CMS Finalizes 2025 ACA Marketplace Rule

Posted August 4, 2025

The Centers for Medicare & Medicaid Services (CMS) recently finalized the 2025 Marketplace Integrity and Affordability Final Rule. The primary objectives of the rule include:

Combating “improper enrollments” and wasteful federal spending. CMS wants to address a “surge of improper enrollments” in Affordable Care Act (ACA) exchanges and protect taxpayer dollars from waste, fraud, and abuse.
Strengthening health insurance markets for American families by ensuring market stability and improving the risk pool.
Lowering Marketplace premiums. The rule aims to achieve this by improving eligibility verification processes and the risk pool.
Ensuring coverage is available to those who need it. CMS wants to stop “exploitation of the system, and realign the program with the values of personal responsibility and fiscal discipline”.
Promoting efficient and accessible eligibility verification processes. The agency intends to prevent coverage gaps and surprise tax liabilities for qualified enrollees resulting from improper third-party actions.
Addressing fraud, waste, and abuse related to expanded premium subsidies. CMS designed many of the temporary measures in the rule to mitigate these issues as the enhanced subsidies expire.
Improving transparency and accountability for agents, brokers, and web-brokers.

Projected Impacts

CMS projects the rule changes to have various impacts. Some impacts are temporary, expiring at the end of the 2026 plan year. Others are permanent:

Specific Policy Impacts

Exclusion of DACA Recipients. The rule excludes Deferred Action for Childhood Arrivals (DACA) recipients from eligibility for ACA Exchange coverage and Basic Health Program (BHP) coverage in states that operate a BHP. This policy is permanent. CMS projects the rule to result in a reduced annual QHP enrollment of 10,000 individuals and BHP enrollment of 1,000 individuals. It may also lead to a small negative impact on the individual market risk pool. States also may incur costs for updating eligibility systems of approximately $1.96 million in 2025.
Repeal of Monthly SEP for Low-Income Individuals. The monthly Special Enrollment Period (SEP) for individuals with projected household incomes at or below 150% of the federal poverty level is repealed. The repeal is a temporary measure, expiring at the end of the 2026 plan year, after which the SEP will resume in 2027. CMS claims agents and brokers misused this SEP for improper enrollments and unauthorized plan switching.
Enhanced Eligibility Verification. Requires income verifications to ensure people qualify for premium subsidies. Conducts eligibility verifications for the majority (at least 75%) of enrollments through SEPs, aiming to close loopholes that allowed people to wait until they needed care to enroll. These eligibility verifications are a temporary measure for Federally-Facilitated Exchanges (FFM), expiring at the end of 2026. It also removes the automatic 60-day extension to resolve income-related data matching issues (DMIs), giving applicants only 90 days. The removal of the 60-day extension is a permanent policy. The result could cause APTC loss for approximately 140,000 FFM enrollees and 86,000 SBM enrollees.
$5 Premium Penalty for Auto-Reenrollees. Reduces APTC by $5 a month for individuals auto-reenrolled in fully subsidized plans without eligibility verification, intended to prompt engagement. The penalty applies only to FFMs and is a temporary measure. It ends after 2026.
Standardized Annual Open Enrollment Period (OEP). Starting with the 2027 plan year, the OEP will end by December 31 for all health insurance exchanges, encouraging year-round coverage. The OEP rule is a permanent policy. Nineteen of 20 State-based Marketplaces (SBMs) will need to shorten their OEPs. The total estimated costs for SBMs to comply are $7.37 million in 2026.
Prohibition on Federal Subsidies for Sex-Trait Modification Procedures. Prohibits federal subsidies from being used to cover specified sex-trait modification procedures as an Essential Health Benefit (EHB). The policy is effective for 2026 and beyond. The rule defines “specified sex-trait modification procedure,” though it does not prevent health plans from voluntarily covering such procedures as non-EHB. It also does not prevent states from mandating such coverage if they defray the cost. Given low utilization (approximately 0.11% of enrollees), the premium impact is expected to be minimal.
Revised Premium Adjustment Percentage Methodology. Reinstates a methodology (similar to 2020) that includes individual market premiums, leading to a higher premium adjustment percentage. The policy is permanent. The change results in a higher maximum annual limitation on cost-sharing ($10,600 for self-only coverage for 2026) and a higher required contribution percentage for subsidies. It is also expected to increase net premiums by about $530 million per year and lead to coverage losses of at least 80,000 marketplace enrollees.
Expanded Actuarial Value (AV) De Minimis Ranges. Allows insurers to adopt less generous benefit designs by expanding de minimis ranges to +5/-4 percentage points for expanded bronze plans and +2/-4 percentage points for other plans. CMS made this a permanent policy. It also eliminates previous conditions for silver QHP certification related to AV. This change is expected to result in lower overall premiums (approx. 1.0% on average) by incentivizing unsubsidized enrollees and improving the risk pool.
Denial of Coverage for Failure to Pay Past-Due Premiums. Allows insurers to deny new coverage to individuals who have outstanding premium debt from prior coverage by attributing the initial payment for new coverage to past-due amounts. The policy is permanent. States retain the discretion to permit this.
Changes to Re-enrollment Hierarchy. Eliminates the “bronze-to-silver crosswalk” policy, which previously allowed Exchanges to move CSR-eligible enrollees from a bronze to a silver plan under certain conditions. The policy is permanent. CMS aims to improve consumer choice and reduce confusion. However, this rule may result in some consumers remaining in bronze plans with higher out-of-pocket costs, even if eligible for more generous silver plans.
Temporary Elimination of Fixed-Dollar and Gross Percentage-Based Premium Payment Thresholds. Temporarily removes options for issuers to implement fixed-dollar or gross percentage-based premium payment thresholds, meaning insurers can only use a net premium percentage threshold. CMS set the measure as temporary. It ends after 2026, with the previous flexibility resuming in 2027. CMS aims to prevent enrollees from remaining covered for extended periods without paying, particularly if improperly enrolled.

Financial and Coverage Impacts

Significant Savings for Taxpayers. CMS expects the rule to save taxpayers up to $12 billion in 2026 by reducing improper subsidy expenditures.
Lower Premiums. Projections show individual health insurance premiums will lower by approximately 5 percent on average. Specifically, pausing the monthly SEP for low-income individuals could lead to a 3% to 4% reduction.
Reduced APTC Transfers.
- $5 a month reduction in APTC for individuals auto-reenrolled in fully subsidized plans without eligibility verification.
- An estimated $1.28 billion reduction in 2026 due to the 1-year FTR policy.
- $266 million annual reduction from 2025 by removing the automatic 60-day extension for income-related DMIs.
- $191 million reduction in 2026 due to generating DMIs for incomes below 100% of the federal poverty level (FPL).
- $957 million reduction in 2026 due to generating DMIs when tax return data is unavailable.
- $817.57 million reduction in 2026 from temporarily eliminating certain premium payment thresholds.
- Approximately $3.4 billion reduction in 2026 due to pausing the 150% FPL SEP.
- Approximately $105.4 million reduction in 2026 due to changes in SEP verification requirements.
- Approximately $1.22 billion reduction in 2026 (increasing to $1.40 billion by 2029) due to revised actuarial value (AV) de minimis ranges.
- $1.27 billion to $1.55 billion annual reduction in APTC payments from 2026 due to the revised premium adjustment percentage methodology.
Increased Employer Shared Responsibility Payments. Large employers may see increased payments to the federal government. These payments range from $3 million to $20 million annually between 2028 and 2030. This occurs if the IRS adopts the new premium adjustment percentage methodology for affordability calculations.
Potential Coverage Losses. The rule projects a total reduction in annual enrollment of between 725,000 and 1.8 million individuals in 2026. CMS attributes this to the removal of improper enrollments.

Were there significant changes from the proposed rule and the final rule?

CMS released the Marketplace Integrity and Affordability Proposed Rule on March 10. While the final rule retains many of the core proposals aimed at strengthening program integrity and controlling federal spending, it introduces a “temporary” caveat for many of the more stringent enforcement mechanisms. It also offers greater deference to states than initially outlined in the proposed rule. This reflects a response to the extensive public comments received, balancing the perceived “urgent need” to address improper enrollments with concerns about unintended negative impacts on legitimate enrollees and market stability.

Here’s a detailed breakdown of the primary differences:

Temporary vs. Permanent Policies

Perhaps the most impactful change related to policies proposed as permanent that are now explicitly temporary, designed to sunset at the end of the 2026 plan year. CMS states it aims to balance the “urgent need to reduce the high level of improper and fraudulent enrollments” with “longer-term concerns” once enhanced premium subsidies expire.

However, CMS likely made these items temporary so they could be made permanent in the One Big Beautiful Bill Act. That action allows the Act to contain greater financial savings.

One Big Beautiful Bill Act (OBBBA) Codifications

Elimination of the monthly SEP for low-income individuals (at or below 150% of the FPL). The OBBBA appears to codify a prohibition on premium tax credits (APTCs) for those enrolling through income-based SEPs. Specifically, Section 71303 of the Act states that “coverage month” for APTC eligibility shall not include any month where an individual enrolls through a special enrollment period unless it is “on the basis of a change in the family size of the individual” and eligibility is verified. That language effectively limits the qualifying SEPs for APTC to family size changes, thereby excluding the income-based SEP.
Requirement for Federally Facilitated Marketplaces to verify SEP eligibility for at least 75% of new enrollments. The Act imposes broader pre-enrollment verification requirements for those using SEPs. Section 71303(a)(5)(A) establishes an “EXCHANGE ENROLLMENT VERIFICATION REQUIREMENT” stating that a “coverage month” is not counted for APTC if enrollment occurred via a SEP “unless… the Exchange has verified the eligibility of the individual for such coverage as of the first day of such month, based on applicable enrollment information”. The Act seems to require verification for all such SEP enrollments. The result is a more extensive mandate than the 75% threshold in the CMS rule.
A $5 premium penalty for certain fully subsidized auto-reenrollees in FFMs who do not confirm eligibility. The OBBBA goes further than a $5 penalty by banning auto-reenrollment for subsidy-eligible consumers entirely. Section 71304, titled “PROHIBITION ON AUTO-REENROLLMENT FOR APTC-ELIGIBLE INDIVIDUALS,” states that the Secretary of Health and Human Services “shall not permit an Exchange to auto-reenroll an individual in a qualified health plan… if the individual was eligible for an advanced payment of the premium tax credit” for the preceding year. This direct prohibition would eliminate the need for a premium penalty.
Increased income verification requirements when a consumer’s attested income is above the FPL but federal data indicates it’s below 100% FPL. The Act includes general provisions for Exchange enrollment verification, including household income and family size. The comprehensive nature of Section 71303’s “EXCHANGE ENROLLMENT VERIFICATION REQUIREMENT” suggests it would fall under these broadened verification mandates.
Increased income verification requirements when tax return data is unavailable. Similar to the above, Section 71303 requires verification of “Household income and family size”. The passage indicates a general tightening of verification processes, which would likely encompass situations where tax return data is unavailable.
Reinstatement of the 1-year FTR policy for APTC eligibility. The Act directly addresses FTR. Section 36B(c)(5)(C) specifies that “The term ‘coverage month’ shall not include, with respect to any individual, any month for which the individual has failed to file a tax return for a preceding taxable year for which the individual received an advance payment of the premium tax credit”. This explicitly codifies the 1-year FTR policy for APTC eligibility.
Elimination of fixed-dollar and gross percentage-based premium payment thresholds for insurers. Based on the OBBBA, there appears to be no explicit legislative analogue for the elimination of fixed-dollar and gross percentage-based premium payment thresholds for insurers.

Scope for SBMs

Several policies that CMS initially proposed to apply to both FFMs and SBMs were modified to grant SBMs more discretion or to exclude them entirely.

SEP Verification. Proposed for all Exchanges, but finalized only for FFMs and temporarily.
$5 Premium Penalty for Auto-Reenrollees. Proposed for FFM and SBMs, but finalized only for FFMs and temporarily, acknowledging that improper enrollment concentrates in FFMs.
Annual OEP. The proposed rule set a rigid November 1 to December 15 OEP for all Exchanges starting with PY 2026. The final rule modified this to allow flexibility for all Exchanges to determine their specific OEP dates within broader guidelines (begin no later than November 1 and end no later than December 31, maximum 9 weeks) and applies this from PY 2027, leaving PY 2026 unchanged. This change impacts 19 of 20 SBMs, requiring them to shorten their OEPs.
Annual Eligibility Redeterminations with $5 Penalty. Proposed for SBMs starting in 2027, but not finalized for SBMs.

Prohibition on Sex-Trait Modification as Essential Health Benefit (EHB)

The proposed rule outlined a prohibition on federal subsidies for “sex-trait modification” procedures as an EHB. The final rule permanently implements this prohibition, but critically, it adds a specific definition of “specified sex-trait modification procedure” to provide clarity on what is covered or excluded, addressing a key point raised in public comments.