New regulations issued by the Department of Health and Human Services (HHS) show that laws in more than a dozen states may be invalid because they go too far in restricting the work of consumer assistance personnel certified under the Affordable Care Act (ACA).

Navigators, certified application counselors, and other assisters are tasked under the ACA with helping consumers understand their insurance options and make informed decisions about what coverage is right for them. Federal rules released last year established a variety of eligibility, training, and conduct standards that assisters must meet. These regulations required assisters to provide fair, accurate, and impartial help and prohibited them from steering consumers to particular health plans. But the rules also warned about overregulation from the states, noting that state restrictions that prevent assisters from doing their jobs would violate federal law. In May, HHS published additional regulatory guidance indicating that burdensome requirements in many states may do just that.

State navigator laws have proliferated. While some states embraced assister programs, others have regarded them warily, with skepticism concentrated in states that ceded responsibility for developing an insurance marketplace to the federal government. To date, 19 states with federally facilitated marketplaces have acted to restrict the work of consumer assisters in ways that exceed the federal regulatory framework. Three of these states have legislation pending that would impose additional constraints, while three others that have not adopted state-specific requirements are considering them (Exhibit 1).

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How far may states go to restrict navigators? States have flexibility to supplement federal navigator standards. However, they may not place burdens or limitations on navigators that undermine navigators' ability to provide the consumer assistance required of them by federal law. The question of whether certain state restrictions cross this line has generated considerable confusion, making it hard for navigators to know what they can and cannot do to help consumers. Meanwhile, early evidence suggests that some of these state rules may have discouraged assistance efforts in the run-up to open enrollment for the ACA’s insurance marketplaces. In January, in the first judicial ruling on this contentious issue, a federal court in Missouri blocked enforcement of that state’s navigator rules, concluding that they violated federal law.

New federal rules supply greater clarity. The revised regulations from HHS offer important guidance regarding federal and state authority to regulate health reform assisters. On one hand, the new regulations create additional federal obligations that navigators and other consumer assisters must satisfy and amplify federal enforcement powers to discipline those who violate these requirements. On the other, the regulations describe several types of state restrictions that, because they prevent assisters from complying with their federal responsibilities, are invalid. This—non-exhaustive—list includes state rules that:

  • require assisters to refer consumers to individuals or organizations that are not required to provide impartial advice;
  • limit the types of entities or individuals to whom assisters can provide advice; 
  • restrict assisters from providing advice about substantive benefits or comparative benefits of different health plans; 
  • require all navigators to be agents or brokers;
  • require assisters to maintain their principal place of business within the state; or
  • disqualify providers from serving as assisters solely because they receive compensation from insurers for the health care services they provide.

Importantly, the regulations also recognize that some state standards that may be permissible on their face may be unduly burdensome—and therefore unlawful—as applied in practice.

What do the rules tell us about existing state laws? In the view of federal officials, a number of state navigator requirements conflict with the ACA. Our analysis of the new rules reveals that portions of laws and regulations in at least 15 states may impermissibly restrict consumer assisters (Exhibit 2).


Exhibit 2: State Restrictions on Consumer Assisters that May Conflict with the ACA

Type of State Restriction

Why May These Restrictions Conflict with the ACA?

States  with Restrictions that May Be Invalid 

Limitations on the advice assisters may provide regarding the substantive benefits or comparative features of different health plans

The new rules reiterate that assisters are required to engage in substantive discussions about the terms and features of any coverage for which a consumer might be eligible. This responsibility includes clarifying the similarities and differences among particular plans and assisting consumers with making informed decisions about plan selection, consistent with their expressed interests and needs. State rules that prohibit assisters from providing such advice violate federal law.

11 statesa

In-state residency or principal place of business requirements

Assisters must maintain a physical presence in each state where they provide services, and may be required to register with the state. However, standards that limit assister eligibility to in-state residents and organizations effectively prevent national groups from serving as assisters and were specifically identified in the rules as conflicting with the ACA.

3 statesa

Prohibitions on receiving compensation from an insurer, even where unrelated to assistance work

Federal conflict of interest standards bar assisters from receiving compensation from insurance companies in connection with their enrollment activities. State requirements that go further, and prohibit assisters from receiving any compensation whatsoever from insurers—even if not in connection with enrollment—effectively disqualify hospitals and other health care providers from serving in those capacities (because they receive compensation from insurers for health care services provided). These types of eligibility restrictions were specifically targeted by HHS in the new rules.

5 statesb

Mandated referrals to agents or brokers for consumers who have previously purchased insurance from an agent or broker

Assisters are required by federal law to provide fair and impartial help to all consumers who seek assistance. State rules that require assisters to refer consumers to an agent or broker if they learn that the individual previously purchased health coverage from an agent or broker, interfere with their federal obligations.

2 states

Requirements to purchase a surety bond or carry insurance

State eligibility requirements that limit the pool of assisters in a manner that undermines the effectiveness of a marketplace’s consumer assistance programs may violate federal law. While HHS declined to indicate that state rules requiring assisters to satisfy certain financial requirements—like purchasing a surety bond or errors and omissions insurance—are invalid on their face, these restrictions may be unduly burdensome as implemented and bear close scrutiny.

5 states

a) In September 2013, Tennessee issued temporary regulations regarding consumer assisters that, among other things, contained limitations on the advice assisters were allowed to provide and a requirement that an assister maintain his or her principal place of business in Tennessee. These regulations expired in March 2014. Permanent rules containing the same limitation on advice-giving, but omitting the principal place of business requirement, have been proposed but are not yet finalized.

b) In June 2014, Louisiana enacted legislation that bars navigators from receiving compensation from an insurer, if that compensation is prohibited by federal law. While this new provision likely does not conflict with the ACA, state regulations already on the books go further, prohibiting the acceptance from an insurer of any form of compensation “of any kind whatever,” regardless of whether such compensation is permissible under federal law.

Looking forward. HHS is responsible for administering many aspects of the ACA. This includes the law’s assister programs and its “preemption provision,” the part that says that state laws which conflict with the ACA must be set aside. Because of the agency’s special role, courts are likely to defer to its interpretation of the health law—including its views regarding the federal responsibilities that assisters must meet, and the kinds of state restrictions that would prevent them from doing so. The new rules from HHS thus shed valuable light on the scope of state authority to regulate assisters, and should aid policymakers as they determine whether and how to do so, going forward.

The rules also should have a significant impact on existing state restrictions through traditional policymaking channels and, in some instances, through litigation. With the benefit of additional guidance found in the rules, state officials may reevaluate their requirements for assisters and, where necessary, revise the regulatory framework to ensure it does not conflict with federal law. And, in states with restrictions that fall squarely within one of the categories described by the federal regulations, assisters now have a potentially decisive basis on which to argue, to a court, that those limitations should be struck down.

Learn more about navigators in our New Directions in Health Care podcast.