CMS finalizes the program integrity rule for the Affordable Care Act insurance marketplaces

CMS formally implemented an Affordable Care Act marketplace rule that is expected to reduce plan enrollment in the name of program integrity, but the agency took steps to try to mitigate the long-term impact.

Unlike in the earlier proposed rule, the final rule allows some of the new restrictions on enrollment to sunset after 2026. With the enhanced subsidies for marketplace insurance expiring ahead of the ’26 plan year, barring unanticipated action over the next few months by Congress, CMS says some of the concern about improper enrollments will be alleviated.

Tweaks to certain proposed policies are projected to slightly lower the final rule’s immediate impact on the insured rate. Whereas the proposed rule estimated that 750,000 to 2 million marketplace enrollees would lose coverage in 2026, the final rule puts the range at 725,000 to 1.8 million.

“We note that coverage losses are expected to be concentrated in nine states where erroneous and improper enrollment is most noticeable,” CMS states in the rule, mentioning Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas and Utah.

However, the agency acknowledges that the increased administrative burden posed by some provisions will be seen in coverage levels nationwide.

The proposed rule’s provisions also were included as a savings measure in the House version of the budget reconciliation bill. The Senate did not include those provisions in its draft but could add them, potentially with updates to match the changes from the proposed rule to the final rule. Passing the text as legislation would give it a greater sense of permanence compared with regulatory language.

CMS: Benefits outweigh concerns

CMS maintains that a large segment of the coverage decrease will be improper enrollments, many of which happened through brokers and without the knowledge of the enrollee.

By cracking down on improper enrollments that involve subsidized premiums, CMS expects to save taxpayers $12 billion in 2026. For nonsubsidized marketplace enrollees, premiums will fall by an average of 5%, according to the agency.

“Improper ACA enrollments, enabled by weakened verification processes and expanded premium subsidies, have triggered widespread fraud,” CMS stated in a news release. “Research shows that in 2024 alone, an estimated 5 million people may have been improperly enrolled, costing taxpayers as much as $20 billion.”

The citation for that statement is a study by the conservative Paragon Health Institute.

CMS notes potential downsides of the new rule but says: “While some consumers may face challenges paying past-due premiums and may become or remain uninsured, the longer-term effects can include more stable risk pools and potentially more moderate premium trends.”

Projected impacts from components of the rule include:

• A potential increase in costs and medical debt for individuals who are deterred from enrolling, which could lead to higher costs for hospitals and municipalities
• Potential costs to state governments and private hospitals in the form of charity care for individuals who become uninsured

The agency is not dwelling on the adverse impacts for hospitals: “We believe that the concerns expressed [in stakeholder comments], such as emergency room strain or changes in coverage during a course of treatment, represent common, existing issues that healthcare providers are generally well-equipped to address.”

Long-term changes

Some of the provisions are intended to last indefinitely. rather than expire after 2026.

Beginning with plan year 2027, open enrollment must end by Dec. 31 for on- and off-marketplace individual-insurance plans, two weeks later than in the proposed rule but two weeks earlier than during the Biden administration.

For the first time since a previous change heading into 2023, marketplace health plans will be able to deny new coverage if an enrollee has premiums that are past due. A plan can require both the overdue amount and the initial premium for the new coverage unless prohibited by state law. CMS hopes this clause will promote continuous coverage.

Among other provisions, the rule also removes marketplace and Basic Health Program eligibility for U.S. residents with Deferred Action for Childhood Arrivals (DACA) immigration status. And marketplace plans will not be permitted to include specified sex-trait modification procedures as an essential health benefit.

The DACA provision is projected to lead 10,000 residents to lose insurance next year and also to have a small negative impact on the risk pools for the marketplaces, since those enrollees are generally younger. DACA residents have been eligible to enroll since 2024, although a federal judge halted eligibility in 19 states that had sued the Biden administration over the matter.

The rule also expands the allowable range for the actuarial value of plans in the different metal tiers of the marketplaces. “This policy will allow for greater flexibility in plan design, providing consumers with increased plan options and lower premiums as issuers adjust plan designs to attract a broader range of enrollees, improving market competition and stability,” the final rule states.

For 2026 only

The plan to terminate some provisions after a year, following the expected end to the enhanced subsidies, is intended to limit some of the long-term disruption in the marketplaces.

For 2026, the rule removes the year-round special enrollment period (SEP) for people whose incomes are below 150% of the federal poverty level. A new requirement to conduct pre-enrollment verification for SEP eligibility also is set to expire after next year, and the mandate does not pertain to the 19 state-based marketplaces.

A provision will render enrollees ineligible for subsidies if they fail to file federal income taxes and reconcile their income with their subsidy amount in a single year, as opposed to two years under current regulations. But after 2026, the time frame will revert to two years.

Another one-year aspect of the new rule requires a $5 monthly premium payment for subsidized individuals who are reenrolled and otherwise would have no premium responsibility but have not affirmed or updated their eligibility information.

The idea is to add an administrative step that ensures the enrollee is actively trying to enroll for the 2026 plan year. State-based marketplaces will be authorized to create their own “comparable” process for the $5 premium requirement, subject to HHS approval.