The Obama administration is letting Hawaii use an Affordable Care Act reboot provision to shut down its small-group ACA exchange program starting this year.

Under a new agreement, Hawaii can put any federal money that might have funded ACA small business tax credits for its small employers into a small-group premium subsidy fund.

Andrew Slavitt, the acting administrator of the Centers for Medicare & Medicaid Services, and Mark Mazur, the assistant secretary for tax policy at the U.S. Treasury Department, gave Hawaii permission to change the way it handles the small-group market by issuing a waiver for the usual ACA rules, based on ACA Section 1332, according to a waiver approval notice dated Jan. 3.

Related: Hawaii wants to make its version of the ACA richer

Drafters of the ACA built the Section 1332 waiver program into the original text of the ACA package. President Obama signed the two bills that created the ACA in March 2010. The Section 1332 provision gave states a chance to change how the ACA operates in their jurisdictions starting in 2017.

The U.S. Department of Health and Human Services, which is the parent of CMS, and the Treasury Department, the agencies in charge of the Section 1332 program, set up rules requiring any Section 1332 waiver programs to be at least as generous toward consumers, and at least as nondiscriminatory toward people with health problems, as the standard ACA programs.

Officials in Hawaii wrote in their application for the waiver that an existing small-group health coverage support program set up in 1974 had been more generous for employers and the enrollees than the ACA Small Business Health Options Program, and the ACA tax credit available to some SHOP users.

Only 324 employers in Hawaii used SHOP exchange coverage in 2016, and the ACA small-group tax credit has been helping fewer than 1 percent of the employers in Hawaii who appear to be eligible for the tax credit, state officials told federal regulators in a waiver proposal filed in August and a letter sent in November.

State officials reported that, on the date when they sent the letter, no employers had signed up for SHOP coverage starting in 2017.

HHS and the Treasury Department have provided a waiver that’s set to run from Jan. 1, 2017, through Dec. 31, 2021.

Employers in Hawaii that are using ACA small-group tax credits for SHOP plan coverage with plan years starting in 2016 and ending this year can still get the tax credits, federal officials said in the waiver approval notice.

Hawaii must tell the employers using the SHOP program and other small employers about the switch to the state premium subsidy program within 30 days.

Republicans in Congress have expressed concern about the possibility of the Obama administration rushing out regulations and regulatory decisions before President-elect Donald Trump takes office.

A “change to applicable federal laws” provision lets HHS and the Treasury Department change the waiver arrangement, without requiring Hawaii to submit a new waiver proposal, after giving Hawaii 30 days of advance notice.

Related:

PPACA revamp provision: Feds emphasize limits

Feds create PPACA Web revamp page

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