# Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2025-11606

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** June 25, 2025
- **Citation:** 90 FR 27074

## Text

DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Parts 147, 155, and 156
[CMS-9884-F]
RIN 0938-AV61
Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS)

ACTION:

Final rule.

SUMMARY:

This final rule revises standards relating to denial of coverage for failure to pay past-due premium; excludes Deferred Action for Childhood Arrivals recipients from the definition of “lawfully present;” establishes the evidentiary standard HHS uses to assess an agent's, broker's, or web-broker's potential noncompliance; revises the Exchange automatic reenrollment hierarchy; revises standards related to the annual open enrollment period and special enrollment periods; revises standards relating to failure to file and reconcile, income eligibility verifications for premium tax credits and cost-sharing reductions, annual eligibility redeterminations, de minimis thresholds for the actuarial value for plans subject to essential health benefits (EHB) requirements, and income-based cost-sharing reduction plan variations. This final rule also revises the premium adjustment percentage methodology and prohibits issuers of coverage subject to EHB requirements from providing coverage for specified sex-trait modification procedures as an EHB.

DATES:

Effective Date:
These regulations are effective on August 25, 2025.

Applicability Dates:
See section III.D. of this final rule for further information on the applicability dates.

FOR FURTHER INFORMATION CONTACT:

Jeff Wu, (301) 492-4305, Rogelyn McLean, (410) 786-1524, Grace Bristol, (410) 786-8437, for general information.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

On January 20, 2025, President Trump issued a memorandum entitled “Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis.”
1

This memorandum instructed all executive departments and agencies to deliver emergency price relief for the American people and to increase the prosperity of the American worker. Health care represents a substantial portion of a family's budget and a tremendous cost to Federal taxpayers. To provide emergent relief from rising improper enrollments and health care costs, we are finalizing several regulatory actions aimed at strengthening the integrity of the Patient Protection and Affordable Care Act (ACA) eligibility and enrollment systems to reduce waste, fraud, and abuse that we proposed in the 2025 Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability proposed rule (90 FR 12942) (“2025 Marketplace Integrity and Affordability proposed rule” or “proposed rule”). We expect these actions will provide immediate premium relief to families who do not qualify for Federal premium subsidies and reduce the burden of improper ACA premium subsidy expenditures to the Federal taxpayer.

1
Executive Office of the President. (January 20, 2025).
Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis. https://www.federalregister.gov/documents/2025/01/28/2025-01904/delivering-emergency-price-relief-for-american-families-and-defeating-the-cost-of-living-crisis
.

Based on our review of enrollment data and our experience fielding consumer complaints, the Department believes the temporary expansion of ACA premium subsidies resulted in conditions that were exploited to improperly gain access to fully-subsidized coverage. As we detailed in the 2025 Marketplace Integrity and Affordability proposed rule and reiterate in this final rule, the widespread availability of $0 premium plans created the incentive and opportunity for fraudulent and improper enrollments at scale, either by the enrollee's own doing or by a third party without the enrollee's knowledge, including consumers who were enticed to respond to misleading advertisements promising cash or gift cards, and provided enough personal information for the agent, broker, and web-broker to enroll the consumer in a qualified health plan (QHP). Exchange eligibility verification policies in effect at the time enhanced subsidies became available, as well as those adopted and implemented since that time, were not sufficient to protect against this consumer harm and fraud, waste, and abuse of Federal funds.

In particular, consumers are at risk for accumulating surprise tax liabilities and substantial inconvenience from resolving these liabilities, as well as other issues related to coverage changes and access to care, due to improper enrollment. The substantial and unprecedented increase in consumer complaints from people who were unaware that they had been enrolled by an agent, broker, or web-broker in Exchange coverage suggests many of these improper enrollments are due to fraud, improper actions that violate agency rules and agreements, or other improper processes that result in incorrect determinations.
2

Fraudulent enrollments involve enrollments obtained through willful misrepresentations whereas improper enrollments involve enrollments that result from or were affected by noncompliance with agency rules and regulations, which can include fraud.
3

2
For example, from January 2024 through August 2024, CMS received 90,863 complaints that consumers had their FFE plan changed without their consent (also known as an “unauthorized plan switch”). CMS (2024, October).
CMS Update on Action to Prevent Unauthorized Agent and Broker Marketplace Activity. https://www.cms.gov/newsroom/press-releases/cms-update-actions-prevent-unauthorized-agent-and-broker-marketplace-activity. See also,
U.S. Department of Justice. (2025, February 19).
President of insurance brokerage firm and CEO of marketing company charged in $161M Affordable Care Act enrollment fraud scheme
[Press release].
https://www.justice.gov/opa/pr/president-insurance-brokerage-firm-and-ceo-marketing-company-charged-161m-affordable-care
.

3

See
U.S. Government Accountability Office, Improper Payments and Fraud: How They Are Related but Different, December 7, 2023,
https://www.gao.gov/products/gao-24-106608
.

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. This final rule also enacts permanent reforms to help the markets reset to the changing subsidy environment to improve affordability and stability over the long-term.

The temporary enactment of numerous policies within this rule responds directly to concerns raised by commenters about potential negative effects of making such policies permanent, while balancing the need to address the current high levels of improper enrollments created by the expanded subsidies and the holdover improper enrollments that will remain in the immediate wake of the enhanced subsidy expiration. The temporary reforms then sunset, as we share many commenter concerns. We also considered comments that the causes of the improper enrollments this rule aims to address are not known with certainty and that data related to Exchange enrollments may be skewed or

misleading as marketplaces are still recovering from the COVID-19 public health emergency. The temporary codification of these policies attempts to strike a balance between these commenter concerns and the integrity of the Exchange program and the Federal funds that support it. We believe the policies will reduce the improper enrollments that can carry forward due to auto re-enrollment after the enhanced subsidies expire. The absence of the enhanced subsidies, most notably the absence of fully-subsidized plans, will substantially mitigate the threat of future improper enrollments.

Because Federal law limits the amount that enrollees with lower household incomes must repay when they reconcile advance payments of the premium tax credit (APTC) received, these improper enrollments ended up costing Federal taxpayers billions of dollars. One analysis of improper enrollments estimated the Federal Government may have spent up to $26 billion on improper enrollments in 2024, before reconciling enrollment data.
4

The policies being finalized in this rule aim to address these imminent program integrity problems while recognizing these problems are an outgrowth of temporary policy in order to deliver a streamlined enrollment and eligibility determination process for individual market consumers.

4
Blase, B.; Gonshorowski, D. (2024, June).
The Great Obamacare Enrollment Fraud
. Paragon Health Institute.
https://paragoninstitute.org/private-health/the-great-obamacare-enrollment-fraud
.

Before summarizing these policies, we believe it is important to review the interlocking policies the ACA put in place to expand access to coverage on the individual market.
5

A full understanding of how ACA individual market policies interact helps frame why we stated in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12943) that we believe the program integrity and premium relief policies contained within these rules are necessary to respond to present-day challenges in the individual health insurance market. As a starting point, the ACA establishes American Health Benefit Exchanges, or “Exchanges,” to facilitate the purchase of QHPs. Many individuals who enroll in QHPs through individual market Exchanges are eligible to receive a premium tax credit (PTC) to reduce their costs for health insurance premiums and have their out-of-pocket expenses for health care services reduced through cost-sharing reductions (CSR). Most individuals who claim PTCs receive APTC, which subsidizes lower monthly premiums, before they must file taxes. Taxpayers must then reconcile APTC paid to issuers on their behalf when they file taxes. The ACA includes limits on how much excess APTC a taxpayer must repay based on household income.

5
The Patient Protection and Affordable Care Act (Pub. L. 111-148, 124 Stat. 119) was enacted on March 23, 2010. The Healthcare and Education Reconciliation Act of 2010 (Pub. L. 111-152, 124 Stat. 1049), which amended and revised several provisions of the Patient Protection and Affordable Care Act, was enacted on March 30, 2010. In this rulemaking, the two statutes are referred to collectively as the “Patient Protection and Affordable Care Act,” “Affordable Care Act,” or “ACA”.

The ACA's individual market rules require issuers to guarantee coverage (with limited exceptions) to all applicants regardless of pre-existing conditions and restrict issuers from setting premiums based on health status. These requirements create an inherent bias towards adverse selection—a situation where individuals with higher risk are more likely to select coverage than healthy individuals—by allowing people to wait to enroll in coverage until they need health services. In such situations, health insurance issuers offering coverage to a larger proportion of higher risk enrollees raise premiums, which causes healthier people to drop coverage. Enough cycles of rising premiums and healthier people dropping coverage would create a “death spiral” and undermine the viability of the individual market.

Several policies included in the ACA attempt to address its adverse selection bias. For example, the ACA permits issuers to limit enrollment periods to certain times. In addition, adverse selection between plans can occur when one plan enrolls a disproportionate number of people with higher risk conditions. The ACA's risk adjustment program transfers funds from issuers with relatively low-risk enrollees to issuers with relatively high-risk enrollees, though implementation of the risk adjustment program has been criticized by some commenters for creating further distortions that limit incentives for issuers to attract lower-risk enrollees.
6

To avoid adverse selection between plans sold on and off the Exchanges, the ACA also requires issuers to keep all individual market plans that are subject to the law's main coverage mandates in the same risk pool.

6
Cruz, D; Fann, G. (2024, Sept.).
It's Not Just the Prices: ACA Plans Have Declined in Quality Over the Past Decade
. Paragon Health Institute.
https://paragoninstitute.org/private-health/its-not-just-the-prices-aca-plans-have-declined-in-quality-over-the-past-decade/
.

By tying an issuer's on-Exchange and off-Exchange individual market risk pools together, the ACA's unsubsidized off-Exchange market was intended to help anchor the subsidized Exchange enrollees to a more competitive and efficient market. A well-functioning market depends on consumers actively shopping for the best deal based on price and quality.
7

A well-functioning market also depends on there being `low information asymmetry' where, for example, health insurance issuers, health care providers, and consumers have comparable information, instead of issuers and providers having more or better information than consumers. Information asymmetry in insurance markets can lead to imbalances in market predictions, inefficient operations, skewed decisions, and adverse selection.
8

Low information asymmetry generally ensures that buyers (consumers) and sellers (issuers and providers) are on a more equal footing, preventing one party from taking advantage of another due to superior knowledge. In recent years, HHS has taken steps to level the playing field between health insurance issuers, health care providers, and consumers by adopting regulations promoting transparency in health insurance coverage (85 FR 72158).

7
Garrod, L.; Waddams, C.; Hvvid, M.; and Loomes, G. (2009). Competition Remedies in Consumer Markets.
Loyola Consumer Law Review
. 21. 439-495.
https://www.researchgate.net/publication/271701344_Competition_Remedies_in_Consumer_Markets
. (last accessed Febuary 23, 2025).

8
Akerlof, George A. (August 1970). “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism”. The Quarterly Journal of Economics. 84 (3): 488-500. doi:10.2307/1879431. JSTOR 1879431.

Despite the ACA's intent to create more competitive and efficient markets, in practice, the high premiums of off-Exchange plans have made these options largely unattractive to unsubsidized consumers, with only an estimated 2.5 million people enrolling in unsubsidized off-Exchange coverage (including some in plans not subject to all of the ACA's market rules, such as grandfathered and short-term plans) nationwide in 2023.
9

Further, price-linked subsidies like PTCs are directly tied to the price of a QHP such that when QHP premiums go up, PTC allowed also increases. Such price-linked subsidies generally distort markets and weaken competition because the subsidized enrollee is no

longer price sensitive to the full cost.
10

In a market where everyone is subsidized, prices would generally be much higher due to the subsidized consumers' lower level of price sensitivity.
11

When Congress enacted the ACA, the Congressional Budget Office (CBO) projected the law would enroll 15 million unsubsidized consumers—about the same as without the law—and another 19 million subsidized consumers.
12

Those 15 million unsubsidized consumers actively shopping for the best deal were expected to support a competitive and efficient market. In turn, the benefits from this competition would spill over to the subsidized consumers who benefit from the availability of higher quality health plans and the Federal taxpayers funding the subsidies who benefit from lower premium subsidies.

9
Ortaliza, J.; Amin, K.; and Cox, C. (2023). As ACA Marketplace Enrollment Reaches Record High, Fewer Are Buying Individual Market Coverage Elsewhere.
https://www.kff.org/private-insurance/issue-brief/as-aca-marketplace-enrollment-reaches-record-high-fewer-are-buying-individual-market-coverage-elsewhere/#
.

10

See
Sonia Jaffe and Mark Shepard, “Price-Linked Subsidies and Imperfect Competition in Health Insurance,”
American Economic Journal: Economic Policy,
Vol 12, No. 3, August 2020.

11
While subsidized consumers are willing to tolerate higher prices than unsubsidized consumers, there are certain limits on how much prices can rise overall. The ACA's rate review provision (section 2794 of the Public Health Service Act (PHS Act)) restrains prices prospectively by placing scrutiny on proposed premium rate increases before they go into effect, which can discourage or prevent issuers from implementing unreasonable rate increases. The ACA's medical loss ratio provision (section 2718 of the PHS Act) limits prices retrospectively by requiring issuers to pay rebates to consumers if premium rates end up being excessive relative to actual medical costs.

12
Congressional Budget Office. (2010, March 20).
Letter to Nancy Pelosi
. Congress of the U.S. Table 4,
https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/costestimate/amendreconprop.pdf
.

The ACA did not roll out as intended when the ACA's main coverage mandates went into effect in 2014. Premiums increased much more and enrollment levels among both the subsidized and the unsubsidized were much lower than projected. Higher premiums then led to a substantial decline in unsubsidized enrollment, which undermined the competitiveness of the market. By 2019, our data showed that subsidized enrollment on the Exchanges had reached only 8.3 million while unsubsidized enrollment across the entire individual market subject to the ACA's market rules had dropped to 3.4 million.
13

To improve the attractiveness of the market, several States implemented reinsurance programs that lowered premiums for the unsubsidized by funding high-cost claims across the individual market. These policies helped retain unsubsidized enrollees who anchor the market in a more competitive and efficient position.

13
CMS. (2020, Oct. 9).
Trends in Subsidized and Unsubsidized Enrollment
. p. 11.
https://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/Trends-Subsidized-Unsubsidized-Enrollment-BY18-19.pdf
. Note that, in 2019, an additional 1.4 million unsubsidized people remained enrolled in grandfathered and grandmothered individual market plans that were not subject to all of the ACA's market rules. Grandmothered coverage refers to certain non-grandfathered health insurance coverage in the individual and small group market with respect to which CMS has announced it will not take enforcement action even though the coverage is out of compliance with certain specified market rules.
See
CMS. (2022, March 23).
Extended Non-Enforcement of Affordable Care Act-Compliance with Respect to Certain Policies. https://www.cms.gov/files/document/extension-limited-non-enforcement-policy-through-calendar-year-2023-and-later-benefit-years.pdf
.

In 2021, Congress passed the American Rescue Plan of 2021 (ARP),
14

which temporarily expanded the generosity of ACA premium subsidies. In 2022, Congress extended the enhanced subsidies through 2025 under the Inflation Reduction Act of 2022 (IRA).
15

These subsidies compounded the problems associated with price-linked subsidies like PTC, but they also created the incentive and opportunity for unprecedented fraud and improper enrollments. Specifically, the enhanced subsidies provide “zero-dollar premium” benchmark silver plans for individuals with projected annual household income between 100 and 150 percent of the Federal Poverty Level (FPL). By fully subsidizing the premium for these plans, individuals could be enrolled into these plans once every month through a special enrollment period (SEP) by predatory agents and brokers without the individual's knowledge. Individuals for whom Federal law limits the amount of PTC they must repay also have a strong incentive to sign up for such plans improperly. There have been widespread reports of consumers in this income cohort having their plan switched without their knowledge. As displayed in Table 14 of this rule, there are millions of people improperly enrolled in fully-subsidized QHPs. These imminent concerns prompted our rapid rulemaking and informed our nuanced response in this final rule that balances the need to urgently reduce the high level of improper enrollments while understanding the subsidy environment that largely created the incentive and opportunity for such improper enrollment is coming to an end.

14
Public Law 117-2.

15
Public Law 117-169.

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12944), we stated that we believe that after reviewing individual market data and responding to a substantial increase in consumer complaints, we needed to implement program integrity protections to mitigate and reverse the substantial increase in improper enrollments on the Exchanges caused by the availability of enhanced premium subsidies. Some of those protections included eligibility verifications related to qualifying for APTC and CSR subsidies. Others focused on enrollment period policies by re-thinking when and under what conditions a consumer can enroll. We also stated that we believe the data and analysis presented in this preamble show how these protections could lower premiums and costs for consumers and taxpayers alike. Therefore, we proposed regulatory changes to improve program integrity and protect against adverse selection. We proposed this while also emphasizing the importance of keeping the enrollment process streamlined and accessible, especially for low-income consumers who utilize Exchanges for subsidized individual market coverage. These considerations helped inform our thinking as we amended our proposals into policies being finalized in this rule. Specifically, the finalized policies balance the urgent need to reduce the high level of improper and fraudulent enrollments with this desire to promote an efficient enrollment process over a longer-term.

The 2025 Marketplace Integrity and Affordability proposed rule was published in the
Federal Register
on March 19, 2025, with a comment period that ended on April 11, 2025. We received over 26,000 comments from State governments or entities, the National Association of Insurance Commissioners (NAIC), the American Academy of Actuaries (AAA), issuers or issuer groups, providers/provider groups/provider associations, general advocacy groups, individuals, and others. The vast majority of comments were from individuals.

In section III. of this final rule, we provide a summary of each proposed provision, a summary of the public comments received and our responses to them, and the policies we are finalizing. Below, we summarize the policies being finalized.

We are finalizing revisions to § 147.104(i) that reverse the current policy prohibiting an issuer from denying coverage due to an individual's or employer's failure to pay premiums owed for prior coverage, including by attributing payment of premium for new coverage to past-due premiums from prior coverage. The current policy, in effect, prohibits issuers from establishing premium payment policies that require enrollees to pay past-due

premiums to effectuate new coverage. While we previously concluded that this prohibition would remove an unnecessary barrier and make it easier for consumers to enroll in coverage, recent enrollment data suggest people are manipulating guaranteed availability and grace periods to time enrollment in coverage to when they need health care services. Under this final rule, issuers may, to the extent permitted by applicable State law, add past-due premium amounts owed to the issuer (or owed to another issuer in the same controlled group) to the initial premium the applicant must pay to effectuate new coverage and not effectuate new coverage if the past-due and initial premium amounts are not paid in full. As this adverse selection issue was not created by the expansion of APTCs and is not related to the levels of improper enrollment brought on by them, we are finalizing this policy, which will be applicable as of the effective date of this rule and beyond. We believe this change will strengthen the risk pool and lower gross premiums.

We are finalizing modifications to the definition of “lawfully present” currently articulated at § 155.20 and used for the purpose of determining whether a consumer is eligible to enroll in a QHP through an Exchange or a Basic Health Program (BHP) in States that elect to operate a BHP.
16

The BHP regulations at 42 CFR 600.5 cross-reference the definition of lawfully present at 45 CFR 155.20. This change reflects the best view of the statutory requirements of the ACA by once again excluding “Deferred Action for Childhood Arrivals” (DACA) recipients from the definition of “lawfully present” that is used to determine eligibility to enroll in a QHP through an Exchange, for PTC, APTC, and CSRs, and for a BHP in States that elect to operate a BHP. We are finalizing this policy to be applicable upon the effective date of this final rule and beyond.

16
Currently, Minnesota and Oregon operate a BHP.
See
their approved BHP Blueprints, available at:
https://www.medicaid.gov/basic-health-program/index.html
. New York had implemented a BHP since April 1, 2015 and suspended its implementation on April 1, 2024.

We are finalizing revisions to § 155.220(g)(2) to require HHS to apply a “preponderance of the evidence” standard of proof for terminations for cause by HHS of an agent's, broker's, or web-broker's Exchange agreements under § 155.220(g)(1). We are also finalizing the addition of the definition for “preponderance of the evidence” at § 155.20. We believe this change will improve transparency in the process for holding agents, brokers, and web-brokers accountable for compliance with applicable law, regulatory requirements, and the terms and conditions of their Exchange agreements. This change is a consumer protection unrelated to the subsidy levels set by Congress. We finalize this standard to be applicable upon the effective date of this final rule and beyond.

We are finalizing revisions to the failure to file and reconcile (FTR) process at § 155.305(f)(4) to reinstate the 1-year policy in PY 2026 that Exchanges must determine a tax filer ineligible for APTC if: (1) HHS notifies the Exchange that the tax filer (or their spouse if the tax filer is a married couple) received APTC for a prior year for which tax data will be utilized for verification of income, and (2) the tax filer or tax filer's spouse did not comply with the requirement to file a Federal income tax return and reconcile APTC for that year. This change will reduce the number of ineligible enrollees who continue to receive APTC in 2026 as a result of lingering improper and fraudulent enrollments resulting from the expansion of APTCs. As such, this policy will sunset on December 31, 2026 after addressing the imminent improper enrollment concerns and Exchanges would revert back to the two-year policy where Exchanges may not determine a tax filer eligible for APTC if HHS notifies the Exchanges that the tax filer (or either spouse if the tax filer is a married couple) received APTC for two consecutive years for which tax data would be utilized for verification of income, and (2) the tax filer or tax filer's spouse did not comply with the requirement to file a Federal income tax return and reconcile APTC for that year and the previous year beginning in coverage year 2027. We believe this change will reduce the number of ineligible enrollees who continue to receive APTC in 2026, which will lower APTC expenditures and protect ineligible enrollees from accumulating surprise tax liabilities while the market and enrollment rolls readjust to the absence of the subsidy expansion. Finally, we are also finalizing amendments to the notice requirement at § 155.305(f)(4)(i) and removing the notice requirement at § 155.305(f)(4)(ii) for 2026 to conform with the notice policy under the previous FTR policy, while the noticing requirements will revert back to align with the 2-year policy in 2027.

We are finalizing the removal of § 155.315(f)(7) which requires that applicants receive an automatic 60-day extension to the 90-day period set forth in section 1411(e)(4)(A) of the ACA to provide documentation to verify household income when there is an income inconsistency. Removing § 155.315(f)(7) will adjust APTC payments to individuals who have failed to provide documentation verifying their income attestation within 90 days and further protect them from surprise tax liabilities if they are ineligible. We no longer believe the automatic 60-day extension is allowed by statute and we are therefore finalizing this change, which will be applicable as of the effective date of this rule and beyond.

To further protect against consumers receiving APTC and CSR subsidies when they do not meet eligibility requirements and root out the improper and fraudulent enrollments holding over from the subsidy expansion, we are finalizing temporary policies to address immediate concerns with the verification process when there is an income inconsistency with trusted data sources. We also are finalizing for the remainder of plan year (PY) 2025 starting at the effective date of the rule and PY 2026 revisions to § 155.320(c)(3)(iii) to specify that Exchanges on the Federal platform must generate annual household income inconsistencies when a tax filer's attested projected annual household income would qualify the taxpayer as an applicable taxpayer according to 26 CFR 1.36B-2(b) and trusted data sources indicate that projected household income is under 100 percent of the FPL. Finally, we are finalizing, for the remainder of PY 2025 starting the effective date of the rule and PY 2026, the pause of § 155.320(c)(5), which pauses the exception to the standard household income inconsistency process that requires the Exchange to accept an applicant's attestation of household income and family size without verification when the Internal Revenue Service (IRS) does not have tax return data to verify household income and family size. Removing this exception will in most circumstances require Exchanges to verify household income with other trusted data sources when a tax return is unavailable and follow the alternative verification process to verify the income, which strengthens program integrity by improving the accuracy of eligibility determinations across all Exchanges. These policies directly address program integrity issues brought on by the proliferation of fully-subsidized, zero-premium benchmark plans and therefore we are finalizing them until PY 2027.

To prevent fully-subsidized enrollees from being automatically re-enrolled without taking an action to confirm their eligibility information, we are finalizing a temporary amendment to the annual eligibility redetermination regulation. We are finalizing that, when an enrollee does not submit an application for an updated eligibility determination for the future coverage year (2026) by the last day to select a plan for January 1, 2026 coverage, in accordance with the effective dates specified in § 155.410(f), and the enrollee's portion of the premium for the entire policy is zero dollars after application of APTC through the annual redetermination process, Exchanges on the Federal platform must decrease the amount of the APTC applied to the policy such that the remaining monthly premium owed by the enrollee for the entire policy equals $5 for the first month and for every following month that the enrollee does not confirm their eligibility for APTC. Consistent with § 155.310(c) and (f), enrollees automatically reenrolled with a $5 monthly premium after APTC under this policy will be able to update their Exchange application at any point to confirm eligibility for APTC that covers the entire premium, and re-confirm their plan to thereby reinstate the full amount of APTC for which the enrollee is eligible on a prospective basis. We are finalizing that the Federally-facilitated Exchanges (FFEs) and the State-based Exchanges on the Federal platform (SBE-FPs) must implement this change with annual redeterminations for benefit year 2026. We believe implementing these policies for 2026 will strengthen the program integrity of the Exchanges and protect consumers by ensuring that those fraudulently or improperly enrolled in fully-subsidized, zero-premium plans are not unknowingly enrolled in those plans for an additional year while the market readjusts to the expiration of the expanded subsidies. In the 2025 Marketplace Integrity and Affordability proposed rule, we also sought comment on a range of other options to ensure program integrity with respect to automatic re-enrollment that would provide a more meaningful incentive to confirm eligibility for APTC, as the millions estimated to currently receive improper APTC could simply pay the $5 premium while continuing to improperly receive generous subsidies on their behalf, potentially incurring significant future surprise tax liabilities in the process. As such, we sought comment on whether $5 is the appropriate premium amount for affected individuals to pay under the proposed policy. Another such option could include requiring individuals who qualify for fully-subsidized plans to re-confirm their plan and re-verify their income before they are eligible to receive APTC. Finally, we sought comment on removing the option for Exchanges to auto-re-enroll individuals who qualify for fully or partially subsidized plans, ensuring individuals affirmatively choose their plan and verify their income during the Open Enrollment Period (OEP), dramatically reducing the likelihood of improper payments of the APTC.

We are finalizing amendments to the automatic reenrollment hierarchy by removing § 155.335(j)(4), which currently allows Exchanges to move a CSR-eligible enrollee from a bronze QHP and re-enroll them into a silver QHP for an upcoming plan year, if a silver QHP is available in the same product, with the same provider network, and with a lower or equivalent net premium after the application of APTC as the bronze plan into which the enrollee would otherwise have been re-enrolled. We also clarify that State Exchanges may retain their flexibility regarding their re-enrollment hierarchies at the discretion of the Secretary of Health and Human Services (the Secretary) per § 155.335(a)(2)(iii) and that Exchanges may seek approval from the Secretary to conduct their own annual eligibility redetermination process. We believe the consumer awareness problem the current policy aimed to address is substantially less today than it was at the time we adopted a re-enrollment hierarchy allowing Exchanges on the Federal platform to switch a consumer's enrollment from a bronze to a silver plan. As a result, consumer awareness concerns no longer outweigh the negative consequences of not automatically re-enrolling consumers whose current plan is still available for the upcoming plan year without their active consent. These negative consequences include potential consumer confusion, undermining of consumer choice, and unexpected tax liabilities. We believe this policy is important to honor the decisions of consumers, regardless of the subsidy environment. Given that we did not find this policy as being substantially associated with fraudulent and improper enrollments, we are finalizing this policy, which will be effective for PY 2026 and beyond.

We are temporarily finalizing modifications to § 155.400(g) to pause paragraphs (2) and (3), which establish an option for issuers to implement a fixed-dollar and/or gross percentage-based premium payment threshold, with the following modification: the removal of the fixed-dollar and gross-premium threshold flexibilities will sunset after the completion of one new coverage year, PY 2026, on December 31, 2026. Thereafter, the FFE and SBE-FP will, and State Exchanges may, offer issuers the flexibility to implement the premium payment threshold flexibilities that were finalized in the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2026; and Basic Health Program final rule (2026 Payment Notice) (90 FR 4424). As previously stated, we have significant program integrity concerns with the availability of fully-subsidized plans. Therefore, to preserve the integrity of the Exchanges, we believe it is important to ensure that enrollees do not remain enrolled in coverage without paying at least some of the premium owed, as there are situations where the fixed-dollar and/or gross percentage-based thresholds would have allowed an enrollee to remain enrolled in coverage for extended periods of time after payment of the binder. Because this problem is effectively an outgrowth of the subsidy expansion, we are finalizing these proposals only through PY 2026 to allow the market to readjust to the non-expanded subsidy environment.

For benefit years starting January 1, 2027, and beyond, we are finalizing a change to the annual OEP for coverage through all individual market Exchanges. Rather than specifying November 1 through December 15 as the OEP period as proposed, the final rule at § 155.410(e) provides that the OEP must begin no later than November 1 and end no later than December 31 of the calendar year preceding the benefit year of enrollment. Exchanges have flexibility to determine their specific OEP dates within these guidelines as long as the OEP length does not exceed 9 weeks per § 155.410(e)(5)(ii) and all OEP plan selections are effective on January 1 of the plan year per § 155.410(f)(4). Beginning with benefit year 2027, the dates of the OEP each year for Exchanges operating on the Federal platform will be November 1 through December 15. Non-grandfathered individual health insurance coverage offered outside of an Exchange must also align with the OEP dates in the applicable State Exchange. The length of the open enrollment period is fundamentally unrelated to subsidy levels and we have not determined it to be a major source of improper and fraudulent enrollments. Therefore, we are finalizing these

changes, which will be applicable for benefit year 2027 and beyond.

We are temporarily finalizing the removal of § 155.420(d)(16) and making conforming changes to pause the monthly SEP for qualified individuals or enrollees, or the dependents of a qualified individual or enrollee, who are eligible for APTC and whose projected household income is at or below 150 percent of the FPL through PY 2026. This policy is directly related to the availability of fully-subsidized plans, as under the subsidy expansion individuals with projected annual incomes between 100 and 150 percent of the FPL are eligible for fully-subsidized plans and the SEP. Therefore, to fully ensure that improper and fraudulent enrollments are fully exercised from this population, we are pausing the SEP for PY 2026 as the market readjusts to the lack of a subsidy expansion.

Further, based on recent evidence
17

suggesting an increase in the misuse and abuse of SEPs to gain coverage primarily in fully-subsidized plans outside of the OEP, we are finalizing temporary amendments to § 155.420(g) to enable HHS to reinstate pre-enrollment verification of eligibility of applicants for all categories of individual market SEPs. We are further finalizing temporary amendments to § 155.420(g) to require all Exchanges to conduct pre-enrollment verification of eligibility for at least 75 percent of new enrollments through SEPs. Given the primary concern with fully-subsidized plans, we are finalizing these proposals through PY 2026, to give the market the opportunity to fully shed improper enrollments resulting from the subsidy expansion.

17
This conclusion is drawn from current and historic SEP data available to the Exchanges on the Federal platform through the Monthly SEP report and is current as of January 3, 2025.

We are finalizing amendments to § 156.115(d) to provide that an issuer of coverage subject to EHB requirements may not provide coverage for specified sex-trait modification procedures as an EHB beginning with PY 2026. In response to comments, we are also adding a definition of “specified sex-trait modification procedure” at § 156.400. These changes are effective for PY 2026 and beyond, as they are a furtherance of existing EHB requirements and are not associated with subsidy levels or improper enrollments.

We are finalizing updates to the premium adjustment percentage methodology to establish a premium growth measure that comprehensively reflects premium growth in all affected markets for PY 2026 and beyond. This premium growth measure is used to ensure that certain parameters change with health insurance market premiums over time, including parameters related to annual limits on cost sharing, eligibility for certain exemptions based on access to affordable premiums, and employer shared responsibility payment amounts. The premium adjustment percentage is also used as part of the calculation of the reduced annual limitation on cost sharing applicable to silver plan variations. This final policy re-adopts the premium growth measure that was in place for PY 2020 and PY 2021 and applies it to the related parameters starting with PY 2026. As such, we also are finalizing the PY 2026 maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage under § 155.605(d)(2) using the premium adjustment percentage methodology finalized in this rule.

Beginning in PY 2026, we are finalizing changes to the de minimis thresholds for the Actuarial Value (AV) for plans subject to EHB requirements to +2/−4 percentage points for all individual and small group market plans subject to the AV requirements under the EHB package, other than for expanded bronze plans,
18

for which we are finalizing a de minimis range of +5/−4 percentage points, as well as finalizing wider de minimis thresholds for income-based CSR plan variations. These changes are effective for PY 2026 and beyond as they are unrelated to the subsidy level set by Congress, but are rather important measures to promote affordability and choice.

18
Expanded bronze plans are bronze plans currently referenced in § 156.140(c) that cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan within the meaning of section 223(c)(2) of the Internal Revenue Code of 1986.

II. Background

A. Legislative and Regulatory Overview

Section 2702 of the Public Health Service (PHS) Act, as added by the ACA, establishes requirements for guaranteed availability of coverage in the group and individual markets.

Section 2703 of the PHS Act, as added by the ACA, and sections 2712 (former) and 2742 of the PHS Act, as added by the Health Insurance Portability and Accountability Act of 1996 (HIPAA), require health insurance issuers in the group and individual markets to guarantee the renewability of coverage unless an exception applies.

Section 1302 of the ACA provides for the establishment of an EHB package that includes coverage of EHBs (as defined by the Secretary), cost-sharing limits, and AV requirements. Among other things, the law directs that EHBs be equal in scope to the benefits provided under a typical employer plan, and that they cover at least the following 10 general categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

Sections 1302(b)(4)(A) through (D) of the ACA establish that the Secretary must define EHB in a manner that: (1) reflects appropriate balance among the 10 categories; (2) is not designed in such a way as to discriminate based on age, disability, or expected length of life; (3) takes into account the health care needs of diverse segments of the population; and (4) does not allow denials of EHBs based on age, life expectancy, disability, degree of medical dependency, or quality of life.

To set cost-sharing limits, section 1302(c)(4) of the ACA directs the Secretary to determine an annual premium adjustment percentage, a measure of premium growth that is used to set the rate of increase for three parameters: (1) the maximum annual limitation on cost sharing (section 1302(c)(1) of the ACA); (2) the required contribution percentage used to determine whether an individual can afford minimum essential coverage (MEC) (section 5000A of the Internal Revenue Code of 1986 (the Code), as enacted by section 1501 of the ACA); and (3) the employer shared responsibility payment amounts (section 4980H of the Code, as enacted by section 1513 of the ACA).

Section 1302(d) of the ACA describes the various levels of coverage based on their AV. Consistent with section 1302(d)(2)(A) of the ACA, AV is calculated based on the provision of EHB to a standard population. Section 1302(d)(1) of the ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. Section 1302(d)(2) of the ACA directs the Secretary to issue regulations on the calculation of AV and its application to the levels of coverage. Section 1302(d)(3) of the ACA directs

the Secretary to develop guidelines to provide for a de minimis variation in the AVs used in determining the level of coverage of a plan to account for differences in actuarial estimates.

Section 1311(c)(6)(B) of the ACA directs the Secretary to require an Exchange to provide for annual OEPs after the initial enrollment period.

Section 1311(c)(6)(C) of the ACA authorizes the Secretary to require an Exchange to provide for SEPs specified in section 9801 of the Code and other SEPs under circumstances similar to such periods under part D of title XVIII of the Act. Section 1311(c)(6)(D) of the ACA directs the Secretary to require an Exchange to provide for a monthly enrollment period for Indians, as defined by section 4 of the Indian Health Care Improvement Act.

Section 1311(c) of the ACA provides the Secretary the authority to issue regulations to establish criteria for the certification of QHPs. Section 1311(c)(1)(B) of the ACA requires among the criteria for certification that the Secretary must establish by regulation that QHPs ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA grants the Exchange the authority to certify a health plan as a QHP if the health plan meets the Secretary's requirements for certification issued under section 1311(c) of the ACA, and the Exchange determines that making the plan available through the Exchange is in the interests of qualified individuals and qualified employers in the State.

Section 1312(e) of the ACA provides the Secretary with the authority to establish procedures under which a State may allow agents or brokers to (1) enroll qualified individuals and qualified employers in QHPs offered through Exchanges and (2) assist individuals in applying for APTC and CSRs for QHPs sold through an Exchange.

Sections 1312(f)(3), 1401, 1402(e), and 1412(d) of the ACA require that an individual must be either a citizen or national of the United States or an alien lawfully present in the United States to enroll in a QHP through an Exchange, to be eligible for PTC, APTC, and CSRs. Sections 1313 and 1321 of the ACA provide the Secretary with the authority to oversee the financial integrity of State Exchanges, their compliance with HHS standards, and the efficient and non-discriminatory administration of State Exchange activities. Section 1313(a)(5)(A) of the ACA directs the Secretary to provide for the efficient and non-discriminatory administration of Exchange activities and to implement any measure or procedure the Secretary determines is appropriate to reduce fraud and abuse. Section 1321 of the ACA provides for State flexibility in the operation and enforcement of Exchanges and related requirements.

Section 1321(a) of the ACA provides broad authority for the Secretary to establish standards and regulations to implement the statutory requirements related to Exchanges, QHPs and other components of title I of the ACA, including such other requirements as the HHS Secretary determines appropriate.

Section 1321(a)(1) of the ACA directs the Secretary to issue regulations that set standards for meeting the requirements of title I of the ACA with respect to, among other things, the establishment and operation of Exchanges.

Section 1331 of the ACA provides States the option to establish a BHP and provides that only “qualified individuals”, as defined in section 1312 of the ACA, are eligible for BHP coverage. Section 1312(f)(3) of the ACA provides that if an individual is not, or is not reasonably expected to be for the entire period for which enrollment is sought, a citizen or national of the United States or an alien lawfully present in the United States, the individual shall not be treated as a qualified individual. Accordingly, persons who are not lawfully present are not eligible for BHP enrollment.

Section 1401(a) of the ACA added section 36B to the Code, which, among other things, requires that a taxpayer reconcile APTC for a year of coverage with the amount of the PTC the taxpayer is allowed for the year.

Section 1402(c) of the ACA provides for, among other things, reductions in cost sharing for essential health benefits for qualified low- and moderate-income enrollees in silver level health plans offered through the individual market Exchanges, including reduction in out-of-pocket limits.

Section 1411 of the ACA directs the Secretary to make advance determinations for the PTC with respect to income eligibility for individuals enrolling in a QHP through the individual market. Section 1411 of the ACA further specifies that the Secretary verify income with the Secretary of the Treasury based on the most recent tax return information, and then implement alternative procedures to verify income on the basis of different information to the extent that a change has occurred or for individuals who were not required to file an income tax return.

Section 1411(f)(1)(B) of the ACA directs the Secretary to establish procedures to redetermine the eligibility of individuals on a periodic basis in appropriate circumstances.

Sections 1402(f)(3), 1411(b)(3) and 1412(b)(1) of the ACA provide that data from the most recent tax return information available must be the basis for determining eligibility for APTC and CSRs to the extent such tax data is available. Section 1412(c)(2)(B) of the ACA establishes requirements on issuers with regards to an individual enrolled in a health plan receiving an APTC.

Section 1412(d) of the ACA states that nothing in the law allows Federal payments, credits, or CSRs for individuals who are not lawfully present in the United States.

Section 1413 of the ACA directs the Secretary to establish, subject to minimum requirements, a streamlined enrollment process for enrollment in QHPs and all insurance affordability programs and requires Exchanges to participate in a data matching program for the determination of eligibility on the basis of reliable, third-party data.

Section 1414 of the ACA amends section 6103 of the Code to direct the Secretary of the Treasury to disclose certain tax return information to verify and determine eligibility for APTC and CSR subsidies.

1. Guaranteed Availability and Guaranteed Renewability

In the April 8, 1997
Federal Register
(62 FR 16894), HHS published an interim final rule relating to the HIPAA health insurance reforms that established rules applying guaranteed availability in the small group market and guaranteed renewability in the large and small group market. Also, in the April 8, 1997
Federal Register
(62 FR 16985), HHS published an interim final rule relating to the HIPAA health insurance reforms that, among other things, established rules applying guaranteed renewability in the individual market. In the February 27, 2013
Federal Register
(78 FR 13406) (2014 Market Rules), we published the health insurance market rules. In the May 27, 2014
Federal Register
(79 FR 30240) (2015 Market Standards Rule), we published the final rule, “Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond.” In the December 22, 2016
Federal Register
(81 FR 94058) (2018 Payment Notice), we provided additional guidance on guaranteed availability and guaranteed renewability, and in the April 18, 2017
Federal Register
(82 FR 18346) (Market Stabilization Rule) we provided further guidance related to guaranteed availability. In the May 6, 2022

Federal

Register

(87 FR 27208) we amended the regulations regarding guaranteed availability.

2. Deferred Action for Childhood Arrivals

HHS issued an interim final rule in the July 30, 2010
Federal Register
(75 FR 45014) to define “lawfully present” for the purposes of determining eligibility for the Pre-Existing Condition Insurance Plan (PCIP) program. In the March 27, 2012
Federal Register
(77 FR 18310) (Exchange Establishment Rule), HHS defined lawfully present for purposes of determining eligibility to enroll in a QHP through an Exchange by cross-referencing the existing PCIP definition. In the August 30, 2012
Federal Register
(77 FR 52614), HHS adjusted the previous definition of “lawfully present” used for PCIP and QHP eligibility, which had considered all recipients of “deferred action” to be lawfully present, to add an exception that excluded DACA recipients from the definition. In the March 12, 2014
Federal Register
(79 FR 14112), HHS established the framework for governing a BHP, which also adopted the definition of “lawfully present” for the purpose of determining eligibility to enroll in a BHP through a cross-reference to § 155.20. In the May 8, 2024
Federal Register
(89 FR 39392) (DACA Rule), HHS reinterpreted “lawfully present” to include DACA recipients and certain other noncitizens for the purposes of determining eligibility to enroll in a QHP through an Exchange, PTC, APTC, CSRs, and to enroll in a BHP in States that elect to operate a BHP.

3. Program Integrity

We have finalized program integrity standards related to the Exchanges and premium stabilization programs in two rules: the “Program Integrity: Exchange, SHOP, and Eligibility Appeals Rule” published in the August 30, 2013,
Federal Register
(78 FR 54069), and the “Program Integrity: Exchange, Premium Stabilization Programs, and Market Standards; Amendments to the HHS Notice of Benefit and Payment Parameters for 2014 Rule” published in the October 30, 2013,
Federal Register
(78 FR 65045). We also refer readers to the 2019 Patient Protection and Affordable Care Act; Exchange Program Integrity final rule published in the December 27, 2019,
Federal Register
(84 FR 71674).

In the May 6, 2022
Federal Register
(87 FR 27208), we finalized policies to address certain agent, broker, and web-broker practices and conduct. In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we finalized allowing additional time for HHS to review evidence submitted by agents and brokers to rebut allegations pertaining to Exchange agreement suspensions or terminations. We also introduced consent and eligibility documentation requirements for agents and brokers. In the 2025 Payment Notice, issued in the April 15, 2024
Federal Register
(89 FR 26218), we finalized that the CMS Administrator, who is a principal officer, is the entity responsible for handling requests by agents, brokers, and web-brokers for reconsideration of HHS' decision to terminate their Exchange agreement(s) for cause. We also finalized changes to §§ 155.220 and 155.221 to apply certain standards to web-brokers and Direct Enrollment (DE) entities assisting consumers and applicants across all Exchanges. In the January 15, 2025
Federal Register
(90 FR 4424) (2026 Payment Notice), we addressed our authority to investigate and undertake compliance reviews and enforcement actions in response to misconduct or noncompliance with applicable agent, broker, and web-broker Exchange requirements or standards occurring at the insurance agency level to hold lead agents of insurance agencies accountable. We also finalized changes to § 155.220(k)(3) to reflect our authority to suspend an agent's or broker's ability to transact information with the Exchange in instances where HHS discovers circumstances that pose unacceptable risk to accuracy of Exchange eligibility determinations, Exchange operations, applicants, or enrollees, or Exchange information technology systems until the circumstances of the incident, breach, or noncompliance are remedied or sufficiently mitigated to HHS' satisfaction.

4. Premium Adjustment Percentage

In the March 11, 2014
Federal Register
(79 FR 13744), HHS established a methodology for estimating the average per capita premium for purposes of calculating the premium adjustment percentage. Beginning with PY 2015, we calculated the premium adjustment percentage-based on the estimates and projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Accounts (NHEA), which are calculated by the CMS Office of the Actuary. In the April 25, 2019
Federal Register
(84 FR 17454), HHS amended the methodology for calculating the premium adjustment percentage by estimating per capita insurance premiums as private health insurance premiums, minus premiums paid for Medigap insurance and property and casualty insurance, divided by the unrounded number of unique private health insurance enrollees, excluding all Medigap enrollees. Additionally, in response to public comments to the 2021 Payment Notice proposed rule (85 FR 7088), in the May 14, 2020
Federal Register
(85 FR 29164), HHS stated that we will finalize payment parameters that depend on NHEA data, including the premium adjustment percentage, based on the data that are available as of the publication of the proposed rule for that plan year, even if NHEA data are updated between the proposed and final rules. In the December 15, 2020
Federal Register
(85 FR 81097), HHS published the Grandfathered Group Health Plans and Grandfathered Group Health Insurance Coverage final rule, along with the Departments of Labor and the Treasury, that finalized using the premium adjustment percentage as one alternative in setting the parameters for permissible increases in fixed-amount cost-sharing requirements for grandfathered group health plans. In the May 5, 2021
Federal Register
(86 FR 24140), Part 2 of the 2022 Payment Notice amended the methodology for calculating the premium adjustment percentage by reverting to using the NHEA employer-sponsored insurance (ESI) premium measure previously used for PY 2015 to PY 2019 and established that the premium adjustment percentage could be established in guidance for plan years in which the premium adjustment percentage is not methodologically changing.

5. Failure To File Taxes and Reconcile APTC

In the March 27, 2012 Exchange Establishment Rule (77 FR 18310), we required the Exchange to determine a primary taxpayer ineligible to receive APTC if HHS notifies the Exchange that the taxpayer received APTC from a prior year for which tax data would be utilized for income verification and did not file a tax return and reconcile APTC as required by implementing regulations proposed by the Department of the Treasury. In the May 23, 2012
Federal Register
(77 FR 30377), the Department of the Treasury finalized implementing regulations to require every taxpayer receiving APTC to file an income tax return.

In the December 22, 2016
Federal Register
(81 FR 94058) (2018 Payment Notice), we provided that Exchanges cannot determine a taxpayer ineligible for APTC due to failure to file a tax return unless the Exchanges send a direct notification to that tax filer stating

that their eligibility will be discontinued for failure to comply with the requirement to file taxes. We then revisited this notice requirement in the April 17, 2018
Federal Register
(83 FR 16930) (2019 Payment Notice) and removed the notice requirement.

In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice) we required Exchanges to wait to discontinue APTC until the tax filer has failed to file a tax return and reconcile their past APTC for 2 consecutive years rather than ending APTC after a single year. In the April 15, 2024
Federal Register
(89 FR 26218) (2025 Payment Notice), we required Exchanges to send notices to tax filers for the first year in which they have been identified by the IRS as failing to reconcile APTC. In the January 15, 2025
Federal Register
(90 FR 4424) (2026 Payment Notice), we required Exchanges to send notices to tax filers for the second year in which they have been identified by the IRS as failing to reconcile APTC.

6. Income Inconsistencies

In the April 17, 2018
Federal Register
(83 FR 16930) (2019 Payment Notice), we revised income verification provisions in § 155.320(c)(3)(iii) to require the Exchange to generate annual household income inconsistencies in certain circumstances when a tax filer's attested projected annual household income is greater than the income amount represented by income data returned by IRS and the Social Security Administration (SSA) and current income data sources. On March 4, 2021, the United States District Court for the District of Maryland decided
City of Columbus
v.
Cochran,
523 F. Supp. 3d 731 (D. Md. 2021) and vacated these revisions to income verification. We then implemented the court's decision in the May 5, 2021
Federal Register
(86 FR 24140) (Part 2 of the 2022 Payment Notice) and rescinded the income verification provisions in § 155.320(c)(3)(iii) that the court invalidated.

In the March 27, 2012
Federal Register
(77 FR 18310) (Exchange Establishment Rule), we established the alternative verification process in § 155.320(c) for situations when a household income inconsistency occurs with IRS data or when tax return data is unavailable. This process required the Exchange to provide the applicant notice of the income inconsistency and requires applicants to provide documentary evidence to verify their income or otherwise resolve the inconsistency within a period of 90 days from which notice is sent. In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we revised this process to require Exchanges to accept an applicant's or enrollee's self-attestation of annual household income when a call to IRS is completed but tax return data is unavailable and add that household income inconsistencies must receive an automatic 60-day extension in addition to the 90 days provided to applicants to resolve their income inconsistency.

7. Annual Eligibility Redetermination

In the March 27, 2012
Federal Register
(77 FR 18310) (Exchange Establishment Rule), we implemented the Affordable Insurance Exchanges (“Exchanges”), consistent with title I of the ACA. This included standards for annual eligibility redeterminations and renewals of coverage. In the January 22, 2013
Federal Register
(78 FR 4594), we sought comment on whether the redetermination notice should describe how the enrollee's deductibles, co-pays, coinsurance, and other forms of cost sharing would change. In the July 15, 2013
Federal Register
(78 FR 42160) (2013 Eligibility Final Rule), we amended the notice to remove the requirement to provide the data used for the eligibility redetermination and the data used for the most recent eligibility determination, even though we did not previously propose to change the annual redetermination notice. In the September 5, 2014
Federal Register
(79 FR 52994), we amended the annual redetermination standards to allow for an Exchange to choose from one of three methods for conducting annual redeterminations. In the January 24, 2019
Federal Register
(84 FR 227) (2020 Payment Notice proposed rule), we sought comment on the automatic re-enrollment processes to address program integrity concerns. In the February 6, 2020
Federal Register
(85 FR 7088) (2021 Payment Notice proposed rule), we solicited comment on modifying the automatic re-enrollment process such that any enrollee who would be automatically re-enrolled with APTC that would cover the enrollee's entire premium would instead be automatically re-enrolled without APTC, and we solicited comments on a variation where APTC for this population would be reduced to a level that would result in an enrollee premium that is greater than zero dollars, but not eliminated entirely. We did not finalize any changes in the final rules.

8. Automatic Re-Enrollment Hierarchy

In the March 27, 2012
Federal Register
(77 FR 18309) (Exchange Establishment Rule), we implemented the Exchanges, consistent with Title I of the ACA. This included implementation of components of the Exchanges and standards for annual eligibility redetermination and renewal of coverage. In the September 5, 2014
Federal Register
(79 FR 52994) (Annual Eligibility Redeterminations Rule), we modified the standards for re-enrollment in coverage by adding a re-enrollment hierarchy to address situations when the enrollee's plan or product is not available through the Exchange for renewal. In the March 8, 2016
Federal Register
(81 FR 12204) (2017 Payment Notice), we amended the hierarchy to give Exchanges flexibility to prioritize re-enrollment into silver plans for all enrollees in a silver-level QHP that is no longer available for re-enrollment, and re-enroll consumers into plans of other Exchange issuers if the consumer is enrolled in a plan from an issuer that does not have another plan available for re-enrollment through the Exchange.

In the January 5, 2022
Federal Register
(87 FR 584) (2023 Payment Notice proposed rule), we solicited comments on revising the re-enrollment hierarchy at § 155.335(j) at a later date. After considering comments, we proposed and finalized amendments and additions to the re-enrollment hierarchy in the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), including changes to allow Exchanges to direct re-enrollment for enrollees who are eligible for CSRs from a bronze QHP to a silver QHP, if certain conditions are met.

9. Premium Payment Threshold

In the December 2, 2015
Federal Register
(80 FR 75532), we published a proposed rule to allow issuers to adopt an optional premium payment threshold policy under which issuers could collect a minimal amount of premium, less than that which is owed, without triggering the consequences for non-payment of premiums. We established the option for issuers to implement a net premium percentage-based premium payment threshold in the 2017 Payment Notice (81 FR 12271 through 12272). In the October 10, 2024
Federal Register
(89 FR 82366 through 82369), we proposed to add additional optional premium payment threshold flexibilities, proposing an option for issuers to adopt a fixed-dollar premium threshold amount of $5 or less and/or a percentage-based threshold based on the gross premium of 99 percent or more or the existing net premium of 95 percent or more of the premium after application of APTC. We modified and finalized this proposal in the 2026

Payment Notice (90 FR 4475 through 4480), allowing issuers to adopt a fixed-dollar premium threshold amount of $10 or less and/or a percentage-based threshold based on the gross premium of 98 percent or more or net premium of 95 percent or more of the premium after application of APTC.

10. Special Enrollment Periods (SEPs)

In the July 15, 2011
Federal Register
(76 FR 41865), we published a proposed rule establishing SEPs for the Exchange. We implemented these SEPs in the Exchange Establishment Rule (77 FR 18309). In the January 22, 2013
Federal Register
(78 FR 4594), we published a proposed rule amending certain SEPs, including the SEPs described in § 155.420(d)(3) and (7). We finalized these rules in the July 15, 2013
Federal Register
(78 FR 42321).

In the June 19, 2013
Federal Register
(78 FR 37032), we proposed to add an SEP when the Federally Facilitated Exchange (FFE) determines that a consumer has been incorrectly or inappropriately enrolled in coverage due to misconduct on the part of a non-Exchange entity. We finalized this proposal in the October 30, 2013
Federal Register
(78 FR 65095). In the March 21, 2014
Federal Register
(79 FR 15808), we proposed to amend various SEPs. In particular, we proposed to clarify that later coverage effective dates for birth, adoption, placement for adoption, or placement for foster care would be effective the first of the month. The rule also proposed to clarify that earlier effective dates would be allowed if all issuers in an Exchange agree to effectuate coverage only on the first day of the specified month. Finally, that rule proposed adding that consumers may report a move in advance of the date of the move and established an SEP for individuals losing medically needy coverage under the Medicaid program even if the medically needy coverage is not recognized as minimum essential coverage (individuals losing medically needy coverage that is recognized as minimum essential coverage already were eligible for an SEP under the regulation). We finalized these provisions in the May 27, 2014
Federal Register
(79 FR 30348). In the October 1, 2014
Federal Register
(79 FR 59137), we published a correcting amendment related to codifying the coverage effective dates for plan selections made during an SEP and clarifying a consumer's ability to select a plan 60 days before and after a loss of coverage.

In the November 26, 2014
Federal Register
(79 FR 70673), we proposed to amend effective dates for SEPs, the availability and length of SEPs, the specific types of SEPs, and the option for consumers to choose a coverage effective date of the first of the month following the birth, adoption, placement for adoption, or placement in foster care. We finalized these provisions in the February 27, 2015
Federal Register
(80 FR 10866). In the July 7, 2015
Federal Register
(80 FR 38653), we issued a correcting amendment to include those who become newly eligible for a QHP due to a release from incarceration. In the December 2, 2015
Federal Register
(80 FR 75487) (2017 Payment Notice proposed rule), we sought comment and data related to existing SEPs, including data relating to the potential abuse of SEPs. In the 2017 Payment Notice, we stated that in order to review the integrity of SEPs, the FFE will conduct an assessment by collecting and reviewing documents from consumers to confirm their eligibility for the SEPs under which they enrolled.

In an interim final rule with comment published in the May 11, 2016
Federal Register
(81 FR 29146), we made amendments to the parameters of certain SEPs (2016 Interim Final Rule). We finalized these in the 2018 Payment Notice, published in the December 22, 2016
Federal Register
(81 FR 94058). In the April 18, 2017 Market Stabilization Rule (82 FR 18346), we amended standards relating to SEPs and announced HHS would begin pre-enrollment verifications for all categories of SEPs in June 2017. In the 2019 Payment Notice, published in the April 17, 2018
Federal Register
(83 FR 16930), we clarified that certain exceptions to the SEPs only apply to coverage offered outside of the Exchange in the individual market. In the April 25, 2019
Federal Register
(84 FR 17454), the final 2020 Payment Notice established a new SEP. In part 2 of the 2022 Payment Notice, in the May 5, 2021
Federal Register
(86 FR 24140), we made additional amendments and clarifications to the parameters of certain SEPs and established new SEPs related to untimely notice of triggering events, cessation of employer contributions or government subsidies to COBRA continuation coverage, and loss of APTC eligibility. In part 3 of the 2022 Payment Notice, in the September 27, 2021
Federal Register
(86 FR 53412), which was published by HHS and the Department of the Treasury, we established a temporary new monthly SEP for those eligible for APTC with projected household incomes at or below 150 percent of the FPL. In the May 6, 2022
Federal Register
(87 FR 27208), we finalized updates to the requirement that all Exchanges conduct SEP verifications and limited pre-enrollment verification for Exchanges on the Federal platform to only consumers who attest to losing minimum essential coverage. In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we lengthened the SEP from 60 to 90 days to those who lose Medicaid coverage. In the April 15, 2024
Federal Register
(89 FR 26218) (2025 Payment Notice), we aligned effective dates for coverage after selecting certain SEPs across all Exchanges and removed limitations on the monthly SEP for those eligible for APTC with incomes up to 150 percent of the FPL.

11. Essential Health Benefits

We established requirements relating to EHBs in the Standards Related to Essential Health Benefits, Actuarial Value (AV), and Accreditation Final Rule, which was published in the February 25, 2013
Federal Register
(78 FR 12834) (EHB Rule). In the EHB Rule, we included at § 156.115 a prohibition on issuers from providing routine non-pediatric dental services, routine non-pediatric eye exam services, long-term/custodial nursing home care benefits, or non-medically necessary orthodontia as EHB. In the 2019 Payment Notice, published in the April 17, 2018
Federal Register
(83 FR 16930), we added § 156.111 to provide States with additional options from which to select an EHB-benchmark plan for PY 2020 and subsequent plan years. In the 2023 Payment Notice, published in the May 6, 2022
Federal Register
(87 FR 27208), we revised § 156.111 to require States to notify HHS of the selection of a new EHB-benchmark plan by the first Wednesday in May of the year that is 2 years before the effective date of the new EHB-benchmark plan, otherwise the State's EHB-benchmark plan for the applicable plan year will be that State's EHB-benchmark plan applicable for the prior year. We displayed the Request for Information; Essential Health Benefits (EHB RFI), published in the December 2, 2022,
Federal Register
(87 FR 74097), to solicit public comment on a variety of topics related to the coverage of benefits in health plans subject to the EHB requirements of the ACA. In the 2025 Payment Notice (89 FR 26218), we removed the regulatory prohibition at § 156.115(d) on issuers from providing routine non-pediatric dental services as an EHB beginning with PY 2027.

In the 2026 Payment Notice, published in the January 15, 2025
Federal Register
(90 FR 4424), we revised § 156.80(d)(2)(i) to require the

actuarially justified plan-specific factors by which an issuer may vary premium rates for a particular plan from its market-wide index rate include the AV and cost-sharing design of the plan, including, if permitted by the applicable State authority, accounting for CSR amounts provided to eligible enrollees under § 156.410, provided the issuer does not otherwise receive reimbursement for such amounts.

III. Summary of the Proposed Provisions, Public Comments, and Responses to Comments on the Proposed Rule

A. Part 147—Health Insurance Reform Requirements for the Group and Individual Health Insurance Markets

1. Limited Open Enrollment Periods (OEPs) (§ 147.104(b)(2))

As further discussed in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12950) and section III.B.8. of this final rule regarding the proposal to remove the monthly SEP for APTC-eligible qualified individuals with a projected household income at or below 150 percent of the FPL (§ 155.420(d)(16)), we proposed a conforming amendment to remove § 147.104(b)(2)(i)(G), which currently excludes § 155.420(d)(16) as a triggering event for a limited OEP for coverage offered outside of an Exchange. We proposed to remove § 147.104(b)(2)(i)(G) to reflect the removal of the SEP at § 155.420(d)(16). We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and section III.B.8. of this final rule, including our responses to comments, we are finalizing a pause of the SEP at § 155.420(d)(16), and therefore are temporarily finalizing the proposed conforming change to remove § 147.104(b)(2)(i)(G). We summarize and respond to public comments received on the proposed removal of the SEP at § 155.420(d)(16) in section III.B.8. of this final rule.

2. Coverage Denials for Failure To Pay Premiums for Prior Coverage (§ 147.104(i))

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12950 through 12953), we proposed to remove § 147.104(i) that prohibits an issuer from denying coverage due to failure of an individual or employer to pay premiums owed under prior coverage, including by attributing payment of premium for new coverage to past-due premiums from prior coverage. Similar to the policy in the Market Stabilization Rule (82 FR 18349 through 18353), we proposed to allow issuers to attribute the initial premium the enrollee pays to effectuate new coverage to past-due premium amounts owed for prior coverage and then to not effectuate new coverage if the initial premium and past-due amounts are not paid in full. Under the proposal, consistent with the Market Stabilization Rule, an issuer would be required to apply its past-due premium payment policy uniformly to all employers or individuals in similar circumstances in the applicable market regardless of health status, and consistent with applicable nondiscrimination requirements,
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and would be prohibited from conditioning the effectuation of new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premium.

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Issuers may also have obligations under other applicable Federal laws prohibiting discrimination, and issuers are responsible for ensuring compliance with all applicable laws and regulations. There may also be separate, independent nondiscrimination obligations under State law.

Unlike the policy in the Market Stabilization Rule (82 FR 18346), the proposal would not limit the policy to past-due premium amounts accruing over the prior 12 months or require the issuer to provide any notice of the policy. States would remain free to apply additional parameters governing issuers' premium payment policies, to the extent permitted under Federal law.

We sought comments on the proposal and specifically on whether we should leave other parameters to States or codify additional parameters to establish a more uniform Federal regulatory approach. We also sought comment on whether issuers should be required to establish terms of coverage that attribute the initial premium an enrollee pays for subsequent coverage to past-due premium amounts owed, and the associated costs for issuers to implement such a requirement.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy with a modification by removing the regulatory text that prohibited this policy, and replacing it with regulatory text that codifies the proposed policy. Under the finalized policy, States may choose whether to allow issuers in their market and State to attribute the initial premium paid to effectuate new coverage to past-due premium amounts owed and to refuse to effectuate new coverage if the past-due and initial premium amounts are not paid in full. If an issuer does so, then under the final rule, it must apply its past-due premium payment policy uniformly to all employers or individuals in similar circumstances in the applicable market and State regardless of health status, and consistent with applicable nondiscrimination requirements, and are not permitted to condition the effectuation of new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premium. We are codifying this policy by revising § 147.104(i) instead of removing § 147.104(i) as proposed. As the issue this provision is intended to resolve was not created by the expansion of APTCs that are expiring after PY 2025, this policy will not sunset. We are finalizing this policy to be applicable as of the effective date of this rule and beyond.

We summarize and respond to public comments received on the proposed policy below.

Comment:
Several commenters supported the proposal, stating it would incentivize enrollees to maintain 12 months of continuous coverage, provide issuers with a tool to reduce adverse selection, reduce opportunities for enrollees to game the system by circumventing required premium payments, and allow issuers to more accurately price products. One commenter stated that the proposal would reduce premium inflation caused by gaming the rules, ultimately easing the burden on taxpayers and ensuring that ACA subsidies are better targeted.

Response:
We agree that finalization of the policy contained in the proposal will help to promote continuous coverage, reduce gaming and adverse selection, ensure that ACA subsidies are targeted to those who are eligible, and allow issuers to more accurately predict costs and price plans.

Comment:
Several commenters agreed with the proposal to defer to the States to determine whether issuers in their State are permitted to attribute payments for new coverage to past-due premiums and to refuse to effectuate new coverage unless both the past-due premium and the initial payment for new coverage are paid. One commenter stated that States, who maintain the closest interaction with their consumers and issuers, are best positioned to regulate issuers' premium payment policies. Another commenter acknowledged that issuers in some areas of the country are facing high fraud rates and the proposal could reduce gaming, adverse selection, and ultimately premiums by requiring payment of past-due premiums. However, the

commenter stated that issuers in areas with little evidence of gaming would likely not want to require payment of past-due premiums to effectuate new coverage.

Response:
We agree that States are in the best position to decide whether it is appropriate to permit or prohibit this policy. For that reason, we proposed, and are finalizing, the policy contained in the proposal in such a way that States may choose whether to allow issuers in their State to attribute the initial premium an enrollee pays to effectuate new coverage to past-due premium amounts the issuers are owed and to refuse to effectuate new coverage if the past-due and initial premium amounts are not paid in full.

We solicited comment in the proposed rule about whether to make the premium payment policy mandatory or optional. Comments in response to that solicitation are discussed below.

Comment:
Many commenters, some of whom supported and some of whom opposed the proposal, stated that if the proposal is adopted, there should be parameters around how issuers implement the policy. For example, commenters suggested the final rule should prohibit issuers that apply the past-due premium policy from collecting past-due premiums for debts older than 12 months; provide advance notice of their past-due premium policy; accept installment payments; take into account the individual's payment history; prohibit charging interest; set limits on amounts owed; allow enrollment after partial repayment; create exemptions for low-income individuals, those experiencing hardship, or those whose failure to pay was not their fault or whose enrollment was due to fraud; prohibit an issuer from insisting on payment of past-due premiums for other lines of insurance; and require issuers to allow consumers to appeal the amount of past-due premiums owed and to effectuate coverage pending appeal.

Response:
Under this final rule, an issuer adopting the past-due premium policy must apply it uniformly to all employers or individuals in similar circumstances in the applicable market and State regardless of health status, and consistent with applicable nondiscrimination requirements, is not permitted to condition the effectuation of new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premium, and the amount required to be paid must be subject to any premium payment threshold the issuer has adopted pursuant to 45 CFR 155.400(g). We are codifying these minimum standards in the regulation and defer to States on any additional parameters or standards that issuers must satisfy when implementing the past-due premium policy, as States are best positioned to set and oversee parameters of this nature. States that permit issuers to adopt the past-due premium policy are encouraged to require such issuers to provide advance notice of the policy to applicants. We will consider addressing acceptable past-due premium payment policies in future guidance.

Comment:
One commenter noted that, based on the analysis of Exchange data in the 2026 Payment Notice, over 10 percent of enrollees, or about 180,000 consumers, were terminated for non-payments in which the amount owed was less than or equal to $10 and stated that HHS should carefully balance the goals of securing program integrity with achieving operational efficiency.

Response:
While the debt owed by some individuals might be relatively small, all individuals who enroll for coverage, including those who benefit from APTC, are required to pay their share of the premium for every month of coverage. In addition, issuers of individual or small group market coverage subject to section 2701 of the PHS Act are not permitted to forgive debt owed for past-due premiums, and allowing issuers to attribute payment for new coverage to past-due premiums may create operational efficiencies for issuers in how they collect payment for such debts. We note that States and issuers have flexibility with regard to the past-due premium policy under this final rule. This includes the flexibility to decide that the policy will not apply with respect to de minimis amounts owed consistent with 45 CFR 155.400(g), as long as an issuer's past-due premium payment policy applies uniformly to all employers or individuals in similar circumstances in the applicable market and State regardless of health status and consistent with applicable nondiscrimination requirements.

Comment:
One commenter stated that the best way to address the problem of people waiting to get sick before getting coverage is for the individual shared responsibility payment to be a positive dollar amount. According to the commenter, requiring individuals to make such a payment if they do not have minimum essential coverage would provide an incentive to pay premiums to maintain continuous coverage.

Response:
In 2017, the Tax Cuts and Jobs Act
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set the amount of the individual shared responsibility payment to zero dollars, effective 2019, for non-exempt individuals who do not maintain minimum essential coverage. Statutory changes would be needed to change that amount.

20
Public Law 115-97.

Comment:
One commenter asserted that once coverage is terminated, the enrollee would be responsible for paying his or her own medical bills. Therefore, according to the commenter, if enrollees are required to pay for any outstanding premiums for any plan year, they are likely paying for coverage from which they will not benefit. By contrast, another commenter expressed concerns that individuals could owe a large bill because they followed instructions to stop paying premiums in order to terminate coverage. One commenter stated that if the proposal is adopted, issuers should be required to effectuate new coverage without requiring payment of past-due premiums if no claims were made during the period of delinquency.

Response:
For any period of time after coverage is terminated, no premium would be due. Therefore, “past-due premiums” under this final rule refers to premiums due but not paid for periods during which the individual was covered, such as during a grace period. During such a coverage period, individuals have the benefit of financial protection from unforeseen medical expenses, even if they do not ultimately receive covered benefits. However, the grace period rules function in a manner that allows enrollees to avoid paying their premium while maintaining that financial protection for a short period of time. The policy finalized in this rule provides issuers with an additional tool to collect payments owed for months of coverage, regardless of whether the individual incurs medical expenses during the period for which they owe premiums.

Because applying the past-due premium policy with regard to claims history would discriminate based on health status, we do not adopt the commenter's suggestion to require issuers that adopt the past-due premium policy to create exceptions for instances in which no claims are incurred during the period in which past-due premiums are owed. These practices are not permitted under this final rule.

Comment:
One commenter asked how the policy related to past-due premiums would impact claims payment.

Response:
If an individual pays past-due premiums for months during which

the individual was covered, the issuer must pay any unpaid claims incurred during such month. For example, if an individual seeks to enroll in new coverage while in the 3-month grace period and pays past-due premiums owed for prior coverage, any claims that a QHP issuer pended for services rendered to the enrollee in the second and third months of the grace period, as permitted under § 156.270(d)(1), must be paid in accordance with the terms of the coverage.
21

21
Section 156.270(d) requires issuers to observe a 3-consecutive month grace period before terminating coverage for those enrollees who when failing to timely pay their premiums are receiving APTC. Section 155.430(d)(4) requires that when coverage is terminated following this grace period, the last day of enrollment in a QHP through the Exchange is the last day of the first month of the grace period. Therefore, individuals whose coverage is terminated at the conclusion of a grace period would owe at most 1 month of premiums, net of any APTC paid on their behalf to the issuer. Individuals who attempt to enroll in new coverage while in a grace period (and whose coverage has not yet been terminated) could owe up to 3 months of premium, net of any APTC paid on their behalf to the issuer.

Comment:
One commenter asked how the policy would impact enrollment in new coverage.

Response:
Under the past-due premium policy in this final rule, an issuer, to the extent permitted by applicable State law, may attribute a payment for new coverage to past-due premiums for prior coverage. The issuer then could lawfully refuse to effectuate new coverage unless the individual or employer, as applicable, pays any past-due premium amounts owed for prior coverage and the initial premium (also known as a binder payment) for new coverage by the applicable payment deadline. For example, if an individual applies for coverage during the individual market open enrollment period and owes 1 month of premiums in the amount of $10, and the individual fails to pay past-due premiums of $10 and the binder payment for new coverage by the applicable premium payment deadline, the issuer could refuse to effectuate the individual's enrollment in coverage, subject to any premium payment threshold the issuer has adopted pursuant to 45 CFR 155.400(g). Following the open enrollment period, the individual could enroll in coverage for that benefit year only through a special enrollment period and may be required to satisfy any past-due premium obligations at that time.

Comment:
Many commenters, while acknowledging incentives for individuals not to pay premiums and enroll in coverage only when medical needs arise, asserted that the guardrails in place, such as short grace periods and requirements to retroactively pay medical expenses, limit these incentives.

Response:
We believe that those who seek to circumvent paying premiums have already weighed their personal health and financial risks of doing so. Therefore, we believe that existing guardrails, such as the prospect of having to pay medical expenses not covered by insurance, are not sufficient to discourage individuals from taking advantage of grace period and guaranteed availability rules.

Comment:
One commenter asserted that those who are unable to effectuate enrollment due to unpaid premiums may end up in other forms of “non-ACA compliant” coverage, such as short-term, limited-duration insurance, leading to market distortions and further driving up health insurance premiums in the individual market risk pool. In addition, since these types of plans do not have to cover essential health benefits, the commenter observed that increased reliance on such plans would lead to more uncompensated care, putting hospitals and emergency departments at significant risk of financial instability.

Response:
We agree that individuals with unpaid past-due premiums might seek other types of coverage (for example, in markets where the types of coverage described by the commenter are more prevalent). However, in other markets, that might not be the case. This is why we defer to the States, who know their markets best, to determine whether issuers in their State are permitted to adopt the past-due payment policy set forth in this final rule.

Comment:
One commenter supporting the policy related to past-due premiums stated that, in deferring to States on parameters for applying the policy uniformly and consistently, HHS should ensure States are not requiring issuers to apply the past-due premium policy, but rather allowing for the option to do so, consistent with the intent of the proposal. Some commenters commented on the applicability of the policy for issuers offering coverage through State Exchanges. One commenter asked that State Exchanges be permitted, but not required, to implement the policy. One commenter said that some State Exchanges perform premium collection, making the requirement administratively challenging for issuers that do not have premium collection capabilities, and another commenter noted that implementing a past-due premium policy would require significant configuration of the Exchange's system.

Response:
This final rule removes the Federal prohibition on attributing payments for new coverage to past-due premiums owed for prior coverage and leaves it to States to determine whether to permit the practice, and if permitted, any restrictions on the practice. States are permitted, but not required, to allow issuers participating in their State Exchanges to implement a past-due premium policy. We recognize that some Exchanges may not have the functionality in place to allow QHP issuers to apply the past-due premium policy to coverage purchased through that State's Exchange. States may take these and other considerations into account in determining whether to allow the past-due payment policy finalized in this rule.

Comment:
One commenter was in favor of the proposal, so long as the issuer is the party that must deal with outstanding balances, and not the agent or broker. Other commenters were concerned that agents and brokers will be forced to spend unpaid time navigating billing issues instead of focusing on helping clients get covered.

Response:
This final rule does not address which entity is responsible for collecting premiums owed, including any past-due premiums. To the extent an issuer adopts the past-due premium policy in this final rule, the party that collects the past-due premium, for example, the issuer, agent, or broker, would be determined by State law or by agreement of those parties.

Comment:
A few commenters expressed concern about the effects of the proposal on the individual market risk pool, asserting that young and healthy individuals are more price-sensitive and less likely to enroll if they must pay past-due premiums. One commenter also observed that these young and healthy enrollees are far more likely to have fallen out of coverage in the first place for past non-payment of premiums.

Response:
We believe that, regardless of an individual's age or health status, they potentially will be more inclined to remain in their coverage if they have to pay past-due premiums in order to effectuate new coverage. In addition, to the extent young and healthy enrollees fell out of coverage due to non-payment of premium, the extra effort to resume coverage suggests they may need coverage due to a change in their health status. A policy that keeps them continuously covered is better for them and the risk pool. Moreover, there are minimum standards that must be met to enroll regardless of the impact on the risk pool. Improving the risk pool is no

argument to excuse non-payment of premium.

We also note that, under the premium rating rules in section 2701 of the PHS Act, young peoples' premiums are lower in most States, making it likely (particularly for unsubsidized individuals) that, to the extent they have accrued past-due premiums, the amount owed would be lower than it would be for older individuals.

Comment:
Many commenters asserted that the proposal is inconsistent with the guaranteed availability requirements in section 2702 of the PHS Act. One commenter stated that the proposed policy is unconstitutional.

Response:
We continue to believe that allowing issuers to require payment of past-due premiums is consistent with the guaranteed availability requirements in section 2702 of the PHS Act. In the Market Stabilization Rule (82 FR 18350 through 18351), we noted it is clear from reading the guaranteed availability provision in section 2702 of the PHS Act, together with the guaranteed renewability provision in section 2703 of the PHS Act, that an issuer's sale and continuation in force of an insurance policy is contingent upon payment of premiums. Notably, this recognizes how the guaranteed renewability requirement is not just about renewals but also includes a requirement on issuers to continue the coverage in force throughout the year. Read together, we concluded that the guaranteed availability provision is not intended to require issuers to provide coverage to applicants who have not paid for such coverage. To the extent an individual or employer makes payment in the amount required to effectuate new coverage, but the issuer lawfully credits all or part of that amount toward past-due premiums, we conclude that the consumer has not made sufficient initial payment for the new coverage. We also note that decisions regarding payment of the first month's premium (the binder payment) have traditionally been business decisions made by issuers, subject to State rules. Accordingly, as noted in the proposed rule (90 FR 12953), although we have established certain uniform standards for premium payment deadlines, we ultimately defer to issuers, subject to State rules. Thus, we conclude that refusing to effectuate coverage to an individual or employer who does not pay past-due premiums is indeed permissible under section 2702 of the PHS Act, though a State does not need to allow for it.

Finally, with respect to the commenter raising constitutional concerns, the commenter did not offer any rationale to explain why the proposal would be unconstitutional, and we have not identified any reason why it would be unconstitutional.

Comment:
Many comments opposing the proposal asserted that the proposal would disproportionately harm marginalized people, such as individuals with lower economic status. One commenter asserted that the proposed rule did not provide evidence to support the statement that any past-due amounts would be “quite small” or “would not impose a substantial financial burden” and that the proposed rule made no attempt to quantify that amount in dollars, compare it to the incomes of affected individuals, rebut the findings in the 2023 Payment Notice, or address the potential for multiple years of lookback. One commenter challenged our assertion in the proposed rule that enrollment loss from the proposed changes would be “minimal” because a large proportion of enrollees receive APTCs and therefore would not experience financial hardship because of the proposed changes. According to the commenter, this is not accurate, because people who receive APTCs have very low incomes and lack the funds to pay multiple months of past-due premiums while also paying the premium to effectuate coverage for a new year.

Response:
We anticipate that enrollment loss from requiring payment of past-due premiums would be minimal and not impose a substantial financial burden. APTCs are paid on behalf of the vast majority of individuals who enroll in coverage through the Exchanges. The APTC lowers the amount of premium that they pay out of pocket, and therefore also reduces the amount of past-due premium debt that can accrue. In addition, rules regarding grace periods and termination of coverage for individuals receiving APTC result in such individuals generally owing no more than 1 to 3 months of past-due premium amounts per year.
22

Therefore, we conclude that past-due premium amounts generally would not impose a substantial financial burden to enroll in coverage. States can also take additional steps to limit the potential for individuals to owe significant amount of past-due premium by prohibiting the policy, or limiting the lookback period, or capping the amount of past-due premium due to effectuate coverage, based on factors including the socioeconomic demographics of their populations.

22
Id.

Comment:
Several commenters stated that this proposal would cause the uninsured population to increase, causing more medical debt, illness, and death. Some commenters also stated that the proposed rule did not provide sufficient evidence for the assertion that the proposal would cause the uninsured population to decrease and the assertion that the similar policy implemented in the Market Stabilization Rule encouraged individuals to continue to pay their premiums and stated that HHS did not provide data to show that the proposal was needed.

Response:
We acknowledge there is always some uncertainty regarding the net effects of any new policy. Here, we cannot know with certainty whether the coverage gains resulting from more moderate premium trends and the promotion of continuous coverage will be higher than any coverage losses resulting from issuers requiring payment of past-due premiums to effectuate new coverage. However, given the importance of health coverage and the fact that most consumers are accustomed to paying in full for one contract before they are allowed to enter another with the same contracting party, we anticipate that any discouragement from enrollment will be minimal. When a similar policy was previously in place, the percentage of enrollees in Exchanges using the Federal platform who had their coverage terminated for non-payment of premiums dropped substantially. While there could have been other reasons for this substantial drop, it is reasonable to conclude the policy was, at least in part, a driving factor by encouraging more people to maintain continuous coverage.

Comment:
One commenter observed that HHS had concluded in the 2023 Payment Notice that the past-due premium policy in the 2017 Market Stabilization Rule “had the unintended consequence of creating barriers to health coverage that disproportionally affect low-income individuals.” The commenter explained that the proposal to reinstate the past-due premium policy without the 12-month maximum lookback period would create even more significant barriers for low-income individuals and that HHS had not provided a reasoned explanation for its conclusion that these individuals would not be significantly impacted.

Response:
In neither the proposed rule nor this final rule do we deny that the past-due premium policy as finalized in this rule will possibly have at least some negative impacts on low-income individuals. Nor does the change in policy in this final rule rely on any belief or assertion that low-income individuals will be less harmed by this policy, as compared to the policy adopted in the 2017 Market

Stabilization Rule. Rather, the change in policy in this final rule is supported by the fact that data suggest that more individuals, including low-income individuals, might maintain coverage as a result of the policy in this final rule, as compared to the current policy, which prohibits the past-due premium policy. Continued enrollment suggests that individuals, including those with lower incomes, will not be harmed by the policy, as they will remain covered for any unexpected health issues. Each State, however, including those with large numbers of low-income individuals, are free to disagree, based on their specific market dynamics, and not permit issuers to adopt the policy.

Comment:
Several commenters observed that if the expanded premium subsidies sunset at the end of 2025, coverage will become less affordable for a large number of individuals, thereby exacerbating the number of individuals who will not be able to pay their premiums and making the payment of past-due premiums (plus the binder payment for new coverage) that much more difficult.

Response:
At the time of publication of this final rule, the expanded subsidies will sunset on December 31, 2025, under current law. States may take this sunset into account in determining whether to permit issuers to apply the past-due premium policy finalized in this rule.

Comment:
In the preamble to the proposed rule (90 FR 12951 through 12952), we noted that Exchange enrollment data show a steady decline in the percent of enrollees in Exchanges using the Federal platform that had their coverage terminated for non-payment of premiums between 2017 and 2020. Based on these enrollment trends, we suggested that the past-due premium policy in the Market Stabilization Rule (82 FR 18346) may have successfully encouraged enrollees to continue paying premiums, while acknowledging limitations on our ability to draw a causal inference. One commenter took issue with this analysis, suggesting that it failed to account for the fact that overall Exchange enrollment also fell, and premiums rose significantly, during this time period—suggesting that a combination of policies led to fewer healthy enrollees retaining coverage, increasing the percentage of total enrollees who might be at risk of health events remaining in coverage, who are more likely to pay premiums throughout. The commenter stated that the proposed rule failed to account for these negative effects on this risk pool.

Response:
In the preamble to the proposed rule, we stated that the decline in the rate of enrollees who had their coverage terminated from 2017 to 2020 might have occurred in part because of the interpretation of the guaranteed availability requirement in the Market Stabilization Rule. We acknowledged that due to data limitations, we were unable to directly attribute any changes in enrollment behavior in the Exchanges using the Federal platform to that interpretation. We continue to believe these data, though not conclusive, suggest that the past-due payment policy in the Market Stabilization Rule may have contributed to fewer individuals losing coverage due to non-payment of premiums. However, to the extent States do not believe this would be the case in their specific markets, they may refrain from allowing issuers in their State to adopt the past-due premium policy.

Comment:
Several commenters disputed that there are large numbers of individuals who intentionally stop paying premiums in order to gain 1 month of free coverage through the coverage grace period when they know they will submit medical claims for that month, go without coverage for subsequent months when they are confident they will not need it, and then purchase new coverage. Rather, commenters stated that there are a number of legitimate reasons why individuals fail to pay premiums, such as illness, unemployment or job loss, caregiving responsibilities, a natural disaster, household changes that result in higher premiums, and not realizing that they missed a payment or payments. One commenter stated that some people intentionally stop paying their premiums because their eligibility changes—for example, they become eligible for Medicaid—without understanding the need to terminate their Exchange plan or how to terminate it. Many commenters stated that individuals often experience insurance churn with job loss or access to new coverage. This churn can confuse what plans, coverage, and support are available to them, and patients may not realize they need to terminate coverage, especially if they are not using the insurance.

Response:
We acknowledge that many individuals cease paying premiums for various reasons, such as those mentioned by the commenters. In instances where an individual's household income decreases during the policy year, due to illness, job loss, or other circumstances, the individual has the opportunity to report their changed income to the Exchange and might qualify for new or additional APTC to help with their premiums. We also believe that in the overwhelming majority of cases where individuals cannot pay their premiums, the individual has the ability to contact their issuer and terminate coverage before becoming delinquent, avoiding the need to pay past-due premiums. We also note that, even where issuers adopt the past-due premium policy under this final rule, individuals may purchase coverage on a guaranteed issue basis from a different issuer (in all cases, outside the controlled group of the issuer to whom past-due premiums are owed), without having to pay past-due premiums.

Comment:
A few commenters stated that denying individuals health insurance, due to not paying past-due premiums or other reasons, would be detrimental not only to those individuals, but to providers and health care systems, with effects reaching well beyond Exchange enrollees.

Response:
As we stated in the proposed rule and reiterate in this final rule, we generally believe the past-due premium policy will result in more individuals retaining their coverage.

Comment:
Under the proposed rule, an issuer could not condition the effectuation of new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premium. One commenter asked which individual is considered the contractually responsible person for payment of premium with respect to a child-only policy and with respect to a family covered by an individual market policy.

Response:
For purposes of the past-due premium policy in this final rule, the person contractually responsible for payment of premium is the policyholder. In the case of child-only coverage, the policyholder would typically be the covered child's parent or legal guardian. In the case of an individual market policy covering a family, the policyholder would not be one of the covered dependents. In the case of coverage in the group market, the policyholder is typically the employer or union, not covered employees or their dependents. This means, for example, that a dependent spouse on an individual market policy cannot be required to pay past-due premiums if that dependent spouse wishes to purchase coverage as a policyholder. Similarly, an employer's failure to pay premiums for group health insurance coverage would not result in an employee or dependent owing past-due premiums for coverage in the individual market.

Comment:
Several commenters raised concerns that consumers enrolling in coverage with an issuer that applies a past-due premium policy would not be fully informed or would not fully understand the implications of such a policy, and noted potential consumer confusion, as well as financial harm if consumers incorrectly believe they have enrolled in coverage that was never effectuated.

Response:
We encourage issuers to be transparent about the application of any past-due premium policy to help ensure that individuals understand how much they must pay to effectuate coverage as well as the consequences of non-payment. Issuers, as a matter of practice, instruct their agents and brokers on how to collect premiums in order to effectuate new coverage, how to determine the amount due in order to effectuate new coverage, and the payment due date. We anticipate that issuers adopting the past-due premium policy would continue to work with their agents and brokers to ensure that consumers understand what payments must be made, thus minimizing potential confusion.

Comment:
One commenter asked whether the proposed rule would permit application of past-due premiums when enrollees switch to a plan offered by a different issuer.

Response:
Under the proposed rule and this final rule, subject to applicable State law, an issuer may require a consumer to pay past-due premiums owed to that issuer, or owed to another issuer in the same controlled group, plus the initial (binder) payment for new coverage, before effectuating the new coverage. This reflects the fact that, to the extent an applicant makes payment in the amount required to effectuate new coverage, but the issuer lawfully credits all or part of that amount toward past-due premiums, the applicant has not made sufficient payment for new coverage. There is no mechanism, however, by which an issuer can credit amounts paid to premiums owed to an unrelated issuer. Therefore, an issuer cannot deny coverage under section 2702 of the PHS Act based on an individual's or employer's failure to pay past-due premiums owed to any issuer other than that same issuer or another issuer in the same controlled group.

Comment:
Several commenters observed that the proposal to shorten the length of the OEP would give applicants for new coverage less time to figure out how to acquire the funds to pay past-due premiums.

Response:
As explained in section III.B.7 of this final rule, the changes to the OEP will take effect beginning with the OEP for PY 2027. Because the proposal to shorten the OEP will not be implemented in PY 2026, enrollees and other interested parties will have sufficient time to adjust to the changes to the OEP such that they understand and are better prepared for the changes when the time period for active enrollment during OEP is shortened for PY 2027.

Comment:
Several commenters asserted it would be inappropriate for an issuer to condition enrollment in new coverage on payment of past-due premiums where the non-payment resulted from actions of the issuer or third parties. The commenters gave examples in which non-payment of premiums was due to actions, inactions, or delays on the part of issuers, Exchanges, agents, and brokers, including cases of fraudulent enrollment, or lag time between when an individual reports information and when an Exchange processes and effectuates changes related to that information.

Response:
In instances where an issuer or an Exchange was responsible for non-payment of premium, or incorrectly determined that an individual did not pay premium, we expect the issuer or Exchange to expediently work with the consumer to resolve the situation and enroll them in new coverage without requiring payment of past-due premiums. If there is a delay between when an individual reports changes to their income or household size and when that change is processed, we expect Exchanges to internally document that, so that there is evidence that the individual should not have been charged a higher premium during the lag time. We also note that in situations where an individual was improperly enrolled in coverage, and coverage is rescinded (that is, cancelled or discontinued retroactively to the date of enrollment), as permitted under § 147.128, the individual would not owe any past-due premiums.

Comment:
Several commenters raised concerns about the potential impacts on coverage access, particularly in markets with limited competition, where there may be a limited number of issuers servicing that geographic area.

Response:
We note that this policy provides States flexibility to address adverse selection based on their specific market conditions and allows for appropriate market-specific solutions that recognize the differences between competitive and less competitive regions. We believe this flexible approach strikes an appropriate balance between preserving consumer access to coverage and accounting for varying market conditions across regions.

Comment:
Several commenters observed that there are other mechanisms by which issuers can attempt to collect debt in form of past-due premiums, other than by requiring past-due premiums be paid in order to effectuate new coverage.

Response:
Although issuers may have other methods to collect debt, we note that other forms of debt collection, such as placing the debt into collections, can be costly and time consuming. In addition, although the past-due premium policy will facilitate issuer premium collection efforts, it is principally intended to prevent the premium debt in the first instance by ensuring that individuals pay premiums for months in which they have coverage.

Comment:
One commenter raised concerns about how the past-due premium policy would interact with an individual coverage health reimbursement arrangement (ICHRA) or a qualified small employer health reimbursement arrangement (QSEHRA). Specifically, the commenter observed that the past-due premium policy could complicate the enrollment process and necessitate additional administrative procedures and costs for employers if they are unable to make an ICHRA offer because employees cannot enroll in individual health insurance coverage. The commenter suggested this could subject the employer to a possible tax penalty if the employer has no way to make another offer of affordable health coverage to their employees. The commenter recommended that employees offered an ICHRA should not be required to pay past-due premiums.

Response:
The commenter does not explain why allowing issuers to attribute initial premium payments to past-due premiums would make it so that employers cannot offer ICHRAs, and we do not see a reason why that would be the case. Therefore, we do not believe it is necessary to prohibit an issuer that chooses to apply the past-due premium policy from applying the policy to individuals offered an ICHRA or have a QSEHRA.
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In the event an individual is initially enrolled in individual health insurance coverage and subsequently fails to timely pay premiums for the coverage, with the result that the individual is in a grace period, the individual is considered to be enrolled in individual health insurance coverage and the ICHRA must reimburse qualified medica

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2025-11606. Public record. Not legal advice.