11 min read
Action Benefits
Updated on February 12, 2026
On February 9, 2026, the Centers for Medicare and Medicaid Services (CMS) released the Notice of Benefit and Payment Parameters for 2027. Colloquially known as the proposed rule, or payer notice, this document outlines policy and procedure changes CMS would like to make for the upcoming plan year. These policies are always subject to public comment before they become final. And, frankly, we think there’s a lot that independent health insurance agents and brokers will want to comment about.
Building on 2025’s Program Integrity rule, CMS proposes what are likely the most significant changes to the implementation of the Affordable Care Act (ACA) since its inception.
From shaking up the cornerstones of the ACA to broadening enforcement actions, and permitting more plan variety to taking another bite at restricting subsidy eligibility, there are a number of measures that will likely decrease both federal spending and health insurance premiums.
But, for every dollar insurers aren’t required to pay, consumers might risk a corresponding decline in the quality of coverage.
Here are the highlights from the 577-page proposal.
Two pillars of the Affordable Care Act, Essential Health Benefits and Medical Loss Ratios, combine to dictate what insurers must cover and how much they must spend on covering those services. They both get a re-work under the proposed rule.
Currently, all Qualified Health Plans (QHPs) must post an 80% Medical Loss Ratio--at least 80% of all premium dollars must be spent on claims and quality improvement, rather than administrative costs. Otherwise, excess premium dollars must be refunded to consumers.
CMS is proposing giving itself the ability to customize Medical Loss Ratios on a state-by-state basis in order to promote premium stability in those markets. This adjustment could be both the figure itself and the length of time the adjustment is in place.
While states have asked for, and been granted exceptions to the 80 percent standard in the past, nearly all states now follow the current 80 percent. Spot-reducing MLRs may influence carriers to stay in the market, especially as they can better stomach their administrative costs. However, we may also see an erosion in coverage quality – networks may get leaner, and we may see a race to the bottom of each metal tier’s actuarial value as carriers have more leeway to control costs.
Many states have established additional Essential Health Benefits beyond the ten initially named in the Affordable Care Act. Virginia, for example, includes doula services, while Washington and Vermont include hearing aids.
CMS would reclassify these benefits as “in addition to EHB” (and thus, not EHBs themselves), regardless of whether those benefits are embedded in the state’s benchmark plan.
But there’s some legal wrangling to keep an eye on here, too.
The ACA requires states to defray the costs of benefits classified as “in addition to EHB.” Meaning, for all these requirements – hearing aids, doula services, donations of human milk – the state would be forced to swallow some of the cost instead of the plans themselves. And that leaves states in a pickle– do they try and find the funding? Or do they remove the benefits they’ve mandated, which would likely go over like a lead balloon?
It’s true this move would likely put downward pressure on premiums. But that means lower commissions (where they’re paid on a percentage basis, at least) – and poorer coverage for those who are used to enhanced benefits.
CMS is pausing the review of State applications to choose EHB-benchmark plans for the moment. Functionally, states are unable to select new plans as their benchmark plan. CMS would also prohibit the inclusion of routine non-pediatric dental services as an EHB.
Taken together with the reclassification of some benefits as “in addition to EHB,” it looks very much like CMS is laying groundwork for a significant rework of EHBs. While it’s certainly possible they could expand the scope, given the current political climate, we might expect a narrowing of EHBs, which would permit leaner plan options. That may also drive down premiums, but at what cost?
The gap between ACA plans and short-term plans might shrink, siphoning healthy people out of ACA risk pools. Medicaid coverage might also get leaner, as many states have pegged their coverage to EHBs.
Responding to ongoing allegations of fraud and waste in the Marketplace, CMS is clearly wanting to take a larger role in oversight and enforcement over these federal programs. From broker marketing, compliance and training; to silver loading; to reconfiguring its structure for imposing Civil Monetary Policies, CMS is communicating a clear intent to exert its authority.
In response to ongoing accusations of fraud on the Marketplace, CMS wants to institute additional standards of marketing conduct. CMS proposes prohibiting seven marketing practices:
CMS is specifically worried about a prospect giving out PII preemptively because they fear they might miss out on a gift, deadline, or entitlement if they don’t. An eye will be kept on discrimination toward protected classes.
CMS would also require agents, brokers, and web-brokers to provide marketing materials as part of its monitoring, audit, and enforcement activities. No matter if a marketing material came from a carrier, a third-party marketing organization, or any other entity working with an agent, that agent would be responsible for providing each requested material to CMS for auditing. No strong indication on a retention policy just yet, but CMS seeks comment on that, too. Producers would also be held responsible for marketing content created and published on their behalf.
Currently, agents and brokers have a lot of latitude in documenting a consumer’s consent to the business relationship, and their review of the Marketplace application whenever it is updated. But that lack of uniformity makes it difficult to enforce. CMS would instead mandate the use of a universal form and action for these purposes.
CMS would discontinue its contracts with vendors like AHIP and HealthSherpa, who currently provide alternate routes of training. Training and certification would only be offered through HHS via the portal at cms.gov.
Since the first Trump administration stopped funding Cost Sharing Reductions (CSRs), insurers adapted by loading the cost of those unpaid CSRs into their Silver premiums – which is where those CSRs are used. This ends up distorting pricing for bronze and gold plans too, or making them a more feasible option as the silver option inflated depending on the state.
CMS has consistently given that behavior its blessing, but beginning with PY2027 filings, they are proposing more uniform data collection. In short, they want to know by how much carriers are loading these premiums, and would require reporting to that effect. This, the theory goes, would allow CMS to keep a closer eye on market conditions and to limit potential overloading of premiums.
Remember, the more expensive the silver plan, the more premium tax credits (PTCs) must be shelled out, since the second-lowest-premium silver plan is the driver of those PTCs.
CMS asserts its authority to audit issuers offering a QHP on the exchanges, for the purposes of overseeing payment of APTCs, CSRs, and user fee programs. And, CMS proposes to conduct compliance reviews on an annual basis, rather than an ad hoc basis.
CMS would narrow eligibility for premium tax credits to only those noncitizens who are classified as “eligible aliens;” those who are green card holders, Cuban-Haitian entrants, and COFA migrants. All others, DACA recipients, asylees, lawfully present individuals, and people with Temporary Protected Status would no longer be eligible. This has a twofold impact; one, it makes fewer people eligible for these tax credits. Two, it reduces federal payments to states implementing Basic Health Plans, since the payment is based on the amount of PTCs the enrollee would have received.
HHS would amend its authority to determine CMP amounts imposed on insurers for violating any Marketplace regulations. HHS would be mandated to identify the lawful purpose or purposes of the fine, making them more likely to be defensible in a courtroom. The proposal also clarifies that CMPs may be imposed on issuers in State-Based Exchanges, especially in cases when states do not take adequate enforcement steps, whether by action or inaction.
The agency would empower administrative law judges to issue subpoenas to help uncover relevant information in such cases.
As far as collecting these fines, CMS is also proposing to allow the payment of these fines via HHS’ regular monthly payment and collection cycle.
Taken together, these moves seem to set the stage for stronger federal oversight over the Marketplace.
Standardized plan offerings have caught some flak from our carrier partners in recent years, as they contest that standardization stifles product innovation. They may be a little happier in 2027. And, CMS would for the first time allow non-network plans to be offered on the exchanges.
In the name of simplifying the consumer shopping experience, CMS currently requires plans to standardize some plan offerings across metal levels. However, with their new leadership, CMS is seeking to eliminate the idea. There would be no more requirements for standardized plans, no more “Easy Pricing” displayed on digital tools, and there would no longer be limits on the number and types of plans that carriers might offer ina market, standardized or otherwise.
CMS will not require these standardized plans be abolished, but recognizes this might cause the discontinuation of plans if finalized.
As costs rise and actuarial value (AV) limits stay in place, bronze plans will eventually become non-viable. Either the max out of pockets will rise over the legal limits, or staying within the bronze actuarial value range will become a mathematical impossibility.
So what’s a CMS to do? They propose allowing carriers to “fix” the problem both ways: offer one standard bronze plan that stays under the legally defined MOOP, then offer another plan that exceeds the legal MOOP by $50 increments until it reaches actual bronze level AVs.
Rising costs of health care are making bronze plans start to function as silver when it comes to coverage versus cost. This problem is only exacerbated by the parameters in place with the current actuarial value calculator.
CMS would allow non-network plans to be certified as Qualified Health Plans on the exchanges. Those plans must certify that a sufficient number of providers would accept the non-network plan’s benefit amount as payment in full, and that essential community providers (e.g., local hospitals and clinics) would accept that amount.
You’re probably thinking: “That sounds a lot like a network.”
The difference is that doctors would be under no contractual obligation to participate, and everyone’s overhead would (probably) be reduced. File a claim, get paid. In short, CMS would clear the way for true indemnity-style plans to be offered on the market, likely in an effort to reduce premiums.
As if these changes weren’t enough to contend with, state-based exchanges, like those in Pennsylvania, Georgia, and Colorado, would be subject to several changes.
CMS would also strike the requirement that states transitioning to a State-Based Exchange operate as a State-Based-Exchange – Federal Partnership for one year. That move would speed the transition for states that CMS deems to be technically ready for administering their own exchanges. CMS also proposes removing some administrative progress checks during transitions to a State-Based Exchange, noting a state’s readiness is assessed when a state initially applies to make the transition.
State-based exchanges must currently operate an independent eligibility and enrollment website – think Pennie in Pennsylvania, for example. CMS proposes to allow states to replace them with the services of a web-broker (e.g., HealthSherpa). And, states could designate that web-broker (again, HealthSherpa?) as the only way to apply, receive eligibility determinations, and purchase Marketplace plans.
Such a model raises significant questions, though: namely, what would be the obligation of the state or web-broker to provide servicing beyond quoting, eligibility checks, and enrollment?
Currently, all states, regardless of their exchange participation, must adhere to federal network adequacy standards for time and distance to providers when certifying Qualified Health Plans. CMS wants to loosen SBEs and SBE- FP restrictions, only requiring QHPs to provide “sufficient access” to providers.
CMS also proposes allowing states demonstrating technical ability to review network adequacy to do so, potentially freeing up federal resources.
More broadly, network adequacy standards for states using the federal platform would be uniform for all individual QHPs, stand-alone dental plans, and Small Business Health Options Program QHPs. CMS would also remove the requirement that QHPs use networks, making way for the introduction of non-network plans mentioned above.
CMS worries state-based exchanges are mismanaging their advanced premium tax credits (APTCs). To fix it, a State Exchange Improper Payment Measurement program would require an independent audit of APTC payments, and if payouts are too high, states would have to hand over their enrollment and eligibility information. CMS would then create a correction plan with that data.
While we’re still waiting for final numbers (as of this writing), the recent expansion of catastrophic coverage eligibility likely softened some of the blow for folks who were losing access to PTCs this past fall. That expansion is continued, along with an interesting experiment.
CMS would make permanent the new hardship exemption for those households with income below 100% FPL or above 250% of FPL. These households would, by definition, be ineligible for premium tax credits, but may enroll in catastrophic plans, even if over the age of 30.
In a really interesting development, CMS is proposing that catastrophic plans may have multi-year contracts – up to 10 years! Catastrophic plans with terms of at least two years would be eligible to use value-based insurance designs to provide preventive services before having to satisfy their deductible.
The actuarial value of catastrophic plans could also be lowered to 55%. To do this, plans would increase their OOPM to 130% of what it would have been using the standard actuarial value calculator. In tandem with the changes to bronze plans mentioned above, this alteration will help keep a clear delineation between the plan types.
The out-of-pocket maximum could be annualized, meaning it would remain the same from year one to year ten. Or, the OOPM may apply over the life of the contract, with a monthly OOPM limit.
In terms of premiums, plans would be allowed to index their rates to trend throughout the length of the contract; rates might vary from year to year of the contract.
Of note: CMS also seeks comment on whether similar terms should be extended to metal-level plans
CMS had previously proposed and finalized several provisions that were ultimately stricken down in court cases. Most encompassed eligibility for coverage and APTCs, as well as tightening up the file and reconcile process. Here is what CMS is again proposing:
CMS proposes:
We get that you need a summary – we did write a lot. But this proposal warrants some attention. At its core, the proposal seeks to help drive down premiums. But a number of measures proposed within will likely lead to less robust benefits, more federal oversight, increased privatization, and a complicated web of knock-on effects in this market and beyond. We invite you to read the full proposal and share your thoughts with Uncle Sam.
In the meantime, we will share more developments and further clarification on pertinent matters as we get them.
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