insurance Availability Model Act (adopted by the National Association of Insurance Commissioners on June 3, 1996) insofar as it applies to individual health insurance coverage or the Individual Health Insurance Portability Model Act (also adopted by such Association on such date).
(2)Qualified high risk pool
For purposes of subsection (a)(1)(D)(ii), a “qualified high risk pool” described in this paragraph is a high risk pool that—
(A)provides to all eligible individuals health insurance coverage (or comparable coverage) that does not impose any preexisting condition exclusion with respect to such coverage for all eligible individuals, and
(B)provides for premium rates and covered benefits for such coverage consistent with standards included in the NAIC Model Health Plan for Uninsurable Individuals Act (as in effect as of August 21, 1996).
(3)Other mechanisms
For purposes of subsection (a)(1)(D)(iii), a mechanism described in this paragraph— (A)
(B)is a mechanism under which each eligible individual is provided a choice of all individual health insurance coverage otherwise available.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Codification August 21, 1996, referred to in subsec. (b)(1)(B)(ii), was in the original “the date of enactment of this Act”, which was translated as meaning the date of enactment of Pub. L. 104–191, which enacted this subchapter, to reflect the probable intent of Congress.
Amendments
1996—Subsec. (a)(1). Pub. L. 104–204 made technical amendment to reference in original act which appears in text as reference to section 300gg–62(b) of this title.
Statutory Notes and Related Subsidiaries
Effective Date
of 1996 Amendment Pub. L. 104–204, title VI, § 605(c), Sept. 26, 1996, 110 Stat. 2942, provided that: “The
Amendments
made by this section [enacting section 300gg–51 of this title and amending this section and section 300gg–61 and 300gg–62 of this title] shall apply with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market on or after January 1, 1998.”
Effective Date
Section applicable with respect to health insurance coverage offered, sold, issued, renewed, in effect, or operated in the individual market after June 30, 1997, regardless of when a period of creditable coverage occurs, see section 111(b) of Pub. L. 104–191, set out as a note under section 300gg–41 of this title.
Reference
Citations & Metadata
Citation
42 U.S.C. § 300gg–44
Title 42, The Public Health and Welfare
Last Updated
Sep 23, 2026
Release point: 119-110