CMS tightens eligibility, subsidy guidelines in final ACA Marketplace rule on program integrity

On Friday, June 20, CMS released a final rule entitled Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability. The rule codifies much of what was proposed in this spring’s rulemaking and has significant overlap with what we are seeing in the One Big Beautiful Bill.

Below, we lump the major provisions into four categories: direct impacts to agents and brokers, changes to consumer eligibility for coverage, changes to consumer eligibility for premium tax credits, and a few measures impacting the health insurance marketplace more broadly.

These provisions have varying effective and sunset dates (see the table below), but generally speaking, it seems that CMS sees contract year 2026 as a chance to shed any improper enrollments that may be on the books and to get the marketplace used to functioning in an era without enhanced premium subsidies (yes, you read that right). Many, though not all, policies will sunset at the end of 2026.

How does the final rule affect agents and brokers directly?

The “preponderance of the evidence” standard is formalized

Earlier this spring, CMS proposed to use a “preponderance of the evidence” standard when determining whether HHS should take disciplinary action against an agent or broker, whether that action is a suspension or termination of Marketplace agreements.

The preponderance of the ever standard is a lower legal bar to clear than the “beyond a reasonable doubt” standard used in many proceedings. The standard only requires that HHS prove that misconduct was more likely than not to have occurred, meaning that applications of the standard and possible disciplinary actions could be more subjective. This change has an immediate effect.

What portions of the final rule impact consumer eligibility for Marketplace coverage?

DACA recipients no longer meet the definition of “lawfully present”

CMS is modifying the definition of “lawfully present” by excluding “Deferred Action for Childhood Arrivals” recipients from the definition. DACA recipients will no longer be eligible to enroll in a Qualified Health Plan or Basic Health Plan, nor qualify for premium tax credits or cost-sharing reductions. This policy has immediate effect.

Insurers may now require payment of past-due premiums before effectuating new coverage

Citing its own findings, CMS believes that consumers are using guaranteed availability and grace periods to time both their payments and enrollments for times when they’ll need health care services.

To combat this, carriers may, within the bounds of their state laws,  decline to effectuate coverage until past-due premiums and the binder payment are made in full. This change will go into effect immediately.

Fixed-dollar and gross percentage-based premium thresholds are temporarily removed

Previously, insurers had an option to accept partial payments of premiums without any penalty to the consumer. Chiefly, this allowed consumers with little premium responsibility to maintain coverage for several months after their coverage went into effect. The rule removes these flexibilities for plan year 2026, but puts them back into effect for 2027.

The Special Enrollment Period for consumers making between 100% and 150% of FPL is paused

Currently, households with incomes between 100% and 150% of the federal poverty level are eligible for a monthly special enrollment period (SEP). The rule pauses this SEP for the entirety of plan year 2026, with no comment on what might happen in future years.

SEP eligibility must be verified before enrollment

HHS will now require pre-enrollment verification of each SEP, meaning that consumers will need to produce the appropriate documentation (birth certificates, marriage licenses, etc.), before they may enroll. This policy has immediate effect, and will last through at least the plan year 2026.

What portions of the final rule impact consumer eligibility for premium tax credits?

The file and reconcile policies get tighter

The rule will require all consumers using premium tax credits to file and reconcile their taxes in order to be eligible for further credits in plan year 2026. Consumers who fail to do so will not receive tax credits.

In 2027 and beyond, the policy will revert to the current two-year window. Notice of failure to file and reconcile policies will be similarly structured in 2026 and 2027.

Consumers must verify their household incomes within 90 days

Consumers have always had 90 days to provide documentation to verify their household incomes. Previously, they were granted an automatic 60-day extension for this purpose. The automatic 60-day extension is removed, and consumers will not be eligible for premium tax credits until their income is verified. The change has an immediate effect.

More on income verification

The rule also narrows the options consumers have for verifying their incomes when there is a discrepancy with a trusted data source – e.g., tax filings at the Treasury. Exchanges using the federal platform must now generate income inconsistencies when a household’s projected income is less than 100% of FPL. This has the likely effect of moving these households off the Marketplaces and onto Medicaid coverage.

Enrollees will also no longer be able to attest to their income and household size when that information is not verifiable via a tax return. Instead, Exchanges and consumers must use other trusted sources to verify that information. This policy has immediate effect and will last until plan year 2027.

Consumers with $0 premium responsibility must get a new eligibility determination each year

To encourage active re-enrollments by consumers with $0 premium responsibility, Marketplaces will now deduct $5 from those consumers’ premium tax credits. The deduction will be in place until the consumer verifies their income and eligibility each year. Consumers may have their full premium tax credit reinstated after their eligibility and plan selection have been confirmed. This policy goes into effect beginning with plan year 2026.

What rulemaking impacts the broader market?

CSR-eligible consumers on bronze plans will no longer be automatically re-enrolled on a silver plan

There are plenty of reasons a consumer eligible for cost-sharing reductions might not choose a silver plan, and this rule change seems to acknowledge that. Consumers will instead be re-enrolled in the same bronze plan, unless some other circumstances dictate otherwise. State exchanges will also be permitted to design their own re-enrollment hierarchies. These changes go into effect with the plan year 2026.

The Open Enrollment Period is shortened, but not as much as CMS had proposed

In the spring, CMS proposed limiting the fall Open Enrollment Period to taking place between November 1 and December 15 of each year. However, exchanges may now hold their enrollments between November 1 and December 31, so long as the total period does not exceed 9 weeks. All plan selections will be effective on January 1.

However, we should note that beginning with plan year 2027 (so for OEP in 2026), CMS codified November 1 through December 15 as the yearly OEP window for any exchange using the federal platform. State-based exchanges would be subject to the rules above.

Sex-trait modification may not be included as an Essential Health Benefit

States developing their essential health benefit packages for plan year 2026 may not include sex-trait modification coverage. This change has a permanent effect.

The premium growth measure reverts to that of plan year 2020

To help inform premium assistance, cost-sharing, and employer shared responsibility payments, CMS calculates a premium growth measure each year. Since plan year 2022, the premium has taken into account fewer data points, in an attempt to stabilize premiums through the pandemic and beyond. CMS is now reverting to a more comprehensive measure that captures premium changes in both the individual and employer-based markets.

De minimis thresholds for actuarial value are expanded

To qualify at their metal tier, plans must prove their plans provide actuarial value within a given metal tier’s range; for example, a silver plan must cover about 70% of an enrollee’s medical costs.

The rule expands these ranges to +2/-4, meaning that a silver plan can now cover somewhere between 66% and 72% of an enrollee’s cost and still qualify. Widening these ranges is intended to create more variety in benefit design. This change goes into effect for plan year 2026 and beyond.

What does CMS have to say about the extension of enhanced premium subsidies?

CMS asserts that the uptick in fraudulent and improper enrollments is heavily influenced by the expanded premium subsidies authorized under the American Rescue Plan of 2021, and re-authorized by the Inflation Reduction Act of 2022. And, language within seems to assume that the enhanced subsidies will not be extended:

“The expanded subsidy regime that gave way to this environment of fraudulent and improper enrollments is expiring at the end of this year. Given the high and demonstrable levels of improper enrollment creating long-term uncertainty and instability in the marketplaces, this rule takes a carefully curated set of temporary actions to immediately reduce the crisis-levels of improper enrollments over the short-term as the market readjusts to the new subsidy environment in which enhanced subsidies are no longer available.”

While extension of the premium subsidies is firmly at Congress’s discretion, this seems to be the clearest indication yet that the current administration does not expect enhanced subsidies to continue.

What’s the bottom line?

Agents and brokers working on the Marketplace should be poised for significant disruption in this coming OEP, and throughout plan year 2026. Tightened restrictions on eligibility for both coverage and premium tax credits may shrink your pool of clients and prospects. Modifications to file and reconcile rules, coupled with the limit on passive enrollments for those with $0 premium responsibility, effectively eliminate passive re-enrollments this year. That puts you in a place where you'll have to chase down more consumers to actively re-enroll, lest they lose their premium tax credits.

Also, this rule is not the only policy change that will impact the individual markets. Although many policies from the One Big Beautiful Bill echo what is found here, it is still entirely likely that the lawmaking process could force additional changes for 2026 and beyond. Changes to Medicaid coverage as a result of that law might still upend  the individual market, too. Whatever happens, we’ll be here to help agents and brokers make sense of it.