In its latest proposed rule, the Centers for Medicare and Medicaid Services seeks to implement provisions of the Working Families Tax Cut legislation and further combat fraudulent enrollments. CMS estimates the proposed changes would reduce federal spending on APTCs by $7.6 billion annually beginning in 2028. It also projects 332,500 fewer Exchange enrollees each year: 237,500 on the federal platform and 95,000 through State Exchanges.
So, what exactly are these changes, and how will they impact consumers, your business, and the market at large? Let’s dive in.
Advance Premium Tax Credits (APTC) and Cost Sharing Reductions will be withheld during most open Data Matching Issues (DMI). Under the proposal, APTCs and CSRs would be withheld during certain unresolved DMIs involving applicable enrollment information, including citizenship or eligible noncitizen status, residency, household income, family size, and other health coverage, including employer coverage. Assistance would only begin after the DMI is resolved.
The impact can vary by household. Depending on which household member has an unresolved DMI, the Exchange may be able to continue providing assistance for other eligible household members.
One exception: If a tax-household member qualifies for a Special Enrollment Period (SEP) based on the birth, adoption, marriage, or loss of a dependent, the Exchange would pay APTC and CSRs on attested information during the DMI for both new applicants and current enrollees.
DMIs unrelated to enrollment information would continue to function as they do now. For issues like American Indian/Alaska Native verification, and other issues not listed above, the enrollee would maintain APTC and CSRs during the current 90/95 day verification period.
If a mid-year change creates a DMI, financial assistance may change. When an already-verified enrollee reports a change that creates a DMI, the Exchange will keep APTC and CSRs at the previously verified level if the change would raise them. However, if the change would lower APTC and CSR, the Exchange would immediately lower assistance to the new attested amount. If the DMI remains open, the Exchange would attempt to resolve it with other data sources. If the DMI is closed, and the enrollee is entitled to additional assistance, it would be granted. The effective date of a revised eligibility determination would generally follow the proposed effective-date rules, rather than automatically beginning the month after the consumer reports the change.
Consumers may receive retroactive APTC and CSR when a DMI resolves. There are likely to be cases where a DMI resolves after a policy’s effective date. So long as the consumer is otherwise eligible and successfully closes the DMI, the exchange will issue retroactive APTC and CSR. No APTC would be paid for prior-year months, but CSRs still can be. That avoids a need to provide corrected Forms 1095-A and amended tax returns.
Plan selections by those with open DMIs would be pended. Consumers with open DMIs, who would otherwise be eligible for a Qualified Health Plan, may still enroll in coverage. At the consumer’s option, the application may be pended until APTC and CSR eligibility is determined. If the DMI expires, the consumer may still enroll in a full-price plan.
Beginning with PY2028, the proposed rules would establish new effective dates for pended Open Enrollment Period selections. If all applicable DMIs are resolved by January 15, coverage would begin January 1. If they are resolved after January 15 but on or before the 15th of a subsequent month, coverage would begin on the first of the month in which the DMI is resolved. If the DMI is resolved after the 15th, coverage would begin on the first of the following month. Separate effective-date rules would apply to SEP enrollments, with exceptions for certain birth, adoption, and foster-care situations.
A new pre-Open Enrollment (OE) verification period would be created. Households would have a yearly window for applicants to provide or confirm household income and family size, citizenship or eligible non-citizen status, other health coverage, and residency. This window would open on August 1 and close on the day before the exchange’s OE period begins. However, consumers would have through December 31 to confirm their information.
All information would be subject to verification by the Exchanges, and DMIs could result. Such DMIs would have to be resolved before financial assistance would be paid, as above. Open DMIs would be pended, as above.
Consumers who do not verify eligibility for APTC and CSRs would not be disenrolled from their health plan. However, they would lose financial assistance until their eligibility is confirmed.
We can’t overstate this point: customers would need to verify their eligibility for financial assistance each year in order to keep receiving it.
Generally, CMS proposes these regulations to discourage some of the fraudulent enrollments that have occurred in recent years. CMS specifically raised concerns about agents and brokers who exploit the current DMI process. Under existing rules, commissions may continue to be paid while a consumer remains enrolled with financial assistance, even if that assistance is later revoked after an unresolved DMI. CMS views this as a potential incentive for improper enrollment activity.
To be clear, the proposal does not establish a new agent or broker commission schedule. Its potential effect on commissions would come through changes to enrollment and financial assistance, rather than a direct change to compensation rules.
There are a few things that will impact your day-to-day, however.
CMS intends to allow EDE platforms to be used for pre-OE data collection. On the federal platform, CMS intends to conduct the aforementioned annual APTC and CSR eligibility checks via HealthCare.gov. CMS also intends to allow approved Enhanced Direct Enrollment entities, like HealthSherpa, to participate in the pre-OE process. Brokers using these platforms may be able to help clients submit or confirm information through the same process. Using an EDE platform, however, would not eliminate the verification requirements or guarantee that financial assistance continues uninterrupted.
State-based exchanges may extend the window to resolve DMIs that arise from the pre-OE period. CMS allows state-based exchanges to extend the window for these DMIs. However, it recommends a drop-dead date of December 15th to ensure the DMI can be properly processed.
CMS expects and acknowledges that agents and brokers will contact clients more regularly as a result of these proposed changes. The new pre-OE period is the most obvious change here. To help your clients maintain their financial assistance, you’ll want to be proactive in communicating about their obligations here. Assisting with annual verification would likely become part of your current client retention process. At a minimum, you’ll also need to contact them during open enrollment to help them select the appropriate plan.
There is still some wishy-washiness about the length of OE. CMS acknowledged that previous rulemaking that shortened the annual OE has been challenged in court. While the current-year OE will end on January 15, 2027, CMS indicated it is “uncertain” about what timeline will be followed for the next OE.
The new pre-OE period shifts notice requirements. Beginning in 2027, the period between August 1 and the date the exchange’s open enrollment begins would be known as the pre-OE period. During this time, both current and prospective enrollees would be able to confirm their eligibility for APTC and CSRs, as above. Exchanges could begin sending notices as early as July 1, the month before the pre-OE period begins.
If available, consumers could pre-select plans during the pre-OE period. While it’s unlikely, if plan information is available, consumers could pre-select their plan for next year during this period. However, most consumers would likely have to return to their exchange once plan information becomes available.
Most provisions would go into effect for PY2028. Two exceptions: the pre-OE period would begin on August 1, 2027.
We should point out, of course, that this is a proposed rule, not a final regulation. Comment is due on November 27, 2026. CMS is, of course, mandated to review and respond to comments as it releases the final rule here. Comments can influence what CMS includes in the final rule and how the agency responds to concerns raised during the rulemaking process.
It’s also worth saying that this is supplemental rulemaking, not the Notice of Benefit and Payment Parameters for PY2028. The NBPP is generally released in November or December, and so we would expect that document to carry additional regulatory changes.
We’ll keep you in the loop as it all unfolds.