​​Comments: October 1, 2026 MIA/MHBE Joint Meeting to Discuss Assistance to Small Business

Kaiser Permanente

4000 Garden City Drive
Hyattsville, MD 20785

October 22, 2026

Marie Grant
Insurance Commissioner
Maryland Insurance Administration
200 St. Paul Place, Suite 2700
Baltimore, Maryland 21202

Johanna Fabian-Marks
Executive Director
Maryland Health Benefit Exchange
 750 E. Pratt Street
Baltimore, MD 21202

Submitted electronically to: [email protected] and [email protected]

RE: Small Group Policy Proposals

Dear Commissioner Grant and Director Fabian-Marks:

Kaiser Permanente appreciates the opportunity to comment on the policy options discussed by the Maryland Insurance Administration (MIA) and the Maryland Health Benefit Exchange (MHBE) to improve affordability, choice, and stability for Maryland small businesses and their employees. We share the State’s goal of preserving access to comprehensive coverage while responding to market changes that are placing pressure on employers, workers, carriers, and the regulated risk pool.

Kaiser Permanente is the largest private integrated health care delivery system in the United States, delivering health care to 12.9 million members in nine states and the District of Columbia. [1] Kaiser Permanente of the Mid-Atlantic States, which operates in Maryland, provides and coordinates complete health care services for over 735,000 members. In Maryland, we deliver care to approximately 455,000 members. Additionally, Kaiser Permanente offers coverage in all Small Business Health Options Programs (SHOPs) across our national footprint, including three State-Based Exchanges with SHOP enrollment platforms (California, Maryland, and the District of Columbia).

We appreciate the MIA and MHBE efforts to address coverage affordability and assistance for small businesses. As noted during the October 1, 2026 joint meeting, small group premiums in Maryland are rising about 6.5 percent a year and averaged $634 per month in 2025. In addition, small group claims grew about 11.9 percent in 2025, driven by inpatient hospital costs and a 17.8 percent increase in prescription drug costs. Fully-insured small group enrollment fell from just over 250,000 in 2021 to under 200,000 in 2026, while self-insured enrollment, mostly levelfunded plans, grew 40 percent from 2025 to 2026.

Kaiser Permanente’s experience and outcomes demonstrate that there is a path to deliver better health with greater affordability. Kaiser Permanente has better five-year survival rates among breast, colorectal, and lung cancer patients. [2] Our members are 33 percent less likely to die prematurely due to heart disease, and 20 percent less likely to die prematurely due to cancer compared to nonmembers in their communities. [3] Everywhere we operate, our commercial group premiums are 12 to 19 percent lower than market average for comparable health plans. Of our members, roughly 75 percent pay no deductible at all, making it easier for them to afford care when they need it. And, since 2018, our commercial group premiums have increased at only two-thirds the annual rate of underlying medical costs.

We believe Maryland should pursue small group reforms that address cost and administrative friction without accelerating adverse selection or shifting risk and costs to consumers and the fully-insured markets. Accordingly, we recommend that the State: (1) impose meaningful attachment points for stop loss coverage; (2) support Individual Coverage Health Reimbursement Arrangements (ICHRAs)/CHOICE Arrangements through consumer-centered infrastructure; and (3) defer any decision to merge the individual and small group markets until completion of an independent actuarial analysis.

Stop Loss Coverage and Level Funded Arrangements

Kaiser Permanente appreciates the State’s interest in regulating stop loss insurance, which is typically paired with self-funded benefit plans to help protect against unanticipated highvolume or high-cost claims. While we acknowledge employers’ need for affordable plan options, we are concerned with the rapid rise in the use of these arrangements among small employers―increasing nationwide from just 13 percent in 2020 to 37 percent in 2025 and believe Maryland’s current minimum stop loss attachment points are too low. [4]

When attachment points are too low, level-funded plan arrangements undermine the progress made under the Affordable Care Act (ACA) because many critical consumer protections do not apply to stop loss coverage and most state insurance requirements do not apply to self-funded plans, leaving small employers and their employees exposed to significant financial risks for uncovered care.

We are concerned that Maryland attachment point thresholds have not been updated in years despite significant increases in health care costs and, in turn, premiums. The regulation of stop loss insurance should help ensure that stop loss functions as protection against catastrophic claims rather than promoting level-funded arrangements or other self-funded products as a substitute for ACA-regulated small group coverage. Attachment point requirements should preserve the stability of the ACA small group risk pool, maintain fair competition between fully-insured and level-funded products, and require employers electing level-funded arrangements to retain meaningful financial risk.

Kaiser Permanente supports increasing Maryland’s stop loss specific and aggregate attachment points. However, rather than adopting static dollar thresholds, which become less effective over time because the thresholds do not keep up with increasing costs, we encourage the State to consider establishing an attachment point methodology tied to market conditions. We believe the minimum attachment point should be set at seven times the statewide average annual small group premium and updated annually or every few years. Based on the premium levels discussed during the joint meeting, this approach would produce a minimum specific attachment point of approximately $53,000, which better reflects Maryland’s health care cost environment than the existing $22,500 attachment point or another fixed-dollar standard.

This minimum specific attachment point policy would be most effective if paired with a minimum aggregate attachment point that is the greater of around 18 to 20 times the statewide average annual small group premiums or 120 percent of expected claims. Based on the premium levels discussed during the joint meeting, this approach would produce a minimum aggregate attachment point of approximately $135,000 to $150,000. We believe this attachment point methodology produces the minimum stop loss levels that would have a meaningful impact on the rapid movement from fully-insured to self-insured arrangements in the small group market and would help ensure employers electing level-funded arrangements retain meaningful financial risk while maintaining adequate stop loss protection.

This approach to raising the minimum specific and aggregate attachment points preserves the principal policy intent of stop loss regulation by providing adequate protection against catastrophic financial losses, promoting market stability, discouraging risk segmentation that can weaken the ACA small group market, and ensuring that employers choosing level-funded arrangements retain financial responsibility for claims costs.

Support for ICHRAs/CHOICE Arrangements

CHOICE arrangements allow employers to provide a defined, tax-advantaged contribution that employees may use to purchase individual market coverage. We believe Maryland should support CHOICE arrangements as an additional plan option, particularly for businesses with geographically dispersed workers, varied health coverage needs, or limited capacity for benefit administration. Greater choice can help employers offer coverage that better reflects workforce needs while giving employees access to a broader range of plan designs, networks, and price points. We encourage the MIA and MHBE to consider establishing a platform that could facilitate CHOICE arrangement enrollments from third-party administrators to multiple carriers.

Merger of the Individual and Small Group Markets

A merger of the individual and small group markets would broaden the risk pool, but a larger pool does not necessarily improve affordability or promote long-term stability. The result will depend on the relative morbidity, enrollment, benefit designs, rating practices, carrier participation, federal risk adjustment transfers, and the interaction of Maryland’s reinsurance program with federal risk adjustment. A merger that lowers individual market premiums by shifting costs to small employers―or vice versa―would not address the underlying affordability problem; it merely redistributes the cost impacts across markets.

The MIA and MHBE acknowledged during the joint meeting that a few states have merged individual and small group markets, including Massachusetts, Maine, and the District of Columbia. However, in the District of Columbia, the markets are merged for rating purposes only. Second, some states (including California, Oregon, and North Dakota) have considered but rejected the concept of merging markets primarily because of projected small group premium increases and, in turn, higher rate of transitions to self-funded coverage options. [5] Vermont recently “unmerged” the two markets because of the negative premium impacts for fully-insured small group plans, a “trade-off [that] is not advisable because Vermont has fewer levers to counter premium increases and improve affordability in the small group market than it does in the individual market.” [6]

Before pursuing a merger of the individual and small group markets, we strongly recommend the MIA and MHBE commission an independent actuarial analysis using current Maryland data. The analysis should model multiple years and outline premium effects (by market, metal level, geography, age, employer size, and plan type, including distributional impacts rather than averages alone); possible carrier entry, exit, product alignment, and network effects; potential impacts of employer migration to self-funded or other ACA-alternative coverage arrangements; and transition costs, rate review timing, enrollment systems, renewal calendars, and consumer communications.

We believe such a study should be public and subject to robust stakeholder review. The State should proceed only if the evidence shows that a merger will improve long-term stability without materially increasing costs or reducing carrier participation in either market. If modeling identifies substantial cross-market effects, Maryland should instead consider narrowly tailed tools such as targeted small-business assistance, administrative simplification, or other risk-mitigation measures.

Combined Impact and Evaluation

These policy levers have cross-cutting impacts and trade-offs. We recommend Maryland carefully structure and sequence any reform efforts, obtain independent analyses to inform discussions, and continue using a public stakeholder process to gather feedback on reasonable timelines. 

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Thank you for your leadership on the critical issue of health insurance affordability for small businesses. We look forward to continued collaboration with you on this important work. Please contact us at [email protected] or [email protected] with questions.

Sincerely,

Tina Weiss
Senior Vice President
Small Group and Individual and Family Lines of Business

Gracelyn A. McDermott
Vice President
General Manager Commercial Business
Kaiser Foundation Health Plan of Mid-Atlantic States, Inc.   

[1] Kaiser Permanente comprises Kaiser Foundation Health Plan, Inc., the nation’s largest not-for-profit health plan, and its health plan subsidiaries outside California and Hawaii; the not-for-profit Kaiser Foundation Hospitals, which operates 40 hospitals and over 610 other clinical facilities; and the Permanente Medical Groups, selfgoverned physician group practices that exclusively contract with Kaiser Foundation Health Plan and its health plan subsidiaries to meet the health needs of Kaiser Permanente’s members.

[2] Hahn E et al., Incidence and Survival for Patients Diagnosed with Breast, Colorectal, and Lung Cancer in an Integrated System, Perm J 2023;27:23.02 (Dec. 2023), available at https://www.thepermanentejournal.org/doi/10.7812/TPP/23.021.

[3] McGlynn E et al., Measuring Premature Mortality Among Kaiser Permanente Members Compared to the Community (July 2022), available at https://healthy.kaiserpermanente.org/content/dam/kporg/final/documents/reports/community-benefitreports/measuring-premature-mortality-en.pdf.

[4] KFF, 2025 Annual Employer Health Benefits Survey (Oct. 2025), https://files.kff.org/attachment/EmployerHealth-Benefits-Survey-2025-Annual-Survey.pdf.

[5] PricewaterhouseCoopers, Report on Merging the Individual and Small Group Markets (Nov. 9, 2018), MergedIndividual-and-Small-Group-Market-Report-Final-11.9.18.pdf.

[6] Department of Vermont Health Access, A Technical Analysis Relating to Vermont’s Health Insurance Markets (Jan. 15, 2025), DVHA-Marketplace-Report-FINAL.pdf.

ICAA Insurance Choice & Affordability Alliance

MIA/MHBE Joint Meeting to Discuss Assistance to Small Businesses Testimony on behalf of the Insurance Choice and Affordability Alliance

Catherine Grason, Esq. 

October 15, 2026

Thank you, Commissioner Marie Grant and Executive Director Johanna Fabian-Marks, for considering ideas from stakeholders on how to support small businesses and their employees in navigating health insurance amid changing market dynamics. The Insurance Choice & Affordability Alliance (ICAA) is an independent, nonprofit alliance that advances awareness of CHOICE Models as a trusted health benefit offering. Through a national public affairs campaign, ICAA builds understanding and fosters informed dialogue among employers, employees, policymakers, and industry leaders — providing the facts, tools, and resources needed to understand how these models work and where they may fit within today's healthcare landscape. The ICAA believes that every Marylander deserves the choice of affordable, high-quality, comprehensive healthcare that fits their needs - and we believe that CHOICE Models are a critically important tool that can help Maryland small businesses and their employees meet these goals.

​CHOICE Models - including both Qualified Small Employer Health Reimbursement Arrangements (QSEHRAs) and  CHOICE Arrangements/Individual  Coverage  Health  Reimbursement Arrangements (ICHRAs) - are group coverage models that employers can use to provide affordable healthcare to their employees. QSEHRAs,¹ which were created through the bipartisan 21st Century Cures Act, allow small employers under 50 workers to offer a capped, tax-free contribution to employees, which can be combined with premium tax credits for eligible employees to purchase coverage in the individual market. CHOICE Arrangements, previously known as ICHRAs, are an evolution of QSEHRAs, and are defined through regulation² as a type of health reimbursement arrangement that enables an employer of any size to offer a tax-free contribution to employees to purchase coverage in the individual market.³

​​Importantly, both types of CHOICE Models only permit employees to choose plans that offer all the critical consumer protections of the ACA; plans are required to offer essential health benefits, including zero-dollar preventive care, with no penalties or denials for pre-existing conditions.

​CHOICE Models can match consumers’ financial circumstances, healthcare needs, anindividual preferences better than traditional employer coverage. For example, a consumer may prefer a lower deductible and cost-sharing requirements with a higher premium, or alternatively, lower premium in exchange for a higher deductible and if their employer permits it, the consumer can use leftover employer funds toward qualified medical expenses. Additionally, consumers and each member of their family can choose a health plan that meets their personal health needs including specific providers, cost sharing, prescription drug coverage, and benefits. This variety is often unavailable to employees in the traditional employer market.

​With respect to small employers, CHOICE Models provide an affordable way to offer benefits for those who may not otherwise be able to offer their employees coverage, or who are struggling to maintain their current coverage. Nationally, amongst employers with 10 to 24 employees, nearly half do not offer health benefits, and across businesses with 10 to 99 employees, about four in ten do not.⁴ In Maryland specifically, only 56.9% of private-sector employees working at firms with fewer than 50 employees had an offer of health insurance.⁵ CHOICE Models can help to this gap: more than two-thirds of small businesses offering CHOICE Arrangements and 93% of small businesses newly offering QSEHRAs in 2026 previously offered no health coverage to their employees.⁶

​We believe that CHOICE Models are critical tools for many small businesses, and offer the following considerations in response to common concerns about CHOICE Models and barriers to their adoption. ​First, some have raised concern that employees who are eligible for federal advance premium tax credits (APTCs) cannot use their APTCs to purchase coverage if they have access to a CHOICE Model, even if the APTC would be more generous than the employer contribution under the CHOICE Model. There are two ways in which employees receiving a CHOICE Model can still take advantage of APTCs:

​(1) Employees of small businesses who have access to a QSEHRA can combine their QSEHRA amount with APTC, if eligible, allowing them to benefit from the maximum amount of public and private funding available to them.
(2) Although CHOICE Arrangements cannot be stacked with APTCs like QSEHRAs, employees can still access APTCs if their employer’s contribution is insufficient to purchase coverage under the federal affordability test.⁷ Employees who are offered a CHOICE Arrangement contribution from their employer that does not meet federal affordability criteria may opt out of the CHOICE Arrangement and if otherwise eligible, apply APTCs towards the cost of their coverage.

Second, in response to concerns that CHOICE Model plans are often sold off-exchange and are harder to find and shop for, we note that there is a large and growing ecosystem of entities seeking to provide employers and employees with a seamless user experience in shopping for and procuring off-exchange products. There are over 60 ICHRA administrators that were built to serve employers and consumers that use CHOICE Models, complementing the critical role of the broker in obtaining group health coverage.⁸ This robust ecosystem of administrators provide critical support to employers and employees in determining whether a CHOICE Model is right for them and helping them to shop for and enroll in ACA-compliant coverage. There are also state-based exchange (SBE) initiatives to serve employers and employees who utilize CHOICE Models – like Georgia Access for Business. Other SBEs, like Covered California and Virginia's Insurance Marketplace, provide consumers with decision support tools, including calculating the affordability of a CHOICE Arrangement, call center access, or assistance in connecting with a broker.

​Third, employer awareness is low. A significant barrier to CHOICE Model uptake is that there is a lack of awareness and understanding of the product and its benefits. A 2023 study found that 72% of small employers do not know CHOICE Arrangements are available to them.⁹ However, awareness and uptake of the model has been growing substantially, due to the efforts of states, the federal government, and other stakeholders. In fact, an estimated 20,000 employers offered coverage through a CHOICE Models to more than 500,000 employees and dependents, as of January 2026, a significant increase from the prior year.¹⁰

​Since 2025, 13 states have considered legislation or executive actions focused on ways to increase awareness and uptake of CHOICE Models, showing bipartisan momentum around the potential of CHOICE models to benefit businesses and their employees everywhere.¹¹ Connecticut, Indiana, and Mississippi have enacted tax credits to encourage small businesses to consider and adopt a CHOICE model to control costs and empower their workers. Several other states are considering similar legislation, in line with the National Council of Insurance Legislators (NCOIL) model legislation.¹² Connecticut, California, Virginia, and Georgia’s state-based exchanges support CHOICE enrollment, with Georgia and Connecticut launching robust employer- and employee-facing state CHOICE platforms called Georgia Access for Business and BusinessPlus, respectively. Arizona passed legislation to commission an interim study to evaluate use of CHOICE Arrangements for the state employee health plan.¹³ Moreover, the Centers for Medicare and Medicaid Services (CMS) and the Small Business Administration (SBA) have held public events in three states this fall to create awareness of CHOICE Arrangements and to support state-based efforts to expand employer education and awareness

Small employers are faced with increasing costs and difficult choices about whether to offer coverage for the first time or continue to provide health coverage to their employees. 41% of small businesses that don’t offer coverage today say that cost is the reason.¹⁴ While not a silver bullet to address the affordability crisis, CHOICE Models can provide small employers with a predictable and sustainable pathway to offer coverage to their employees, while empowering employees to spend their health premium dollars on the coverage that works best for them. 91% of employers that adopted CHOICE Models said it was the right move for their company, and 89% of their employees say that their coverage under CHOICE is better than their previous plan.¹⁵

​In closing, CHOICE Models unlock the individual market for employees, allowing more consumers to choose comprehensive and affordable coverage in a system that is oriented around them. This is exactly why there is bipartisan state momentum toward increasing awareness of these models for more employers. The ICAA stands ready to serve as a resource to help Maryland consider how to expand awareness about this important option for Maryland businesses.

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1 As defined in 26 U.S. Code § 9831, 26 U.S. Code § 106, 26 U.S. Code § 36B.

2 As defined in 45 CFR § 144, 45 CFR § 146, 45 CFR § 147, 45 CFR § 155.

³ Centers for Medicare & Medicaid Services. (2026). Employer initiatives.

​1. Affordable: Your required contribution for the lowest-cost, self-only employer plan that provides minimum value does not exceed the applicable percentage of your household income.
2. Minimum value: The employer plan covers at least 60% of the total allowed costs of benefits and provides substantial coverage of inpatient hospital and physician services.