Katie Keith
June 23, 2025 - Health Affairs
This article is the latest in the Health Affairs Forefront featured topic, "Health Policy at a Crossroads," produced with the support of the Commonwealth Fund and the Robert Wood Johnson Foundation. Articles in this topic offer timely analyses of regulatory, legislative, and judicial developments in health policy under the Trump-Vance Administration and the 119th Congress.
On June 20, 2025, the U.S. Department of Health and Human Services (HHS) issued a final rule that will severely restrict marketplace eligibility, enrollment, and affordability under the Affordable Care Act (ACA). The final rule will reverse Biden-era policies and impose new restrictions that will limit enrollment opportunities, raise consumer health care costs, and impose new administrative burdens that will lead to confusion and make it harder for consumers to enroll in and maintain marketplace coverage. Many of the changes in the rule go into effect on very short notice, even though many "sunset" - disappear - after the 2026 plan year.
As a result of these changes, HHS estimates that up to 1.8 million people could lose their coverage in 2026 alone, and marketplace enrollees will receive lower premium tax credits and face higher out-of-pocket costs. The rule was accompanied by a press release and a fact sheet.
Consistent with its rationale in the proposed rule, HHS justifies much of the final rule by citing the need to address fraudulent and improper enrollment of consumers by agents, brokers, and web-brokers. Instead of directly regulating these entities (through, say, new penalties) or adopting other common-sense changes recommended by commenters (such as two-factor authentication), HHS adopts policies that will impose new burdens on consumers, insurers, and marketplaces that will lead to coverage losses. And HHS imposes many policies on a nationwide basis even though improper enrollments are concentrated in only some states that use the federally facilitated marketplace (FFM).
The final rule covers a wide range of topics. This article covers the rule's changes to shorten the annual open enrollment period (OEP) beginning with the 2027 OEP; eliminate a monthly special enrollment period (SEP) for low-income consumers; penalize certain automatic reenrollees with a $5 premium; revise the premium adjustment percentage methodology in a way that will increase premium costs for most of the 20 million people with marketplace coverage; erode the generosity of coverage by allowing plans with lower actuarial value; amend the automatic reenrollment hierarchy; and allow insurers to condition new coverage on the repayment of past premium debt.
A second article will discuss the final rule's changes to impose new income and SEP verification requirements; deny advance premium tax credits for a consumer's failure to reconcile prior year tax credits; and reduce state and insurer flexibility on premium payment thresholds. A third article will cover the rule's changes to eliminate marketplace and Basic Health Program eligibility for DACA recipients; prohibit the coverage of treatment for gender dysphoria as an essential health benefit (EHB); and revise standards that apply to agents and brokers with the next round of agreements.
HHS received more than 26,000 comments on the proposed rule and dismisses commenter concerns that the 23-day formal comment period was insufficient. Commenters raised this limited timeframe after HHS took the unusual step of setting the comment deadline 30 days after the proposed rule was displayed (rather than published) in the Federal Register. HHS argues that display, not publication, was sufficient to begin the comment period. Consistent with the proposed rule, the final rule includes a severability provision: HHS wants to make clear that other parts of the rule should remain in effect even if one of its provisions is found to be invalid or unenforceable.
Despite many commenters urging HHS to delay these policies, the rule will go into effect in 60 days with many changes that will apply to the 2026 plan year. Of the rule's 17 new policies, 13 policies will go into effect in a matter of months - either on the rule's effective date in August 2025 or for the 2026 plan year (which begins on January 1, 2026 but will require changes to be implemented ahead of 2026 OEP that begins on November 1, 2025).
HHS asserts that stakeholders will have sufficient time to make these changes before the 2026 OEP. But this exceedingly short window, coupled with the significance of the changes, gives a wide range of stakeholders - insurers, consumers, state insurance regulators, the federally facilitated marketplace (FFM), state-based marketplaces (SBMs), agents and brokers, and navigators - very little time to come into compliance with, or learn about, these new requirements. The final rule also adopts several provisions that will limit the long-standing flexibility that states have come to rely on under the ACA.
But that's not all. In a move I have never seen before, HHS will codify but then almost immediately sunset several of the rule's most significant provisions. Of the rule's 17 new policies, about half - eight policies - will sunset at the end of the 2026 plan year (i.e., December 31, 2026). These sunsetting provisions (1) eliminate the monthly SEP for low-income consumers; (2) require the FFM to verify SEP eligibility; (3) require the FFM to verify eligibility for 75 percent of new SEP enrollments; (4) adopt a $5 premium penalty for certain automatic reenrollees; (5) require the FFM and SBMs to conduct income verification for the lowest-income consumers; (6) require the FFM and SBMs to conduct income verification when tax data is unavailable; (7) deny advance premium tax credits for consumers who fail to reconcile prior year tax credits; and (8) reduce state and insurer flexibility on premium payment thresholds. All of these policies would have been permanent under the proposed rule. The final rule includes a helpful chart on page 354.
Several of the sunsetting provisions will require marketplaces and insurers to make significant and swift investments in IT and operational changes for 2026, only to see these requirements abandoned for the 2027 plan year. HHS asserts that these temporary measures -which impose significant operational burdens on a range of stakeholders - are urgently needed to address improper enrollment for the 2026 plan year. But the same changes, HHS goes on to conclude, are bizarrely no longer needed the following year because (1) the policies raise "long-term concerns" and the "long-term burden" associated with these policies may not outweigh their benefits; and (2) HHS is willing to "accept some risk" of future improper enrollment for 2027 and beyond. As discussed below, this rationale makes little sense from a policy perspective, especially because enhanced premium tax credits are expected to expire at the end of 2025 (i.e., ahead of the 2026 plan year).
The most likely explanation for HHS's approach is that this sunsetting could allow Republicans in Congress to claim additional savings as they attempt to permanently codify similar policies in budget reconciliation legislation. The House-passed version of the One Big Beautiful Bill Act would codify all but one of the rule's requirements while going even further than the rule in several instances. For instance, the House bill would, if enacted, ban auto-reenrollment for most enrollees, claw back excess advance premium tax credits from taxpayers, and fund cost-sharing reductions in a way that would also undermine abortion coverage in states across the country.
The current Senate draft included the latter House provisions while omitting most of the proposed rule's requirements. But there is overlap between the House bill, the current Senate draft, and the several provisions of the final rule that will sunset after the 2026 plan year. Like the House-passed bill, the current Senate draft would codify the proposed rule's failure to file and reconcile requirements and prohibit premium tax credits for those that enroll through income-based SEPs (thereby functionally eliminating the monthly SEP for certain low-income consumers). The House-passed bill and current Senate draft would also ban auto-reenrollment for subsidy-eligible consumers, which would obviate the need for the final rule's narrower $5 premium penalty for certain automatic reenrollees. And the House bill and current Senate draft would impose new pre-enrollment verification requirements on enrollees that use both OEPs and SEPs, which is far broader than the final rule's narrower SEP eligibility verification requirements.
By sunsetting each of these policies on December 31, 2026, the Trump administration is presumably trying to maximize the savings that Congress can claim from the One Big Beautiful Bill Act. If the final rule adopted these provisions on a permanent basis, Congress could claim lower budgetary savings from codifying related policies. Since the rule adopts these changes on a temporary basis, Congress is expected to claim that the legislation will result in more significant savings over the nine years (in the 10-year budget window) that the rule's provisions will now not be in effect. It will be interesting to see if and how the Congressional Budget Office responds to this sunsetting gimmick and whether it changes the score of any of these provisions - or if the Senate amends its current draft to codify additional final rule provisions.
HHS makes notable changes to its approach to OEPs in the final rule. The proposed rule would have imposed an annual OEP of November 1 to December 15 in all states beginning with the 2026 OEP; this timeframe was clear and standardized in the proposed regulatory text. The final rule, in contrast, does not set a standardized timeframe and instead requires all OEPs - for both the FFM and SBMs - to "begin no later than November 1" and to "end no later than December 31" while being no more than 9 weeks in duration. Marketplaces must also ensure that coverage is effective for January 1. This policy is permanent (i.e., does not sunset) and begins with the 2027 OEP, leaving the 2026 OEP unchanged.
The duration of OEPs has varied over time, ranging from 45 days to 180 days. From 2018 to 2021, the first Trump administration set a 45-day OEP, a change it codified via its 2017 "market stabilization" rule. The Biden administration extended the OEP from November 1 to January 15 beginning with the 2022 OEP. The Biden administration extended the OEP to 75 days in part to give auto-reenrolled consumers more time to change their plan in January after learning that their premium tax credit amount (and thus out-of-pocket premium liability) might be different. These changes notwithstanding, SBMs have generally had flexibility to set a shorter or longer OEP based on state-specific needs.
As noted above, the final rule leaves the 2026 OEP unchang]ed: the OEP for the FFM will run from November 1, 2025 to January 15, 2026 while SBMs will continue to have flexibility to set a shorter or longer OEP. But the final rule will change OEP requirements beginning with the 2027 plan year.
First, the final rule will significantly limit SBM flexibility. According to HHS, 19 of the 20 SBMs will need to shorten their OEP in response to the rule (since 19 SBMs had OEPs that were longer than nine weeks for the 2025 OEP). SBMs will be further constrained by the requirement that any OEP end by December 31. SBMs can, under the final rule, adopt an OEP that spans up to nine calendar weeks, but SBMs will have to begin this OEP earlier in the year (i.e., October 15) and cannot extend into January as many SBMs currently do. SBMs will face total estimated costs of $7.37 million to comply with this change in 2026. These costs could be greater if SBMs want to set their OEP before November 1; this is because SBMs would need to address operational constraints related to rate filings and consumer notices.
Second, even as HHS prohibits longer OEPs, the final rule will give marketplaces the flexibility to adopt shorter OEPs. HHS acknowledges that marketplaces, including the FFM, will be able to adjust the OEP within the rule's new parameters "as operational processes evolve." This opens up the possibility that HHS could adopt an even shorter OEP for the FFM so long as it begins no later than November 1 and coverage goes into effect for January 1. HHS commits to an OEP for the FFM that runs from November 1 to December 15 beginning with the 2027 OEP (although this appears to be inconsistent with the accompanying fact sheet). But this is not codified in the rule, and HHS could change the OEP so long as it ends by December 31 with coverage effective on January 1.
HHS had requested comment on whether the shortened OEP should be delayed until the 2027 OEP, recognizing the disruption consumers will face and the need to allow for more time to drop coverage or change plans after December 15, 2025 if Congress fails to extend the enhanced premium tax credits that expire at the end of 2025. Almost all commenters supported delayed implementation in light of significant uncertainty and confusion for 2026. Beyond direct consumer impacts, commenters raised concerns that a shorter OEP could not be incorporated into rate filings or technical modifications and testing by marketplaces and insurers.
Some commenters were supportive of a shortened OEP while others, including SBMs, raised significant concerns that this change would lead to coverage losses and adverse selection. Commenters were especially concerned that vulnerable populations, such as those in rural areas or with limited English proficiency, may need more time to enroll. Further, every commenter that weighed in on this issue supported continued SBM flexibility, noting that states are better positioned to determine the appropriate OEP length given their deep understanding of local market conditions and consumer needs.
Consistent with its arguments in the proposed rule, HHS believes this policy will reduce adverse selection by lowering premiums and encouraging younger and healthier consumers to enroll. Without offering any comparable data from the FFM to rebut concerns about adverse selection, HHS largely ignores data from SBMs showing that those who enroll later in OEP are, on average, younger and thus may be healthier. Instead, HHS cites general data such as the fact that fewer than 3 percent of FFM enrollees for the 2025 plan year switched plans between December 15 and January 15 and that 97 percent of all marketplace enrollment occurred by the end of the ninth week of the 2025 OEP.
In response to concerns about harm to consumers, HHS generally commits to continued consumer notifications and public outreach regarding marketplace coverage. But the agency provides no additional detail and already significantly reduced funding for the navigator program. HHS also dismisses concerns that assisters - agents, brokers, web-brokers, enrollment assisters, and the marketplace call center staff - would be strained by the need to help enroll the same number of marketplace consumers over a shorter timeframe as well as concerns about workload in light of the overlap with OEPs for other markets (such as Medicare).
The final rule temporarily eliminates a monthly SEP for premium tax credit-eligible people at or below 150 percent of the federal poverty level (FPL). Beginning on the rule's effective date in August 2025, this SEP will no longer be an option for low-income consumers in either the FFM or SBMs. Thus, individuals who want to enroll in coverage but do not qualify for another type of SEP will no longer be able to do so and could remain uninsured until they can enroll during the 2026 OEP. The proposed rule would have made this policy permanent and fully eliminated the low-income SEP.
In a significant shift from the proposed rule, HHS will sunset this part of the final rule at the end of the 2026 plan year. This means low-income consumers could resume enrolling in coverage on a monthly basis using this SEP beginning in 2027. HHS appears to only want to bar low-income consumers from enrolling through this SEP from August 2026 to January 2027 and will reinstate the policy even though the agency continues to question its own legal authority to adopt this policy. As noted above, this seems to be an effort to maximize savings for the One Big Beautiful Bill Act, which would prohibit premium tax credits for those that enroll through income-based SEPs (including the low-income SEP).
HHS's stated goal of this regulatory "pause" is to root out those improperly enrolled and then reinstate the policy in 2027 after the enhanced premium tax credits have expired. This makes little sense for at least two reasons. First, it is unclear how the elimination of a new enrollment opportunity for uninsured people addresses HHS's stated goal of addressing "the currently high rate of improper enrollments" or will otherwise help "shed" improper enrollments. Second, the enhanced premium tax credits expire at the end of 2025, meaning there is currently no difference between 2026 and 2027 with respect to the level of subsidies that will be available to those under 150 percent FPL.
In 2021, the Biden administration established a monthly SEP for people at or below 150 percent FPL, with the goal of helping ensure that uninsured people who qualify but are not enrolled in coverage can access free or nearly free platinum-equivalent marketplace coverage. Initially, this SEP was in effect only when this population qualified for maximal advance premium tax credits (i.e., when Congress sets the taxpayer’s premium contribution to 0 percent). This has been the case since 2021 thanks to enhanced premium tax credits but could end at the end of 2025 if Congress fails to extend them.
In 2024, the Biden administration eliminated the requirement that a consumer be eligible for zero-premium silver coverage. HHS did so in light of data suggesting that the SEP had been successful, the importance of the SEP as an additional safety net especially for consumers transitioning from Medicaid or CHIP, and a lower-than-anticipated risk of adverse selection. As a result, a consumer at or below 150 percent FPL can enroll using a monthly SEP even when the taxpayer’s premium contribution is not set to 0 percent.
HHS wants to eliminate the low-income SEP to address concerns about adverse selection and increased improper enrollments by agents, brokers, and web-brokers. HHS also cites consumer complaints, litigation, and a sharp increase in enrollment of individuals at this income level during the 2024 plan year. Several commenters agreed with this view and believe the risk of adverse selection through this SEP will increase significantly after the enhanced premium tax credits expire.
Other commenters opposed the elimination of the low-income SEP, asserting that it is not a major driver of adverse selection. These commenters cited studies and SBM data showing that, for instance, the vast majority of low-income SEP enrollees remain enrolled for the rest of the plan year and that SEP enrollees’ claims were lower than non-SEP enrollees. Some commenters disputed that the low-income SEP is a major driver of improper enrollment and asserted that HHS relied on flawed analysis to justify this policy change.
HHS is unmoved by these data and declines commenters’ suggestion to assess data from the FFM on claims costs, loss ratios, or risk profiles of low-income SEP enrollees. HHS also applies this change to SBMs・8 of which currently offer the low-income SEP‘ven while noting that SBMs “have not experienced” the same high rates of improper enrollment as the FFM. SBMs will face an estimated $14 million total to comply with this change: $7 million to pause the low-income SEP in 2025 followed by $7 million to reinstate it in 2026.
Some commenters raised concerns that elimination of the low-income SEP will lead to coverage losses, financial instability, and uncompensated care, especially for vulnerable populations who may face barriers to enrollment during the OEP or other SEPs. HHS largely sidesteps these concerns by noting that the low-income SEP will go back into effect in 2027. HHS also clarifies that this rule does not affect the monthly SEP for members of federally recognized tribes and asserts that SBMs cannot separately grant a SEP for “exceptional circumstances” to mimic the low-income SEP＝gor any SEPs based on income for that matter.”
HS continues to take issue with its own legal authority, suggesting that the "best reading" of the ACA provision that governs the Secretary's authority to set marketplace standards, including SEPs, does not authorize the low-income SEP. Even so, HHS thinks that reinstating this policy is "the best course of action."In an unprecedented change that will create confusion for millions of consumers, the final rule will newly require consumers who are automatically reenrolled into marketplace coverage with no premium to pay $5 per month until they take action to confirm their eligibility information. This new $5 premium will apply to fully subsidized consumers (i.e., enrollees whose premium is $0 because they are eligible for advance premium tax credits that fully cover their premium) beginning with the 2026 plan year for the FFM.
The proposed rule would have made this policy permanent for the FFM beginning in 2026 and SBMs beginning in 2027. But HHS declines to finalize this proposal for SBMs, acknowledging that fraudulent and improper enrollment is concentrated in the FFM. It is unclear why the same rationale - i.e., improper enrollment is not prevalent in SBMs - does not extend to other policies that HHS applies to SBMs out of concerns about improper enrollment (such as the low-income SEP).
With respect to the FFM, this provision will sunset at the end of the 2026 plan year, meaning the lowest-income consumers will be assessed a $5 premium only during the 2026 OEP. This again seems to be an effort to maximize savings for the One Big Beautiful Bill Act, which would go even further than the rule by barring automatic reenrollment for all subsidy-eligible consumers (not just those who qualify for $0 premium plans).
HHS's stated goal is to "shed" improper enrollees in the FFM by "prompt[ing] an affirmative action" that will force enrollees to reconfirm their plan eligibility or else pay premiums they do not owe. HHS is adopting this policy for 2026 in the FFM even though most commenters opposed this change and even those that supported the policy encouraged HHS to delay implementation to the 2027 plan year. Instead, HHS will require this policy in the FFM for the 2026 plan year and then eliminate the $5 premium beginning in 2027.
Under current regulations, enrollees that remain eligible for a marketplace plan from one year to the next are automatically reenrolled unless they terminate that coverage or actively enroll in a different plan. If the same plan is not available, the marketplace uses a hierarchy to enroll the individual in a similar plan based on metal level, product, and insurer. Automatic reenrollment has been in place since the initial year of enrollment.
This is not the first time that the Trump administration has proposed changes to the automatic reenrollment process. In the proposed 2021 payment notice, the first Trump administration proposed to automatically reenroll consumers without advance premium tax credits at all, meaning consumers would be reenrolled in unsubsidized coverage until they returned to the exchange to verify their eligibility. Commenters widely panned this approach, arguing that it would result in coverage losses, administrative burdens, and confusion and that automatic reenrollment helps stabilize the risk pool. Although this proposal was not finalized for 2021, the 2025 final rule builds on this prior concept.
Under the final rule, the FFM will reduce the monthly amount of advance premium tax credit that a fully subsidized enrollee would otherwise receive by $5 beginning with the 2026 plan year. The FFM will apply a $5 premium until the enrollee returns to the marketplace to confirm or update their eligibility information. Once the consumer has confirmed or updated their eligibility information, the FFM will reinstate the full amount of advance premium tax credits (i.e., returning the premium to $0) on a prospective basis.
Some commenters questioned HHS's legal authority to arbitrarily reduce and withhold advance premium tax credits from consumers. HHS offers a very limited response, asserting only that the Secretary has the authority to set eligibility redetermination procedures and that the $5 would not affect the overall amount of premium tax credit that a consumer qualifies for - it would merely reduce the amount that is paid in advance.
Although HHS sought comment on whether the premium penalty should be greater than $5, HHS leaves this amount unchanged. HHS "cannot be certain" that $5 is the "best amount," but believes that $5 appropriately balances the need to incentivize action by the enrollee against the risk of undue financial hardship.
Commenters raised concerns that this change will lead to coverage losses among low-income consumers, destabilize the risk pool, and raise administrative costs for insurers and marketplaces. Some of these commenters cited published data showing that a nominal monthly payment leads to coverage losses, especially among younger enrollees. Others noted that marketplaces already have sufficient safeguards (e.g., periodic data matching) such that the $5 premium penalty is unnecessary. Still others noted that this policy will not reduce improper enrollment because an agent or broker could simply update a fraudulent application. Without citing any data, HHS disagrees with these concerns.
Some commenters discouraged HHS from implementing this change if the enhanced premium tax credits expire at the end of 2025. Why? Because far fewer enrollees will have access to $0 premium coverage beginning in 2026 and the operational burdens will not justify the potential policy gains. HHS acknowledges this, but believes the burden is justified because the policy will "shed" improperly enrolled individuals and that the FFM can implement this change for the 2026 plan year at a cost of about $1 million.
In response to commenter concerns about the swift implementation timeline, HHS intends to educate consumers through updated notices, assister and insurer training, and new partnerships with enhanced direct enrollment partners. (Perhaps HHS has more planned, but this does not sound like a particularly robust effort to notify low-income consumers of such a significant change.) Further, the 2026 OEP will still extend to January 15 so consumers have more time to take action as needed, and insurers can update discontinuation and renewal notices with relevant information.
Nearly all commenters "strongly opposed" alternative policies proposed by HHS to strip fully subsidized enrollees of all advance premium tax credits until they verify their eligibility - or to eliminate automatic reenrollment altogether. Commenters explained that automatic reenrollment is critical to preventing adverse selection. HHS appears to agree - noting that these proposals "present too great a widespread coverage loss to legitimate enrollments" - even as Republicans in Congress advance legislation that would fully prohibit automatic reenrollment for subsidized consumers.
Beginning with the 2026 plan year, the final rule readopts the premium adjustment percentage methodology that HHS first established for the 2020 plan year. This new methodology leads to a higher premium adjustment percentage that, in turn, will result in higher out-of-pocket and premium costs for millions of consumers. This is a permanent policy (i.e., it will not sunset) that applies in all states.
Note that this change has effects beyond the individual and small group markets: the premium adjustment percentage is used to set the maximum annual out-of-pocket limit for all non-grandfathered individual and group coverage, including job-based coverage. A higher percentage, once adopted by the Internal Revenue Service (IRS), could also result in higher out-of-pocket premiums for employees with job-based coverage.
The annual premium adjustment percentage is a measure of premium growth used to set the rate of increase for the maximum annual limit on cost-sharing and the required contribution percentage for exemption eligibility. The percentage must be determined by the Secretary of HHS on an annual basis. In addition, under premium tax credit regulations, the IRS generally uses the premium adjustment percentage to adjust premium tax credit parameters that determine individuals' contributions.
Beginning with the 2015 plan year, HHS adopted a methodology that determined the premium adjustment percentage based on projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Accounts. HHS used employer-sponsored premium data because it reflected health care cost trends without being skewed by individual market premium fluctuations.
HHS updated this methodology beginning with the 2020 plan year to additionally include increases in individual market premiums. The resulted in a higher premium adjustment percentage and thus a higher annual limit on out-of-pocket costs and a higher required contribution from subsidy-eligible consumers. HHS proposed to maintain the same methodology for the 2022 plan year, but the Biden administration declined to do so in light of commenter concerns and instead readopted the same methodology as was used from 2015 to 2019 for 2022 and beyond.
Beginning with the 2026 plan year, HHS will newly use a premium measure that is similar to that of the National Health Expenditure Accounts but that excludes premiums for Medigap and property and casualty insurance. Under this new methodology, the premium adjustment percentage for 2026 will be about 4.5 percent higher at 1.6727 percent, up from about 1.4512 for 2025. HHS expects this update to result in higher net premiums of about $530 million per year and coverage losses of at least 80,000 marketplace enrollees.
For 2026, the maximum annual out-of-pocket limit on cost sharing will be $10,600 for self-only coverage and $21,200 for other than self-only coverage. This is a 15 percent increase compared to the 2025 plan year limits and a 4 percent increase relative to the percentage adopted by the Biden administration for 2026. These limits will be reduced to $3,500 for self-only coverage and $7,000 for other than self-only coverage for those with incomes under 200 percent FPL and $8,450 for self-only coverage and $16,900 for other than self-only coverage for those with incomes between 201 and 250 percent FPL. Using the new methodology, the required contribution percentage will be 8.05 percent for 2026, up from 7.28 percent for 2025 (an increase of about 0.77 percentage points).
Many commenters opposed this change, citing concerns about higher net premiums and out-of-pocket costs that will result in coverage losses, adverse selection, worse health outcomes, medical debt, and uncompensated care. HHS acknowledges these potential outcomes but still believes this policy is needed, and the preamble includes an extended defense of HHS's interpretation. HHS also rejects commenters' calls to delay this change to the 2027 plan year to give insurers, state insurance regulators, and SBMs more time to incorporate these new values into rates for 2026.
The final rule allows insurers to adopt less generous benefit design by expanding the de minimis ranges that insurers can use when designing individual and small group market plans. Specifically, plans that are subject to actuarial value requirements will be allowed to use de minimis ranges of +5/-4 percentage points for expanded bronze plans and +2/-4 percentage points for other plans beginning with the 2026 plan year. In addition to eroding the value of marketplace coverage, expanding the de minimis variation for silver plans will, by extension, reduce premium tax credit amounts. This is a permanent policy (i.e., it will not sunset) that applies in all states beginning with the 2026 plan year.
Insurers that offer coverage in the individual and small group markets must comply with actuarial value requirements of 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan. Under the ACA, HHS has flexibility to allow de minimis variation in actuarial value to account for differences in actuarial estimates. As a result, metal-level plans must satisfy their specified actuarial value level within an allowable de minimis variation. Federal officials initially allowed a de minimis variation of 2 percentage points, but this amount was revised under the first Trump administration to +5/-4 percentage points for certain bronze plans (to account for plan design issues unique to them) and then to +2/-4 percentage points for all plans.
Beginning with the 2023 plan year, HHS revised the de minimis ranges to +2/-2 percentage points. HHS also created several exceptions to be more protective of consumers. First, the de minimis range for expanded bronze plans was changed to +5/-2 percentage points. Second, as a condition of certification, insurers had to agree to limit the de minimis range for individual market silver qualified health plans to +2/0 percentage points. Third, income-based silver cost-sharing reduction plan variations were limited to a de minimis range of +1/0 percentage points. The latter two policies were designed to ensure that enrollees could receive the full value of marketplace subsidies provided under the law.
In addition to reverting to the de minimis ranges of +5/-4 percentage points for expanded bronze plans and +2/-4 percentage points for all other plans, HHS also (1) eliminates the Biden-era exception regarding the +2/0 percentage point de minimis range for individual market silver qualified health plan certification; and (2) allows a de minimis range of +1/-1 percentage points for cost-sharing reduction plan variations. HHS affirms that these changes do not impact standardized plan design requirements that continue to apply for the 2026 plan year (although insurers can adjust their non-standardized plan option consistent with other requirements like uniform modifications).
HHS received mixed feedback on this provision. Some commenters supported the change, agreeing with HHS that the actuarial value changes will provide insurers with additional flexibility in plan design and cost sharing, encourage insurer participation, and align standards for plans offered through and outside of the marketplaces. Even commenters that supported this change urged HHS to delay the changes until the 2027 plan year. But HHS declined to do so, noting that this new flexibility is optional for insurers.
Many commenters opposed the proposal, raising concerns that consumers will face higher out-of-pocket costs and higher premiums because of this change. HHS acknowledges these concerns but believes these changes are "essential" to balancing access and affordability and will (somehow) incentivize unsubsidized consumers to enroll in coverage. HHS also dismisses commenter concerns that the actuarial value changes will make it even harder for consumers to meaningfully compare plans.
Beginning with the 2026 plan year, marketplaces can no longer transition an automatic reenrollee from a bronze plan into a more generous silver plan at no additional cost. Marketplaces will still be required to account for the same provider network when reenrolling enrollees into a new plan if their current plan was no longer available, but HHS will generally revert to reenrollment hierarchy standards in place before the 2024 OEP. This is a permanent policy (i.e., it will not sunset) that applies to both the FFM and SBMs (although SBMs can use an existing process to seek HHS approval to apply alternative procedures for automatic reenrollment).
Under current requirements, marketplaces can transition a consumer who is currently enrolled in a bronze plan and eligible for cost-sharing reductions into a silver marketplace plan for a future year under certain circumstances. Specifically, the silver plan must be in the same product with the same provider network and with a lower or equivalent net premium after advance premium tax credits. This bronze to silver crosswalk addresses concerns about low-income consumers leaving large subsidies on the table. HHS now wants to eliminate this reenrollment hierarchy standard because the current policy inappropriately overrides consumer choice.
HHS received mixed comments on this proposal. Some commenters supported the change to reduce consumer confusion and help preserve choice, noting that consumers may want to remain in a bronze plan even when eligible for a more generous silver plan. Other commenters opposed this change, citing studies showing that consumers often do not understand that they qualify for more generous coverage and that the policy will result in higher out-of-pocket costs for families who remain in bronze plans. HHS disputes that consumers are confused about their plan options and that elimination of this policy will necessarily result in higher out-of-pocket costs for families who could actively reenroll into a different plan. HHS also disputes data showing that SBM reenrollment hierarchy is popular, has not resulted in consumer confusion, and could result in federal savings.
Beginning with the rule's effective date, HHS will allow insurers to condition new coverage on the repayment of outstanding premium debt for prior coverage (unless doing so is prohibited under state law). The final rule eliminates the existing ban on this practice. As a result, insurers will, subject to state law, have the option to add past-due premiums owed to that insurer (or another insurer in the same controlled group) from any prior year to the initial premium for new coverage. If a consumer cannot pay the initial and past-due premium amounts in full, the insurer can refuse to effectuate their new coverage. This policy is permanent (i.e., does not sunset).
A similar policy was initially adopted by the Trump administration in the "market stabilization" rule, which allowed insurers to lock consumers out of coverage that would otherwise be available during OEPs or SEPs if they could not pay past-due premiums from the prior 12 months. This interpretation was a shift from prior rules; the Obama administration interpreted the ACA's guaranteed issue requirement to bar an insurer from requiring payment for past-due premiums before effectuating new coverage in a different product. Insurers could pursue collection for past-due premiums but could not condition new coverage on payment of the amount due.
The Biden administration eliminated the Trump-era policy in the 2023 payment notice in response to concerns that the policy creates barriers to coverage and is inconsistent with guaranteed issue protections. HHS and commenters explained in 2023 that nonpayment of premiums may not be intentional and could result instead from financial hardship, hospitalization, an environmental disaster, or a lack of awareness. Even if the reason for nonpayment is not known in all cases, the Biden administration did not view this as a reason to deny coverage to individuals and believed insurers have adequate recourse to collect owed premiums.
Insurers that want to adopt the policy set forth in the June 20 rule must set new terms of coverage that require consumers to pay any past-due premiums as part of their initial premium for a new plan. Past-due premiums refer to any premium that went unpaid while the individual was covered by the same insurer or an insurer in the same controlled group. This means insurers could require consumers to repay past-due premiums that were owed during a grace period even if an enrollee did not have claims during that period. The rule aligns with an existing definition of a controlled group, but states have the flexibility to adopt a narrower definition if they wish. And HHS will require the payment of past-due premiums to comply with the new premium payment threshold requirements adopted in this rule, thereby limiting insurer flexibility.
Unlike the prior 2017 policy, insurers can apply this policy to past-due premiums from any time period (not just the prior 12 months). HHS also previously required insurers to notify consumers about this policy but, despite suggestions from some commenters to do so, does not impose a similar requirement here.
In addition to notice requirements, some commenters urged HHS to impose additional guardrails on insurers' ability to adopt a past-due premium payment policy. Suggestions included consumer protections for installment payments, enrollment after partial payment, exemptions for those enrolled due to fraud or inaction by a third party, and appeals processes for past-due premium determinations.
HHS declined to adopt these or other additional requirements, emphasizing that insurers must apply any past-due premium payment policy uniformly and in a nondiscriminatory manner and cannot condition new coverage on the payment of past-due premiums by someone other than the prior insured. HHS clarifies that, for instance, a dependent spouse would not be liable for prior nonpayment under a family policy while an employee would not be liable for prior nonpayment for group coverage by an employer. But, beyond those minimum requirements, HHS will defer to states and insurers on additional standards (although HHS reserves the right to issue clarifying guidance in the future).
Commenters also raised concerns that this new option for insurers is inconsistent with statutory guaranteed issue requirements. HHS largely reiterates policy considerations but also suggests that guaranteed issue and guaranteed renewability provisions, when read together, are "clear" that the sale and continuation of a policy is contingent on premiums. If HHS views these statutes as this "clear," it raises the question of why this policy is optional, not mandatory, for insurers.
HHS continues to believe that this policy will result in "minimal" enrollment losses. This is because past-due premiums, in HHS's view, do "not impose a substantial financial burden." Most consumers qualify for premium tax credits, which reduces the amount owed in premiums, and are protected by grace period rules (so subsidized consumers would owe no more than three months of past-due premium amounts).
Even if those factors help mitigate the impact of this policy on subsidy-eligible consumers (which commenters disputed), HHS is making this change across the individual and group markets. Despite the broad scope of this change, HHS devotes little to no attention to how this change could impact unsubsidized consumers, employers, and employees who may owe much higher premium costs and have different grace period protections (as set by state law). Instead, HHS largely limits its rationale for the policy and its response to commenters' concerns to factors that affect subsidy-eligible people.
HHS acknowledges that enrollees who face financial constraints "may need to adjust their household budgets to maintain coverage or, if they are not able to, become uninsured," and that this could, in turn, lead to higher costs for care, medical debt, and uncompensated care for hospitals and municipalities. Although the premium nonpayment policy could have "at least some negative impacts on low-income individuals," HHS asserts, without data, that the purported benefits of continuous coverage outweigh this potential harm.
HHS also dismisses concerns raised by commenters that this policy could have an adverse effect on the individual market risk pool. Rather, HHS suggests that consumers will be more incentivized to pay ongoing premiums if they know they can be locked out of coverage in the future. And, in response to concerns about consumers who may have only one insurer option, HHS notes that states with limited competition can prohibit insurers from adopting this policy.