42 U.S. Code § 300gg–44 - State flexibility in individual market reforms
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(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”)—
(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
(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
(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
(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
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—
(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) of this section 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) of this section, 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
(3) Other mechanisms
For purposes of subsection (a)(1)(D)(iii) of this section, a mechanism described in this paragraph—
(A) provides for risk adjustment, risk spreading, or a risk spreading mechanism (among issuers or policies of an issuer) or otherwise provides for some financial subsidization for eligible individuals, including through assistance to participating issuers; or
 So in original. The comma probably should not appear.
Source(July 1, 1944, ch. 373, title XXVII, § 2744, as added Pub. L. 104–191, title I, § 111(a),Aug. 21, 1996, 110 Stat. 1984; amended Pub. L. 104–204, title VI, § 605(b)(1),Sept. 26, 1996, 110 Stat. 2942.)
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.
1996—Subsec. (a)(1). Pub. L. 104–204made technical amendment to reference in original act which appears in text as reference to section 300gg–62 (b) of this title.
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 sections 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.”
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) ofPub. L. 104–191, set out as a note under section 300gg–41 of this title.