House Health Care Committee reviews H.35 to permanently unmerge Vermont individual and small-group insurance markets

Chair, House Health Care Committee opened the Jan. 24 meeting by saying, "it is my intention that we can vote on this today," while noting a short break may be needed until absent members return.

Jen Carvey, legislative counsel from the Office of Legislative Council, led a line-by-line walkthrough of H.35, saying, "This is an act relating to unmerging the individual and small group health insurance markets." Carvey described the bill as mostly cleanup of pre-2016 statutory language (when the small-employer cutpoint changed from 50 to 100 employees) and explained the bill’s operative provisions for separating the two markets permanently starting Jan. 1, 2026.

The bill would: 1) remove outdated pre‑2016 cross-references and update definitions used by the Vermont Health Benefit Exchange (Vermont Health Connect); 2) require carriers to guarantee acceptance separately for individuals and for small employers and their employees and dependents; and 3) require carriers to set premiums for the individual market separately from premiums for the small-group market, using community‑rating methods acceptable to the commissioner of financial regulation. Carvey said the act’s effective date is Jan. 1, 2026 — the start of the 2026 plan year — and that existing temporary provisions that presently separate the markets run through plan year 2025.

Carvey also summarized non‑operational cleanups: removing an outdated requirement to provide Treasury with employer‑employee pairing data the Exchange does not collect, clarifying what information the Exchange actually provides to federal tax authorities about premium tax credit eligibility, and removing a caveat tied to earlier federal permission for direct enrollment (now established practice). She noted a historical provision tied to a small‑business exchange that was never implemented and said the bill aligns statute with current practice allowing direct enrollment by carriers.

Committee members asked clarifying questions. One member asked whether the markets are already unmerged; Carvey explained that the markets are currently operating de facto unmerged under a temporary provision that expires at the end of plan year 2025 and that H.35 would make the separation permanent unless the Legislature later acts otherwise. On employer coverage, Carvey clarified that an employer is not required by statute to offer family coverage and that, when a family member seeks coverage directly from a carrier rather than through the Exchange, they may not receive financial assistance available via the Exchange.

Carvey described the rationale behind separate rating pools: "By pulling out, so the individual market typically has higher premiums ... when we have the markets merge, the costs for those ... individual market is spread across both the individual and small group market, which makes the small group premiums higher than they would likely otherwise be." She added that separating rating pools is expected to reduce premium growth for small employers while individual-market premiums could rise; those individuals could remain eligible for advanced premium tax credits and cost‑sharing reductions under state and federal law.

Committee member Brian said, "I support this," and urged the committee to make room during the session for public input on how the changes affect households and small businesses.

Chair noted there had been no written opposition submitted to the committee assistant and that witnesses representing affected parties had indicated support during prior hearings. The committee did not take a final vote; the Chair said members who are testifying in other committees had asked for a short break so they could return and vote, and the meeting recessed pending the return of an absent member (Penny).

Why it matters: Carving the two markets into permanently separate rating pools changes how carriers calculate premiums and who bears underwriting risk. The committee emphasized timing: carriers are preparing rate filings for the Green Mountain Care Board this winter and need statutory clarity about the market structure before finalizing rates.