Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability

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 Sec. 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 Sec. 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 Sec. 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 Sec. 155.220(g)(1). We are also finalizing the addition of the definition for “preponderance of the evidence” at Sec. 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 Sec. 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 Sec. 155.305(f)(4)(i) and removing the notice requirement at Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 155.410(e)(5)(ii) and all OEP plan selections are effective on January 1 of the plan year per Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 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.