Earlier this month, the Centers for Medicare & Medicaid Services (CMS) released its 2025 Marketplace Integrity and Affordability Proposed Rule (Proposed Rule), proposing a number of enrollment and eligibility policies impacting both Federal and State Exchanges. While CMS frames these policies as necessary to combat fraud and abuse, the impact will be a reduction in enrollment in the ACA Marketplace – with the Proposed Rule estimating that between 750,000 and 2 million fewer individuals enroll in health insurance plans on the Exchanges in 2026. 

The effective date of most of these provisions also coincides with the expiration of the enhanced premium subsidies, which the Biden administration extended through December 31, 2025 through the Inflation Reduction Act (IRA). These enhanced subsidiaries increased the amount of financial assistance individuals received and expanded eligibility for assistance. On December 5, 2024, the Congressional Budget Office wrote a letter to Congress indicating that the failure to extend these subsidies would result in 2.2 million individuals losing coverage in 2026 and an increase in premiums by 4.3%. 

This article outlines the major provisions of the Proposed Rule, followed by a discussion of their potential impact on plans participating in the ACA Marketplace.

Key Provisions of the Proposed Rule

Income Verification Policies. In its Proposed Rule, CMS proposes several changes to the income verification process for applicants to apply through the Exchanges. Although CMS stated that these policies are necessary to combat fraud, CMS provided limited examples and evidence of fraud. Such policies include:

• Removing the exception allowing Exchanges to rely on an applicant’s self-attestation of projected income, if the Internal Revenue Service (IRS) does not have tax return data to verify household income and family size. Exchanges would need to verify individuals’ enrollment, requiring enrollees to provide additional documentation.
• Requiring additional income verification in instances where an applicant’s self-reported projected household income is between 100% and 400% of the Federal poverty level (FPL) but federal tax or other data shows that an applicant’s prior year’s income was below 100%. Individuals would have to prove that their income for the upcoming year is between 100% to 400% of the FPL or be unable to enroll in a plan on an Exchange. This change intends to attempt to identify individuals who may “overinflate” their income to be eligible for coverage. Currently, no income verification is required if the applicant projects a higher income than in their tax return.
• Eliminating an automatic 60-day extension (in addition to the general 90-day deadline) when documentation is needed to verify household income in instances of income inconsistency.

Allowing Insurers to Deny Coverage for Past Due Premiums. CMS proposes to repeal a provision which currently prohibits insurers from requiring enrollees to pay past-due premium amounts in order to receive coverage under a new insurance policy or contract term. CMS consequently proposes, subject to state law, to allow insurers to add an enrollee’s past-due premium amount to the initial premium amount the enrollee must pay to effectuate coverage under a new policy or contract term and allow insurers to deny coverage to individuals if the total of past-due premiums and the initial premium amount are not paid in full. The stated purpose of this policy is (i) to curtail individuals from taking advantage of guaranteed coverage and seeking coverage when they need health care services, and (ii) to strengthen the risk pool and lower gross premiums. 

Revision of Premium Payment Thresholds. CMS proposes to remove flexibilities that currently allow insurers to implement a fixed dollar and/or gross percentage-based premium payment threshold. Under current rules, insurers may consider enrollees to have fully paid their premiums if (i) under the fixed-dollar premium payment threshold, the enrollee has paid a total premium amount such that the unpaid remainder is $10 or less (adjusted for inflation), or (ii) under the gross percentage-based premium payment threshold, the enrollee has paid a total premium amount sufficient to achieve 98% or greater of the total gross monthly premium of the policy before the application of the advance premium tax credit (APTC). Under the Proposed Rule, insurers would only be allowed to implement a net premium percentage-based payment method where enrollees can meet the threshold by paying a total premium amount sufficient to achieve 95% or greater of the total net monthly premium amount owed.

Ineligibility for APTCs after one Year of Failing to Reconcile. CMS proposes to revise the “failure to file and reconcile process” by reinstating a 2015 policy that requires Exchanges to determine whether an individual is ineligible for the APTC if he or she did not file a Federal income tax return and reconcile their APTC amount in any given year. Currently, individuals will be deemed ineligible for failure to file and reconcile for a two-year span. 

Changes to Open and Special Enrollment Periods. Under the Proposed Rule, CMS also seeks to shorten the Open Enrollment Period (OEP) and make several changes to Special Enrollment Periods (SEPs), including:

• Shortening the OEP for all individual market Exchanges and off-Exchange individual health insurance (that are non-grandfathered) from November 1st to January 15th to November 1st to December 15th. 
• Removing the “low-income SEP” from both the Federal and State Exchanges. Currently, individuals whose projected household income is at or below 150% of the FPL have a SEP under the Federal and most State-based Exchanges whereby they can enroll or change plans on a monthly basis. CMS is proposing to remove this SEP. The stated purpose of this action is to reduce adverse selection (i.e., reduce the number of enrollees who sign up for health insurance only when they need coverage).
• Requiring pre-enrollment verifications for applicants seeking coverage through a SEP. Currently, the Exchanges allow applicants to self-attest that, due to a change of circumstance, they qualify for a SEP (e.g., loss of employer coverage, marriage). The Proposed Rule would change the ability to self-attest and require applicants to submit documentation to the Exchanges. 

Requiring Active Re-Enrollment. CMS also seeks to eliminate automatic re-enrollment for fully subsidized enrollees by proposing to require that enrollees whose premium payment amount would be $0 after application of the APTC, would be required to pay a $5 monthly premium until they update their Exchange application with an eligibility redetermination confirming their eligibility for the APTC.

Repeal of Bronze to Silver Plan Cross-Walking. CMS proposes to repeal regulations that currently allow Exchanges to move enrollees eligible for cost sharing reduction, which covers the cost of out-of-pocket healthcare costs and deductibles, from a bronze Qualified Health Plan (QHP) to a silver QHP for an upcoming plan year if a silver QHP is available (i) in the same product, (ii) with the same provider network, and (iii) with a lower or equivalent net premium post APTC-application.

Ineligibility of DACA Recipients. CMS proposes to remove Deferred Action for Childhood Arrivals (DACA) recipients from the definition of “lawfully present,” which in effect renders DACA recipients ineligible for enrollment in a QHP through the Exchange. 

Prohibition of Coverage of Gender Affirming Care. CMS proposes to prohibit health insurance plans subject to the ACA’s essential health benefits (EHBs) from providing sex-trait modification, also commonly known as gender-affirming care, beginning Plan Year 2026. EHBs are ACA required minimum coverage categories that plans subject to the ACA must cover; EHBs are state or region specific and are determined based upon comparison to an EHB-benchmark plan that all other plans must mirror. This prohibition would in effect restrict all non-grandfathered insurance plans in the individual and small group markets, on- and off- Exchange, from covering sex-trait modification services. 

Updates to the Premium Adjustment Methodology. CMS further seeks to update the premium adjustment methodology, which is used to set several different coverage parameters, including maximum out-of-pocket cost-sharing (MOOP), premiums, and tax credits. By way of background, the current premium adjustment methodology took a more stable approach given the uncertainty of premiums during the end of the COVID-19 Public Health Emergency. Under the Proposed Rule, beginning in 2026, CMS is proposing using an adjusted private individual and group market health insurance premium measure. Such a change will likely cause an increase of MOOP and an increase in premiums.

Updating De Minimis Thresholds. Plans on the Exchange are considered bronze, silver, gold, and platinum based on their actuarial value – whereby bronze plans must cover 60% of an average enrollee’s costs, silver plans cover 70%, gold plans cover 80%, and platinum plans cover 90%. Insurers may offer a specific plan if it is within a “de minis range” of this target value – for example, insurers may offer bronze plans so long as the actuarial value is within +5% and -2% of 60%. Similarly, insurers can offer a silver, gold, and platinum plan, if its value is within +2/-2 percentage points. CMS proposes to change the de minimis ranges to +2/-4 percentage points for all individual and small group market plans subject to the actuarial value, except expanded bronze plans. Further, CMS seeks to include a de minims range of +1/-1 percentage points for income-based silver cost-share reduction plan variations (which was previously −0/+1 percentage points). In the Proposed Rule, CMS estimates that this proposal would decrease premiums by one percent; however, it is likely to reduce the APTCs available.

Evidentiary Standard for Terminating Agents and Brokers. The Proposed Rule seeks to revise the standard for the Department of Health and Human Services (HHS) to terminate for-cause agents, brokers, and web-brokers from the Federally-facilitated Exchange by adding a “preponderance of the evidence” standard of proof regarding issues of fact. HHS may terminate its agreements with agents, brokers, and web-brokers for-cause for instances of non-compliance, fraud, and abusive conduct. Currently, regulations do not indicate an evidentiary standard HHS must apply; instead, the regulation states that HHS may terminate “in HHS’s determination.” CMS states that this change would “improve transparency in the process of holding agents, brokers, and web-brokers accountable for compliance.” 

Potential Impacts to Plans

This Proposed Rule will have a direct impact on enrollment in the Exchanges. By adding measures that will increase premiums, reduce APTCs, and increase the administrative burden of applying and verifying enrollment, CMS will in effect discourage enrollment and decrease the number of individuals eligible for enrollment. Further, the changing rules may specifically discourage younger and/or healthier individuals from enrolling. This decrease in enrollment, coupled with the expected decrease in enrollment due to the expiration of the enhanced subsidies, could threaten the stability of the ACA Marketplace in the long run.