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Bill H.35 would permanently unmerge Vermont’s individual and small-group insurance markets
Summary
Legislative Council staff reviewed draft H.35, which would make permanent the temporary separation of Vermont’s individual and small-group health insurance risk pools and clean up outdated Exchange statute language; the change is set to take effect Jan. 1, 2026.
MONTPELIER — Jen Harvey, of the Office of the Legislative Council, presented draft H.35 on Jan. 21, saying the bill “is an act relating to unmerging the individual and small group health insurance markets.”
Harvey told the meeting the draft would make permanent a temporary separation of the individual and small-group markets that had been applied year-by-year, and would repeal and update outdated language in the Vermont Health Benefit Exchange statutes. The bill’s effective date is Jan. 1, 2026.
The measure amends provisions in the state statutes governing the Vermont Health Benefit Exchange, including a revision to the statutory definition of “qualified employer” that removes pre-2016 transitional language and standardizes the threshold at 100 employees. Harvey said the draft replaces older references to an employer with “not more than 50 employees” and adopts a single, current definition of employers eligible for the small-group market.
Harvey described several categories of changes beyond the employer threshold: clarifications about information the Department of Vermont Health Access (DVHA) transfers to the U.S. Department of the Treasury related to premium tax credits; removal of vestigial requirements to establish certain agent payment mechanisms and fee schedules that were never implemented; and explicit language separating the individual market and the small-group market in sections on guaranteed issue and community rating.
On guaranteed issue, the draft specifies that a registered carrier “shall guarantee acceptance of all individuals and their dependents for any health benefit plan offered by the carrier in the individual market” and separately requires guaranteed acceptance for small employers and their employees in the small-group market. In the community-rating provisions, the draft requires carriers to determine premiums for individual-market plans separately from premiums for small-group plans, which Harvey identified as the clearest statutory step creating distinct risk pools.
Harvey summarized the bill’s purpose: “So essentially the whole bill is just cleaning up outdated language, except for we are permanently unmerging the markets.” She said the change formalizes the temporary unmerging used for plan year 2025 and makes that structure the default going forward unless the Legislature later acts to change it.
Harvey also noted the draft removes caveats that had tied direct purchase and enrollment options to conditions imposed by the U.S. Department of Health and Human Services when the Exchange was first established; in practice carriers already allow direct enrollment, she said, and the bill removes language that reflected only an early transitional posture.
No formal vote or motion was recorded during the segment of the meeting in which Harvey presented H.35. The presentation closed with participants asking clarifying questions about the language and timeline. Meeting organizers said Emily Byrne of the Joint Fiscal Office was scheduled to present a separate budget-adjustment briefing later in the session.
Background: The Vermont Health Benefit Exchange statutes appear in Title 33 of the Vermont Statutes Annotated. State staff have used temporary annual unmerging of markets in recent plan years; H.35 would make the split permanent beginning with plan year 2026.
