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A TRUSTED INDEPENDENT HEALTH INSURANCE GUIDE SINCE 1994.
Vermont operates a state-run health insurance exchange – Vermont Health Connect. The exchange offers additional state-funded premium subsidies and cost-sharing reductions, in addition to the federal subsidies that are provided by the ACA. The result is that households with income up to 200% of the poverty level can qualify for premium-free benchmark plans (as opposed to a 150% of FPL limit for this in most other states). And these residents can enroll anytime through Vermont Health Connect, without being limited to just the open enrollment period.
Two carriers – Blue Cross Blue Shield of Vermont and MVP – are offering 2023 health plans through the state’s exchange.
The entire state of Vermont is one rating area (premiums don’t vary from one part of the state to another), and premiums in Vermont do not vary by age. Vermont also prohibits insurers from imposing a tobacco surcharge, so tobacco users in Vermont do not pay higher premiums.
Average rate increases in Vermont amount to about 15% for 2023, before any subsidies are applied. That’s significantly larger than the average percentage rate increase nationwide, but premium subsidies also grow to keep pace with the cost of the benchmark plan in each area.
Vermont has a state-run health insurance exchange (Vermont Health Connect) and has long been a pioneer in health care reform. Initially, Vermont was planning to switch to a single-payer system as of 2017, but abandoned that plan in late 2014 and has continued to use the same general private insurance market structure used in the rest of the country.
For 2023 coverage, there are two insurers that offer exchange plans in Vermont:
Both insurers also offer plans that can be purchased directly, instead of via the health insurance marketplace, for people who don’t qualify for premium subsidies. (Subsidies are only available if the plan is purchased via the marketplace.)
In Vermont, the open enrollment period for individual/family coverage runs from November 1 through January 15. Outside of open enrollment, a qualifying event is necessary to enroll or make changes to your coverage.
Learn more about your enrollment opportunities in our comprehensive guides:
Rates for 2023 Vermont health coverage were finalized by the Green Mountain Care Board in early August 2022. For individual/family health coverage, the following rate changes were finalized:
Overall, the weighted average rate increase is about 15%, which is considerably above the national average for 2023. But premium subsidies grow to keep pace with the cost of the benchmark plan (second-lowest-cost silver plan), and subsidies continue to be larger and more widely available thanks to the American Rescue Plan and the Inflation Reduction Act.
It’s noteworthy that Vermont’s individual and small group markets now have different premiums. Prior to 2022, the state had merged its individual and small group markets, but opted to “unmerge” them as of the 2022 plan year, which is why the rate changes that apply to the small group market are no longer the same as the rate changes for the individual market (in previous years, the same rate change would apply to both types of coverage).
As is always the case when rate changes are discussed, these changes apply to full-price plans. But the majority of enrollees receive premium subsidies that offset their monthly costs. For those enrollees, net premium changes can be very different from the overall average rate changes for full-price plans (due to changes in subsidy amounts as well as changes in their own plan’s price).
For perspective, here’s at how premiums have changed in Vermont’s market in prior years:
2014: Rates in Vermont’s exchange were the fifth highest in the nation in 2014, due in part to the fact that Vermont has the second-oldest population in the country and utilizes community rating, with no variation in premiums based on age.
2015: average increase of 7.8%. For 2015 plans, the Green Mountain Care Board made reductions to the proposed rate increases for both of the state’s insurers. BCBSVT (which covered more than 90% of the exchange’s enrollees) had submitted 2015 rates with an average increase of 9.8%, and the board cut that down to 7.7%. MVP Health Care had proposed a rate increase of 15.3%, which was reduced to 10.9% during the review process. The weighted average rate increase for 2015 was about 7.8%, owing largely to BCBSVT’s significant market share.
2016: average increase of 5.5%. For 2016, Vermont regulators approved a 5.5% weighted average rate increase. The two exchange carriers submitted proposed 2016 rates with a weighted average rate increase of 7.75%, but regulators reduced the rate hikes before finalizing them.
2017: average increase of 7%. The proposed weighted average rate increase for the combined individual and small group markets in Vermont was initially 8.3% for 2017, but some new rates were later filed, public hearings were held, and state regulators ultimately approved lower-than-filed average rate increases for both carriers: For MVP, regulators approved a 3.7% average increase, and for BCBSVT, regulators approved a 7.3% average increase. The overall average increase was 7%.
2018: average increase of 8.5%. For 2018, the Green Mountain Care Board (GMCB) announced approved rate changes for MVP and BCBSVT that were once again smaller than the insurers had proposed. MVP had proposed a 6.74% increase, but regulators approved an average increase of just 3.5%. BCBSVT had proposed an average rate increase of 12.69%, but the approved average increase was 9.2%. Across the full individual and small group market, the weighted average approved rate increase was just 8.47%, which was far smaller than other states saw for 2018.
For both insurers, the approved rates were based on the assumption that federal funding for cost-sharing reductions (CSR) would continue. But on October 12, 2018 (less than three weeks before the start of open enrollment) the Trump administration announced that funding for cost-sharing reductions (CSR) would end immediately. Insurers in many states had already prepared for this eventuality in their rate filings, although some states scrambled in the subsequent days to revise rate filings to add the cost of CSR to 2018 premiums. Vermont, however, stuck with the rates that they approved in August — which were based on the assumption that the federal government would continue to fund CSR. But even if Vermont’s insurers had been allowed to add the cost of CSR to premiums for 2018, the impact would have been smaller than it was in most states. This is due in large part to the fact that the individual and small group risk pools were combined in the state (until 2022), meaning that an increased cost situation that impacted rates for the individual market was spread across the small group market too, resulting in a more stable rate situation.
2019: Average increase of 6.1%. Vermont insurers were allowed to start adding the cost of CSR to on-exchange silver plans for 2019, under the terms of S.19 (described below), and also created “reflective silver plans” (sold outside the exchange) that are slightly different from the on-exchange silver plans, and which do not have the cost of CSR added to their premiums. For 2019 plans, the Green Mountain Care Board once again approved rates that were lower than the insurers had proposed. The approved average rate increases were 6.6% for MVP (but after accounting for the larger premium subsidies due to silver loading the cost of CSR, the average effective rate increase was just 1.9%; silver plan rates increased by between 25 and 31%) and 5.8% for BCBSVT (but after accounting for the larger premium subsidies due to silver loading the cost of CSR, the average effective rate increase was just 3.2%; silver plan rates increased by about 16%). MVP had about one-third of the market share in 2018, and BCBSVT had two-thirds. Across both carriers, the average rate increase was 6.1% for 2019.
2020: 11.5% increase. In August 2019, Vermont regulators announced the approved rate increases for the state’s two insurers for 2020. Since Vermont’s individual and small group markets were still merged at that point, these average rate changes applied to both markets:
As has been the case every year since 2014, the Green Mountain Care Board approved rate changes that were smaller than the two insurers proposed. But the rate increases, which averaged 11.5%, were still much more significant than the national average for 2020, and average unsubsidized premiums in Vermont were well above the national average in 2020.
In announcing the approved rates, the Green Mountain Care Board expressed frustration at the size of the increases, but noted that both insurers had been losing money in 2018, and that their reserves had been dwindling. The rate increases were an effort to protect insurer solvency, and were actuarially justified,
2021: Average full-price premiums in Vermont’s individual and small group market increased by about 3.5% in 2021. Insurers in the state had initially proposed an average rate increase of nearly twice this much, but the Green Mountain Care Board approved smaller rate increases.
In May 2020, Vermont’s insurers submitted rate proposals for 2021 individual and small group plans (Vermont’s individual and small group markets were still merged for 2021, so unlike most states, the same rate changes applied in both markets). Over the following few months, the rates were reviewed by regulators and 900 Vermonters submitted comments on the proposed rate increases. In mid-August, the Green Mountain Care Board finalized the premium changes for 2021, both of which are smaller than the insurers had proposed:
Market share for the two insurers is fairly evenly split, so the overall average rate increase was about 3.5%.
2022: Rates for 2022 health coverage were finalized in Vermont in early August 2021:
Vermont unmerged its individual and small group markets as of 2022. Splitting up the markets resulted in lower premiums for the small group market and higher premiums for the individual market.
According to CMS, there were 26,705 people who signed up for private plans through Vermont Health Connect during the open enrollment period for 2022 coverage.
For perspective, here’s a look back at enrollment in Vermont’s exchange over the years:
Vermont is one of only four states that has continued with the original plan to include groups of up to 100 employees under the definition of “small group” as of 2016, despite the federal PACE Act that became law in the fall of 2015 and allowed states to keep groups of more than 50 employees classified as large groups.
In 2020, legislation (S.216) was introduced in Vermont that would have allowed municipal employers of any size to use Vermont’s small business health insurance exchange in order to offer coverage to their employees. That legislation did not succeed, however, so municipal businesses — like all other businesses in Vermont — can only use the exchange if they have up to 100 employees.
Vermont used to merge its individual/family and small group health insurance markets, but did away with that as of 2022. So the small group market and the individual market are now separate in terms of setting premium rates.
Starting in 2019, Vermont residents with modest incomes found that they could often obtain bronze-level plans with no premium, and gold-level plans that were priced below silver-level plans. Deals like those were not available in Vermont prior to 2019, but that changed due to the way the state began handling the cost of cost-sharing reductions in 2019.
For 2018 coverage, Vermont, North Dakota, and the District of Columbia were the only states that didn’t allow insurers to add the cost of cost-sharing reductions (CSR) to premiums after the Trump administration cut off federal funding for CSR. In most states, insurers were allowed to either add the cost of CSR to all silver plan premiums, to all on-exchange silver plan premiums, or, in a few cases, to all metal-level plan premiums. But in Vermont and North Dakota, insurers simply had to absorb the cost of CSR, estimated at $12 million a year in Vermont.
The impact of adding CSR to premiums, if it had been allowed for 2018, would have been much smaller in Vermont than the national average, due in large part to the state’s combined individual and small group risk pools (the risk pools are no longer combined as of 2022). But even with a fairly small impact, it’s not sustainable to expect insurers to continue to absorb the cost indefinitely. Without federal funding allocated to reimburse insurers for the cost of CSR, adding the cost to premiums is the only solution that makes sense.
If the cost of CSR is going to be added to premiums, adding it to only on-exchange silver plan premiums is the solution that benefits the most consumers, since it allows the additional cost to be borne almost entirely by larger premium subsidies (which are tied to the cost of silver plans). If there are off-exchange silver plans available that don’t include the cost of CSR in their premiums, people who don’t get premium subsidies can purchase those plans instead of the on-exchange silver plans, and avoid having to pay the added premium to cover CSR. People who buy plans at other metal levels avoid the cost altogether, since it’s only added to silver plans. And if they get premium subsidies, those subsidies are larger due to the higher cost of silver plans in the exchange and the commensurately larger premium subsidies.
But this was not an option in Vermont for 2018, since the state didn’t allow insurers to add the cost of CSR to premiums at all, and the plans that were for sale outside of Vermont Health Connect were identical to those sold within Vermont Health Connect, and thus equally priced. People who aren’t eligible for premium subsidies are encouraged to enroll directly through BCBSVT and MVP, using the full-cost direct enrollment pathway, but prior to 2019, the plans were the same as the ones offered through Vermont Health Connect and there was no difference in pricing.
As of 2019, however, Vermont addressed the situation, and insurers are now allowed to add the cost of CSR to silver plan premiums. Vermont enacted legislation (Senate Bill 19, signed into law in February 2018) that codifies the process that insurers use, allowing them to add the cost of CSR to on-exchange silver plans, and offer “reflective silver plans” outside the exchange, without the cost of CSR added to the premiums for the reflective plans. The off-exchange reflective silver plans are similar to the on-exchange silver plans, but with at least one variation, which allows for differential pricing, letting the insurers add the cost of CSR only to the on-exchange versions (as outlined in the insurers’ rate filings, the modifications are modest: either a $5 difference in copays, a 5% difference in coinsurance, or a $25 difference in the deductible). As of March 2019, there were 2,641 Vermont residents enrolled in these “reflective” silver plans.
In December 2018, Vermont Health Connect published an open letter detailing the effects of the change in how the cost of CSR is handled in Vermont:
Vermont has continued to have the insurers add the cost of CSR to silver-level plans. And starting in 2021, the American Rescue Plan made premium subsidies larger and more widely available than they used to be. Those provisions have been extended through 2025 by the Inflation Reduction Act, ensuring that coverage will continue to be more affordable for at least the next few years.
Vermont has an individual mandate as of 2020, requiring residents to maintain minimum essential coverage. But there is no penalty for noncompliance. Instead, Vermont tax filers will simply have to indicate whether they had coverage during the year when they file their 2020 state tax return, and the data will be used by the state to “provide targeted outreach to assist those residents [without minimum essential coverage] in enrolling in appropriate and affordable health insurance or other health coverage.”
In March 2018, the Vermont House of Representatives passed H.696 to implement an individual mandate in the state of Vermont. The Senate also passed the legislation, but without the January 1, 2019 effective date that the House had included. Ultimately, members from both chambers formed a conference committee and agreed on a compromise, calling for the state’s individual mandate to take effect on January 1, 2020. The bill was signed into law by Governor Scott in May 2018.
The specifics of how Vermont’s individual mandate would work were not part of the 2018 legislation. Instead, a working group was tasked with coming up with recommendations that lawmakers would consider during the 2019 legislative session. The working group included representatives from both insurers (MVP and BCBSVT) as well as representatives from the Green Mountain Care Board, the Office of the Health Care Advocate, and the Departments of Tax, Financial Regulation, and Human Services.
They published their final report in November 2018, noting that they had not reached a consensus in terms of all of their recommendations for how the mandate should be structured and enforced. But the report included a wealth of information and numerous recommendations for lawmakers to use as a reference during the 2019 legislative session when they were tasked with finalizing the details of how the state’s individual mandate will be implemented.
In general, the recommendations of the working group were similar to how the ACA’s individual mandate penalty was designed and enforced, but with some changes:
Once the 2019 legislative session got underway, lawmakers began considering H.524. The legislation includes various health care reform consumer protection elements, but sorting out the details of the individual mandate was among its primary goals. Initially, the legislation included an individual mandate penalty modeled after the ACA’s penalty that applied at the federal level until the end of 2018. But the final version of the bill that was signed into law (as Act 63) in June 2019 did not include any of the mandate penalty language.
Instead, the bill simply requires residents to report their health insurance status on their tax returns, and the state will use that data to provide “targeted outreach” to assist uninsured residents with enrolling in health insurance coverage.
Massachusetts has had an individual mandate since 2006, and new individual mandates were implemented in New Jersey and DC as of 2019, and in California and Rhode Island as of 2020. Vermont technically joined them with an individual mandate as of 2020, but their approach to implementation is very different as they do not have a penalty, at least initially.
H.524 does include various other health care reform provisions, including:
In every state, the Affordable Care Act includes a provision to lower out-of-pocket costs for people who qualify based on household income (no more than 250% of the poverty level), and who select a silver plan through the exchange. And the ACA also includes income-based premium subsidies for people who select a bronze, silver, gold, or platinum plan in the exchange.
But in Vermont, premium subsidies (Vermont Premium Assistance or VPA) and cost-sharing reductions (Vermont Cost-Sharing Reductions) are also funded by the state for enrollees with income up to 300% of the poverty level.
Thanks to the combination of state and federal funding, premium subsidies for people with income up to 300% of the poverty level are larger in Vermont than they would be if only federal (ACA) funding was used. And cost-sharing reductions are also available to Vermont Health Connect enrollees with incomes up to 300% of the poverty level, as long as they select a silver plan.
The Vermont Premium Assistance program reduces the percentage of income that people have to pay for the benchmark plan by 1.5 percentage points (for those with income up to 300% of the poverty level). Due to the increased financial assistance that results in more people being eligible for premium-free coverage, Vermont Health Connect allows people with income up to 200% of the poverty level to enroll anytime, rather than having to wait for the annual open enrollment period.
In early 2015, there were concerns that the budget proposal for Fiscal Year 2016 wouldn’t include state funds for cost-sharing reductions past the end of 2015. But in June 2015, Governor Shumlin signed Senate Bill 139 into law (Act 54). The Act provided funding (about $761,000) to maintain the additional cost-sharing reductions provided by the state of Vermont.
In Vermont, cost-sharing reductions are the same as other states for people with incomes up to 200% of the poverty level. But the state provides additional cost-sharing reductions (on top of what’s covered by federal funds) for people with incomes between 200 and 250% of the poverty level, and also provides some cost-sharing reductions for people with incomes between 250 and 300% of the poverty level (that group doesn’t get federal cost-sharing reductions at all).
In 2014 and 2015, Vermont was the only state (in addition to DC) where off-exchange plans were not allowed to be sold — all non-grandfathered individual and small group plans in Vermont were on-exchange plans (although small groups enroll in Vermont Health Connect plans directly through the state’s two carriers – see more details below).
But starting in 2016, Vermont introduced “full-cost individual direct enrollment” which essentially created an off-exchange market in the state. People have the option of enrolling in qualified health plans (QHPs) directly through Blue Cross Blue Shield of Vermont or MVP, with the understanding that no subsidies are available if they enroll directly with the carriers rather than through the exchange (in every state, enrollments completed outside the exchange are ineligible for subsidies).
By February 2017, according to state officials, there were 5,662 people enrolled in full-cost individual direct enrollment plans in Vermont. HHS estimated in October 2016 that there were 1,000 people in Vermont enrolled in off-exchange coverage who would be eligible for subsidies if they switched to on-exchange plans.
Vermont Health Connect has gone to great lengths to explain that subsidies are not available via the full-cost individual direct enrollment path (indeed, even using the term “full-cost” in the name). It’s essential that people only select that pathway if they’re 100 percent certain that they will not qualify for any subsidies during the year. If in doubt, the exchange is the safer way to go, as that allows people to keep the option of claiming the subsidies on their tax returns, even if they don’t want to take them up front throughout the year.
Once Governor Scott took office, he announced that more enrollees would be purchasing Vermont Health Connect plans directly from BCBSVT and MVP, in a move intended to take some volume and pressure off the customer service team at Vermont Health Connect, and simultaneously save the state an estimated $2.8 million per year.
I spoke with BCBSVT about this in 2017, and they explained that people who receive premium subsidies still have to enroll through the exchange, and that the direct-to-carrier enrollment is the same full-cost individual direct enrollment that has been in place since 2016. But the state is now putting more emphasis on promoting that path, encouraging non-subsidy-eligible enrollees to enroll directly through the carriers, while subsidy-eligible enrollees continue to sign up through Vermont Health Connect.
By 2018, enrollment in private plans through Vermont Health Connect stood at 27,595, while 6,440 people were enrolled in plans purchased directly from MVP and BCBSVT. And the exchange actively encouraged non-subsidy-eligible enrollees who want silver plans to use the full-cost direct enrollment pathway in order to obtain lower-cost plans for 2019. As a result, on-exchange enrollment dropped by about 2,000 people, while direct-to-carrier enrollment grew by roughly 2,000 people.
In March 2016, Vermont became the first state to file a 1332 waiver with CMS (Hawaii and Massachusetts had both created 1332 waiver drafts, but Vermont was the first state to officially submit a waiver proposal to CMS). Vermont’s 1332 waiver proposal was a request to waive the ACA’s requirement that exchanges include an online portal for small businesses to enroll in health plans (SHOP).
Instead, Vermont was seeking permission to maintain the system they’ve been using since 2014, which requires direct enrollment through the two carriers that offer small business plans in Vermont. Although Vermont has never established a working online SHOP exchange portal, all small business health plans available in Vermont are certified by Vermont Health Connect, the state-run exchange – there are no off-exchange individual or small group plans for sale in the state.
1332 waivers, also known as “innovation waivers” are permitted under the ACA, and allow states to propose alternatives to many of the ACA’s provisions, as long as residents would still have access to health insurance that’s no less affordable or comprehensive than what’s available without a waiver. Under a 1332 waiver, a state would also have to cover at least a many people as would be covered without the waiver, and 1332 waivers cannot be any more costly to the federal government than the current system. Vermont’s waiver proposal states that it meets all of the requirements laid out by CMS.
Vermont’s small group enrollment in 2014 (33,696 employees and dependents) was by far the highest of all the state-based exchanges. Vermont was the only state that didn’t have an online SHOP enrollment portals, but all of the other states (with the exception of DC) also had competition from off-exchange plans.
Despite the fact that enrollment in SHOP plans in Vermont is conducted directly through the carriers, employers have the option of offering plans from both health insurance carriers, and employees can select from among any of the plans offered by the carrier or carriers chosen by the employer. That system has worked well in Vermont, and especially given Vermont’s early IT struggles with the individual exchange, they were concerned that switching to an online SHOP portal might disrupt the existing small group market.
CMS responded in June 2016, notifying Governor Shumlin that the 1332 waiver proposal was incomplete in some areas. But the state never responded with additional information, so the 1332 waiver never progressed through the approval process. Vermont’s Strategic Solutions report in December 2016 noted that the CMS waiver (not a 1332 waiver) that allows Vermont small businesses to enroll directly through carriers (as opposed to using a SHOP portal) remained in place for 2017, and that continues to be the case in 2019.
Vermont created a health benefit exchange to comply with the Affordable Care Act, but the state had plans to go well beyond that. A 2011 state law envisioned Vermont with a single-payer health care system as soon as 2017, although reports surfaced in April 2014 of a memo from consultant Ken Thorpe (hired by the Vermont legislature to help them wade through the ins and outs of creating the single-payer system) regarding the possibility of a less-robust system that would let people purchase supplemental coverage through private plans in the exchange rather than relying solely on a single-payer model.
But after four years of working towards the single payer goal, Governor Shumlin announced on December 17, 2014 that the “time is not right” to continue to pursue a single-payer system for Vermont. Although Shumlin had pushed for single payer harder than just about any high ranking elected official, it ultimately came down to money, and there was just no way that Vermont could afford the switch to single payer at that point. It would have come with an 11.5 percent increase in payroll taxes and a 9 percent increase in income taxes. Not surprisingly, reactions were mixed after Shumlin’s announcement, with single-payer advocates deeply disappointed in the decision, while other groups welcomed the news.
Vermont’s 2012 Act 171 required that all non-grandfathered existing individual and small group policies terminate at the end of 2013 and be replaced with ACA compliant plans. Unfortunately, Vermont’s exchange was plagued with technical difficulties and was still not operational as of the beginning of November 2013, a full month into open enrollment.
As a result, Governor Shumlin opted at the end of October to utilize a contingency plan that was built into Act 171, allowing for existing policies to be extended into 2014 in order to avoid lapses in coverage. The Governor allowed existing individual and small group policies to be extended until March 31, 2014, and residents had until that time to enroll in a policy through Vermont Health Connect.
Vermont Health Connect
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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