Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability

We received many comments opposing the proposed change to the definition of “lawfully present” in this rule out of concern for the health and well-being of individuals, families, communities, and health care organizations. Commenters expressed concerns regarding increased costs associated with shifts from preventive care to emergency room care, a weaker individual market risk pool, and increased tax burdens on Americans with the removal of eligibility of DACA recipients under the ACA. The following is a summary of the comments we received and our responses.

Comment: Many commenters shared that increasing access to health insurance coverage and health care has positive impacts on individual and

population health, and, conversely, that decreasing access to coverage harms individual and population health.\49\ Many commenters stated that they expected the provision would result in decreased community public health and decreased well-being for DACA recipients as these individuals become uninsured, noting that leaving thousands of DACA recipients without health coverage could lead to dire health consequences in their communities.

\49\ American Hospital Association. Report: The Importance of Health Coverage. https://www.aha.org/guidesreports/report- importance-health- coverage#:~:text=Impact%20of%20Coverage&text=Studies%20confirm%20that %20coverage%20improves,on%20individuals%2C%20families%20and%20communi ties.

Commenters noted that insured individuals are more likely to have a regular source of care and to receive timely and appropriate preventive care and are less likely to experience certain health complications than uninsured individuals. Nonprofit medical and advocacy organizations commented that having access to health insurance is associated with increased utilization of preventive care, and that early testing is critical to detect life threatening health conditions like lung, blood, and breast cancer, HIV/AIDS, diabetes, chronic conditions, and disabilities.\50\ Commenters also noted that access to health insurance is associated with preventing maternal mortality in immigrant women.

\50\ “Access to Primary Care.” Office of Disease Prevention and Health Promotion, 2020, www.odphp.health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-primary-care.

Commenters expressed concerns that without access to health insurance, the cost to treat complex health conditions within the DACA population would be higher than if DACA recipients remained eligible for health insurance and received preventive care. Some commenters noted the disproportionate rate of uninsurance among DACA recipients is due to their prior exclusion from Exchange coverage and continued exclusion from Medicaid. Some commenters noted that taking away eligibility for DACA recipients undermines the goal of the ACA to expand access to health care services.

Response: We appreciate commenters' feedback and acknowledge that one of the broad goals of the ACA is to increase access to health insurance coverage. We also acknowledge commenters' concerns regarding the potential impacts of the changes proposed in this rule on the ability of some DACA recipients to access health care services. We note that, because DACA recipients generally have employment authorization, they may have the option to access health insurance coverage through their employer. Additionally, we note that DACA recipients remain eligible for limited Medicaid coverage for the treatment of an emergency medical condition, if they meet all other eligibility requirements for Medicaid in the state (for example, income and state residency), except for U.S. citizenship or satisfactory immigration status.

We reiterate that the ACA's broad goal of increasing access to health insurance exists within a specific statutory scheme that requires that individuals be lawfully present in order to access coverage. HHS is obligated to promulgate regulations that best effectuate the statutory guardrails of the ACA, and as previously stated, we believe that the definition of “lawfully present” finalized in this rule best achieves Congress's intent.

Comment: Commenters noted that decreased access to health insurance coverage and preventive care would increase the burdens on hospitals, Federally Qualified Health Centers (FQHCs), State and community programs, safety-net providers, and emergency departments which would provide more urgent and emergent care to uninsured individuals as a result. Commenters stated that visits to hospitals and emergency rooms are more costly than preventive care visits, and commenters argued that an increase in emergency services would increase the overall cost of health care.\51\ Some commenters stated that an increase in emergency room visits would put undue strain on hospitals and emergency room providers who already face overcrowding. Other commenters noted that FQHCs see patients regardless of insurance status and that the removal of DACA recipients from Exchange eligibility would require FQHCs to make challenging decisions about the services they can provide.

\51\ American Hospital Association. Report: The Importance of Health Coverage. https://www.aha.org/guidesreports/report- importance-health- coverage#:~:text=Impact%20of%20Coverage&text=Studies%20confirm%20that %20coverage%20improves,on%20individuals%2C%20families%20and%20communi ties.

Commenters cited that, on average, uninsured individuals generate over $1,000 in uncompensated costs annually, which the rest of the health care system absorbs.\52\ In addition to the potential burdens on providers, commenters expressed concerns that DACA recipients would face undue financial hardship when they finally seek care. Commenters noted DACA recipients' fear of medical debt, which contributes to skipping needed preventive medical and dental care and difficulty finding resources to improve their mental health.\53\

\52\ Kaiser Family Foundation. Key Facts About the Uninsured Population (2023). https://www.kff.org/uninsured/issue-brief/key-facts-about-the-uninsured-population/.

\53\ Center for American Progress. The Demographic and Economic Impacts of DACA Recipients: Fall 2021 Edition. (2022). https://www.americanprogress.org/article/the-demographic-and-economic-impacts-of-daca-recipients-fall-2021-edition/.

Comments from providers expressed concerns about the possibility that DACA recipients may lose coverage in the middle of a treatment program or may return to the emergency room or other acute care settings after their health has deteriorated. These providers commented that these emergency services are much more expensive and less effective than if treatment had continued in the patients' primary care setting. One commenter, who is a provider, noted that epilepsy has a higher cost associated with emergency care rather than preventive care and has higher incidence in immigrant populations. Additionally, some commenters noted that DACA recipients face unique stressors that impact their acute mental health and can lead to increased vulnerability to chronic medical conditions.\54\ These stressors include trauma from violence, persecution, and poverty in addition to general fear and anxiety compounded by the stress of the unknown future of the DACA program and immigration status implications.

\54\ Henderson, S.W., & Baily, C.D. Parental deportation, families, and mental health. Journal of the American Academy of Child & Adolescent Psychiatry (2013). 52(5), 451-453.

Many commenters stated that an increase in the cost of health care, due to increased emergency room use, would mean that American taxpayers would pay even higher amounts to insurance companies to defray these increased costs. Commenters also stated that removing eligibility of DACA recipients would not deliver the economic relief needed for American families and may instead increase the financial burden on individual, American taxpayers. Other commenters noted that HHS did not provide evidence of how this proposed change would generate cost savings.

Response: We acknowledge commenters' feedback regarding the potential impact of uninsurance on DACA recipients, and that some DACA recipients may become uninsured as a result of the changes proposed in this rule. Although we are unable to quantify potential costs related to shifting care to

emergency settings, uncompensated care, or changes to the risk pool as a result of this provision, we expect that this proposal will result in savings in the form of reduced PTC expenditures. We refer to this rule's Regulatory Impact Assessment for further information regarding these estimates. Additionally, we believe that the concerns expressed here, such as emergency room strain or changes in coverage during a course of treatment, represent common, existing issues that healthcare providers are generally well-equipped to address. Finally, we note that these concerns do not overcome Congress's direction in the ACA that only “lawfully present” individuals are eligible for Exchanges coverage.

Comment: Many commenters cited concerns about how removing access to Exchange coverage for DACA recipients would impact the 300,000 U.S. citizen children who have at least one parent that is a DACA recipient.\55\ These commenters noted that insurance coverage for parents is also tied to the health of their children, where children are more likely to access health insurance and health care services when their parents are insured, a phenomenon known as the “welcome mat” effect.\56\ They noted that barriers to health insurance access for parents often increases the uninsured rate of their children who are U.S. born and U.S. citizens, but that children who have access to preventive care often have better health outcomes as adults. Commenters also noted that access to health insurance is linked to the financial stability of the family as insured parents are better equipped to support their families.\57\

\55\ Center for American Progress. The Demographic and Economic Impacts of DACA Recipients: Fall 2021 Edition. (2022). https://www.americanprogress.org/article/the-demographic-and-economic-impacts-of-daca-recipients-fall-2021-edition/.

\56\ Hudson, Julie L., and Asako S. Moriya. “Medicaid Expansion for Adults Had Measurable “Welcome Mat” Effects on Their Children.” Health Affairs, vol. 36, no. 9, Sept. 2017, pp. 1643- 1651, https://doi.org/10.1377/hlthaff.2017.0347.

\57\ Wright Burak, Elisabeth. “Parents' and Caregivers' Health Insurance Supports Children's Healthy Development.” Society for Research in Child Development, June 2019, https://www.srcd.org/research/parents-and-caregivers-health-insurance-supports-childrens-healthy-development.

Response: While we acknowledge these commenters' concerns, we note that the U.S. citizen children of DACA recipients remain eligible for QHPs through an Exchange, for PTC, APTC, and CSRs, as well as for Medicaid, CHIP, and BHP in States that elect to operate a BHP, if they meet all eligibility requirements in the state. This rule's provisions do not impact their eligibility.

Comment: Many commenters stressed the important role that DACA recipients hold in our communities and workforce, noting that during the COVID-19 pandemic nearly 203,000 DACA recipients worked at the frontlines in health care, education, and food distribution.\58\ Commenters also noted that DACA recipients contribute billions of dollars in Federal and State taxes each year, paying into the ACA Exchanges that they would not be eligible for if this rule was finalized as proposed. Additionally, these commenters noted that if DACA recipients were not eligible for health insurance through the ACA, there could be a negative impact on the economy as sickness or the need for emergency care rather than preventive care would impact these frontline workers and frontline communities. Commenters also noted that studies \59\ show DACA recipients may avoid seeking medical attention out of fear that doing so would impact their immigration status, and these commenters express concern that this will increase for DACA recipients when they are no longer eligible for coverage under the ACA.

\58\ Nicole Svajlenka, A Demographic Profile of DACA Recipients on the Frontlines of the Coronavirus Response, Ctr. for Am. Progress (Apr. 6, 2020), https://www.americanprogress.org/article/demographic-profile-daca-recipients-frontlines-coronavirus-response/.

\59\ National Immigration Law Center (2024, May 29). DACA Recipients' Access to Health Care: 2024 Report. Retrieved April 8, 2025, from https://www.nilc.org/wpcontent/uploads/2024/05/NILC_DACA-Report_2024_06-27-24.pdf.

Response: We disagree that these factors constitute a compelling reason to maintain a regulatory definition of “lawful presence” that we do not believe is consistent with the statute.

Comment: Many commenters stated that removing the eligibility of DACA recipients from Exchange coverage would negatively impact the risk pool. Commenters noted that DACA recipients are generally younger and healthier, which would benefit the risk pool, citing studies of likely eligible DACA recipient self-reporting excellent or very good health.\60\ Commenters noted that the removal of DACA recipients from the Exchange risk pool would increase the overall cost of the health care system, including the cost of premiums and copays for other consumers. One State Exchange also noted that the elimination of DACA recipients from their Exchange would erode their merged market and would result in premium increases for all market segments and ultimately increasing costs for families and individuals in their State. One commenter suggested that DACA recipients who are currently enrolled in Exchange coverage should be “grandfathered” in to reduce the impact of individuals' exclusion on the risk pool. The same commenter noted that State Exchanges should be given the option to allow DACA recipients in their Exchanges if doing so would benefit their population.

\60\ Key Facts on Deferred Action for Childhood Arrivals (DACA) (2025), https://www.kff.org/racial-equity-and-health-policy/fact-sheet/key-facts-on-deferred-action-for-childhood-arrivals-daca/.

Response: While we are unable to quantify the potential impacts of this policy on Exchange risk pools, we note that HHS is obligated to promulgate regulations that best effectuate the guardrails outlined in the ACA. HHS believes the definition of “lawfully present” finalized in this rule best achieves Congress' intent. Accordingly, granting State Exchanges the flexibility to cover DACA recipients if they choose is not appropriate. Implementation Concerns and Effective Date

We received several comments that highlighted concerns with the time within which all Exchanges would be required to exclude DACA recipients from Exchange (or BHP) participation and the associated operational concerns. The following is a summary of the comments we received and our responses.

Comment: Many commenters expressed significant concerns that the proposed modification to the definition of “lawfully present” would be applicable upon the effective date of the rule, as a mid-year eligibility change would negatively impact consumers. Many commenters noted that due to rapid policy shifts, additional time is necessary to identify and communicate with impacted consumers. Several State Exchanges that do not use the Federal platform underscored the need for additional lead time to implement changes, including information technology (IT) system changes, modifications to business operations, and retraining staff. Commenters noted that implementing changes without additional lead time impacts system accuracy, market stability, and overall member experience. Commenters also highlighted that two State Exchanges indicated that IT system changes require lead time to ensure alignment with other State agency partners to coordinate IT release schedules. One State Exchange indicated that they utilize an integrated eligibility system which requires additional time to

coordinate a planned technical release and testing. Several commenters strongly urged HHS to delay the effective date of this provision until January 1, 2026. One commenter also noted that a mid-year eligibility change would affect assumptions that carriers make about their enrollees in a plan year.

Several commenters noted that an effective date earlier than January 1, 2026, would impact rate filing submissions by issuers. One issuer noted that the proposed effective date does not provide sufficient time for State Exchanges to accurately identify individuals, share necessary documentation with issuers, and send termination notices to consumers following termination. The same commenter noted that insufficient time may result in delayed or erroneous terminations, which may result in consumer harm and increased administrative burden for Exchanges and issuers. Two issuer commenters noted that issuers do not have information on the immigration status of enrollees and requested additional clarification on how Exchanges will terminate DACA recipients, including if the proposed change impacts current or future enrollees. One commenter suggested that HHS consider grandfathering in current DACA recipients for PY 2026 to promote continuity of care. Another commenter requested flexibility in the timeline to terminate and notify consumers for any current DACA recipient enrollees without any penalty to the consumer.

Response: We acknowledge commenters' concerns about operational challenges regarding the implementation of this provision, as well as commenters' suggestions on alternative approaches. While we understand that there are existing technical and operational constraints that impact interested parties, including issuer concerns with rate filing submissions for PY 2026, we reiterate that without the proposed modification to the definition of “lawfully present,” the agency would fail to align with the better interpretation of the term “lawfully present” and incorrectly expend taxpayer dollars. This provision will continue to be applicable on the effective date of this final rule and will apply to current and future enrollees who are DACA recipients for enrollment in a QHP offered on an Exchange and eligibility for PTC, APTC, CSRs, and enrollment in a BHP in States that elect to operate a BHP. We acknowledge concerns regarding technical and operational constraints that may hinder some State Exchanges that are not on the Federal platform from implementing this provision. We intend to provide technical assistance and educational materials targeted at State Exchanges not on the Federal platform and state agencies that operate BHPs in states that elect to operate BHPs (BHP agencies) to assist in successful implementation of this rule. We intend to begin providing such technical assistance after the publication date of this rule and in advance of its effective date. Importantly, we note that Exchanges and BHP agencies should continue to submit requests to verify an applicant's immigration status through a data match with DHS via the Hub using DHS' Systematic Alien Verification for Entitlements (SAVE) system, which allows Exchanges and BHP agencies to correctly identify enrollees who are DACA recipients. We anticipate that Exchanges and BHP agencies will be responsible for terminating coverage for any DACA recipients currently enrolled in coverage upon the effective date of the rule. Pursuant to 45 CFR 156.270(b)(1), we note that issuers must send termination notices to enrollees for all termination events, even when a termination is initiated by an Exchange. We also acknowledge the possibility of erroneous terminations as Exchanges implement this provision. If Exchanges inadvertently and erroneously disenroll eligible individuals during the course of implementing this provision, Exchanges have broad authority to take steps to reinstate coverage under 45 CFR 155.430(e)(3). Out of Scope

Comment: Some commenters noted that DACA recipients pay taxes and contribute positively to U.S. society and requested that the Federal government create pathways for DACA recipients to obtain U.S. citizenship.

Response: We note that this rule does not address the DACA policy itself, only the eligibility of DACA recipients for coverage under an Exchange (and related eligibility for insurance affordability programs) or BHP in States that elect to operate a BHP. While these comments are related to the DACA policy broadly, they do not seek to support or change specific provisions set forth in the proposed rule, and no response is required.

Comment: A few commenters stated that they opposed declaring DACA recipients illegal and excluding DACA recipients from receiving Medicare coverage.

Response: This rule does not address the DACA policy itself, and DACA recipients are not eligible for Medicare under current law. While these comments are related to the DACA policy broadly, these topics are out of scope for this final rule, and no response is required.

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 as proposed to modify the definition of “lawfully present” at Sec. 155.20 used for the purpose of determining whether a consumer is eligible to enroll in a QHP through an Exchange, to be eligible for PTC, APTC, CSRs, and to be eligible to enroll in a BHP in States that elect to operate a BHP, which excludes DACA recipients from Exchange (and from eligibility for insurance affordability programs) and BHP coverage. As previously discussed, this policy will be applicable immediately upon the effective date of this rule. 2. Standards for Termination of an Agent's, Broker's, or Web-Broker's Exchange Agreements for Cause (Sec. 155.220(g)(2))

As discussed in the 2025 Marketplace Integrity and Affordability proposed rule and this final rule, there have been dramatic levels of improper enrollments involving agents, brokers, and web-brokers. Examining agent, broker, and web-broker practices and taking enforcement action against noncompliant agents, brokers, and web- brokers is critical to program integrity and safeguarding consumer personally identifiable information (PII), and HHS is committed to holding noncompliant agents, brokers, and web-brokers accountable to protect Exchanges and consumers. In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12955 and 12956), we proposed to amend Sec. 155.220(g)(2) to 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.\61\

\61\ Consistent with Sec. 155.220(d), there are currently three Exchange agreements with CMS that extend to agents, brokers, and web-brokers assisting consumers in the FFEs and SBE-FPs: (1) the Agent Broker General Agreement for Individual Market FFEs and SBE- FPs, (2) the Agent Broker Privacy and Security Agreement for Individual Market FFEs and SBE-FPs, and (3) the Agent Broker SHOP Privacy and Security Agreement. Web-brokers assisting consumers in the FFEs and SBE-FPs are required to sign the Web-broker General Agreement, and web-brokers who are primary Enhanced Direct Enrollment (EDE) entities that assist consumers in the FFEs and SBE- FPs are required to sign the EDE Business Agreement and the Interconnection Security Agreement.

Section 1312(e) of the ACA provides that the Secretary shall establish procedures under which a State may allow agents or brokers to enroll individuals and employers in any QHPs in the individual or small group market as soon as the plan is offered through an Exchange in the State; and to assist individuals in applying for PTC and CSRs for plans sold through an Exchange. Regulations at 45 CFR 155.220 implement this statutory requirement.\62\ Among other things, Sec. 155.220 includes termination for cause standards in paragraphs (g)(1) through (3), which generally provide that if, in HHS' determination, a specific finding of noncompliance or pattern of noncompliance is sufficiently severe, HHS may terminate an agent's, broker's, or web-broker's agreements with the FFE for cause. Consistent with Sec. 155.220(l), the termination for cause standards apply to agents, brokers, and web-brokers participating in SBE-FPs. Paragraph (h) sets forth procedures for subsequent review (that is, “reconsideration”) of the termination action.

\62\ See also Sec. Sec. 155.221 and 155.222.

We proposed to improve transparency in the process for holding agents, brokers, and web-brokers accountable for noncompliance with applicable law, regulatory requirements, and the terms and condition of their Exchange agreements. Specifically, we proposed to add text to Sec. 155.220(g)(2) stating that HHS would apply a “preponderance of the evidence” standard of proof with respect to issues of fact to assess potential noncompliance under Sec. 155.220(g)(1) and make a determination there was a specific finding or pattern of noncompliance that is sufficiently severe. We proposed at Sec. 155.20 to capture a new definition, similar to definitions adopted by other HHS agencies and offices,\63\ which would state that “preponderance of the evidence” means proof by evidence that, compared with evidence opposing it, leads to the conclusion that the fact at issue is more likely true than not.\64\

\63\ See 42 CFR 93.228 (preponderance of the evidence means “proof by evidence that, compared with evidence opposing it, leads to the conclusion that the fact at issue is more likely true than not”); 45 CFR 412.001 (“Preponderance of the evidence means proof, after assessing the totality of available information, that leads to the conclusion that the fact at issue is more probably true than not.”); and 45 CFR 1641.2 (“Preponderance of the evidence means proof by information that, compared with that opposing it, leads to the conclusion that the fact at issue is more probably true than not.”).

\64\ See also INS v. Cardoza-Fonseca, 480 U.S. 421 (1987) (defining “more likely than not” as a greater than 50 percent probability of something occurring).

In proposing the preponderance of the evidence standard, we considered the severity of the potential consequences involved in our termination for cause framework in Sec. 155.220(g)(1) through (3),\65\ and how evidentiary standards have traditionally been used in court cases. Federal administrative and civil cases generally use a preponderance of the evidence standard, while criminal cases, in order to sustain a conviction, demand the highest standard, guilt “beyond a reasonable doubt,” under which evidence must be so strong that there is no reasonable doubt about a defendant's guilt.\66\ Between those two evidentiary standards are the “clear and convincing evidence” standard, under which a trier of fact must have an abiding conviction that the truth of the factual contention is “highly probable,” \67\ and the “substantial evidence” standard, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.\68\

\65\ HHS acknowledged in the proposed rule that there are additional enforcement actions under 45 CFR 155.220(g) that are not addressed by this proposal (90 FR 12955 through 12956). We noted in the proposed rule that we are considering future rulemaking to implement additional regulation changes to the frameworks for those actions that may further strengthen our oversight and the integrity of the program.

\66\ See Maurice, R.; updated by Barrett, S. (2024, Oct. 31). Legal Standards of Proof. Nolo. https://www.nolo.com/legal-encyclopedia/legal-standards-proof.html (from lowest to highest standard: preponderance of the evidence, substantial evidence, clear and convincing evidence, and beyond a reasonable doubt). See Maurice, R., & Barrett, S. (2024, October 31). Legal standards of proof: You've probably heard that prosecutors have to prove criminal charges “beyond a reasonable doubt.” But do you know about the other legal standards of proof? NOLO. https://www.nolo.com/legal-encyclopedia/legal-standards-proof.html.

\67\ Ibid. (citing Colorado v. New Mexico, 467 U.S. 310 at 316 (1984)).

\68\ See Reed v. Sec. of Health and Human Serv., 804 F. Supp. 914 at 918 (E.D. Mich. 1992).

As stated in the proposed rule (90 FR 12956), HHS is of the view that the preponderance of the evidence standard is appropriate in our termination for cause framework under Sec. 155.220(g)(1) through (3) because it is the standard used in most Federal civil cases and administrative proceedings. However, we stated in the proposed rule that we also appreciate that the termination of an agent's, broker's, or web-broker's Exchange agreements may affect their State licensure, given that we inform State insurance oversight agencies of these enforcement actions.\69\ In addition, after the applicable period in Sec. 155.220(g)(3) elapses and the Exchange agreement(s) under Sec. 155.220(d) are terminated, the agent, broker, or web-broker will no longer be permitted to assist with or facilitate enrollment of a qualified individual in coverage in a manner that constitutes coverage through an FFE or SBE-FP, or be permitted to assist individuals in applying for APTC and CSRs for QHPs offered through an FFE or SBE- FP.\70\ Once an agent's, broker's, or web-broker's Exchange agreements are terminated, they are unable to assist with applying for or enrolling in QHPs offered through the Exchange in any of the more than 30 States served by Exchanges on the Federal platform. Given these potential consequences, we sought comment not only on the proposal to use a “preponderance of evidence” standard of proof in assessing potential noncompliance under Sec. 155.220(g)(1), but also whether a different standard would be more appropriate to make a determination there was a specific finding or pattern of noncompliance by agents, brokers, and web-brokers that is sufficiently severe. We also sought comment on our proposed definition for this new “preponderance of evidence” standard.

\69\ See Sec. 155.220(g)(6).

\70\ See Sec. 155.220(g)(4) and (l).

In addition, we stated in the proposed rule (90 FR 12956) that we intend to provide greater specificity and precision in the Exchange agreements for PY 2026 and beyond regarding impermissible conduct by agents, brokers, and web-brokers, and to address the requirements for ensuring agents, brokers, and web-brokers have obtained and documented receipt of consumer consent to collect their personally identifiable information and help them apply for and/or enroll in QHP coverage offered through the applicable FFE or SBE-FP. These changes will provide additional, clear guidance to agents, brokers, and web-brokers, as well as additional information on how HHS will address compliance failures. In the proposed rule, we solicited comment on what should be addressed in the Exchange agreements for PY 2026 and beyond, States' oversight practices, guidance for obtaining and documenting consumer consent, how to protect consumers from improper enrollments, and oversight enhancement for agents, brokers, and web-brokers.

After consideration of comments and for the reasons outlined in the proposed rule and in our responses to comments later in this section of this final rule, we are finalizing this provision as proposed. These provisions are important consumer protections that address longstanding concerns with enforcement against noncompliant agents, brokers, and web-brokers. As these concerns exist regardless of the subsidy levels set by Congress, we are finalizing these provisions to be

applicable as of the effective date of this rule and beyond. We summarize and respond to public comments received on the use of a “preponderance of the evidence” standard when taking enforcement actions for agent, broker, and web-broker noncompliance under Sec. 155.220(g)(1) through (3) later in this section, as well as on our proposed definition of “preponderance of the evidence” in Sec. 155.20.

Comment: Numerous commenters stated that adopting the “preponderance of the evidence” standard will create a fair, uniform, and universal standard for assessing noncompliance by agents, brokers, and web-brokers assisting consumers with enrollment through the FFEs and SBE-FPs, while adding greater transparency to the enforcement process under Sec. 155.220(g)(1) through (3).

Response: We appreciate commenters' support and agree that holding all compliant agents, brokers, and web-brokers to this same evidentiary standard supports fairness and uniformity in agent, broker, and web- broker enforcement actions under Sec. 155.220(g)(1) through (3). We also agree that, as we explained in the proposed rule (90 FR 12944, 12955), adoption of the “preponderance of the evidence” standard will improve transparency in the process for holding agents, brokers, and web-brokers accountable for noncompliance with applicable law, regulatory requirements, and the terms and conditions of their Exchange agreements.

Comment: We received several comments expressing that adopting the “preponderance of the evidence” standard will enhance agent, broker, and web-broker accountability and build on past protections added in previous years, leading, ultimately, to greater consumer protection.

Response: We agree with the commenters that utilizing the “preponderance of the evidence” standard in agent, broker, and web- broker enforcement actions under Sec. 155.220(g)(1) through (3) enhances agent, broker, and web-broker accountability and builds on protections added in previous years, including our agent, broker, and web-broker policies finalized in the 2026 Payment Notice (90 FR 4431 through 4432): to hold lead agents at insurance agencies responsible for agency-level misconduct and noncompliance and expand our authority to suspend an agent or broker's ability to transact information with the FFEs and SBE-FPs if we discover circumstances that pose an unacceptable risk to the accuracy of FFE or SBE-FP eligibility determinations, operations, applicants, or enrollees under Sec. 155.220(k)(3). In particular, using this evidentiary standard will ensure that when an agent, broker, or web-broker is subject to enforcement action under Sec. 155.220(g)(3)(i), CMS will generally terminate their Exchange agreements unless the evidence they submit to resolve the matter to CMS' satisfaction consists of proof that, compared with the evidence supporting CMS' determination of a specific finding or pattern of noncompliance that is sufficiently severe, leads to the conclusion that the agent, broker, or web-broker was more likely than not compliant with applicable law, regulatory requirements, and the terms and condition of their Exchange agreements. This will help ensure that agents, brokers, and web-brokers are held accountable for noncompliance with applicable law, regulatory requirements, and the terms and condition of their Exchange agreements and will help ultimately prevent agents, brokers, and web-brokers who are noncompliant from assisting consumers with enrollment in coverage through the FFEs and SBE-FPs.

Comment: We received several comments expressing that adopting the “preponderance of the evidence” standard is appropriate because it is the standard used in civil cases at the Federal level.

Response: We agree with commenters and appreciate their support. As we explained in the proposed rule (90 FR 12942) and previously in this final rule, we have determined the preponderance of the evidence standard is appropriate for use in our termination for cause standards framework under Sec. 155.220(g)(1) through (3) because it is the standard used in most Federal civil cases and administrative proceedings.

Comment: We received one comment in favor of the “preponderance of the evidence” standard stating that compliant agents, brokers, and web-brokers will benefit from our use of the standard and asking HHS to also pair the new standard with continuous monitoring tools to further target noncompliant agents, brokers, and web-brokers.

Response: We agree with the commenter that compliant agents, brokers, and web-brokers will benefit from the “preponderance of the evidence” standard, which clarifies the termination for cause process for agents, brokers, and web-brokers under Sec. 155.220(g)(1) through (3). We will continue to assess the need for additional agent, broker, and web-broker continuous monitoring tools, particularly after we develop experience implementing our agent, broker, and web-broker policies finalized in the 2026 Payment Notice: to hold lead agents at insurance agencies responsible for agency-level misconduct and noncompliance and expand our authority to suspend an agent or broker's ability to transact information with the FFEs and SBE-FPs if we discover circumstances that pose an unacceptable risk to the accuracy of FFE or SBE-FP eligibility determinations, operations, applicants, or enrollees under Sec. 155.220(k)(3). We continue to believe that all of these policies will enhance agent, broker, and web-broker accountability and public trust in the FFEs and SBE-FPs and reduce the risk of misconduct that puts consumers' healthcare coverage at risk.

Comment: We received several comments stating that the “preponderance of the evidence” standard is too demanding of an evidentiary standard to use to assess potential noncompliance by agents, brokers and web-brokers. In particular, commenters asserted that adopting the “preponderance of the evidence” standard would make it too easy for CMS to terminate agent, broker, and web-broker Exchange agreements, punish agents, brokers, and web-brokers for “minimal” errors, eliminate agent, broker, and web brokers' due process rights, and deprive agents, brokers, and web-brokers of their livelihoods.

Response: We disagree with comments asserting that the proposed standard is inappropriate for use in our termination for cause framework under Sec. 155.220(g)(1) through (3). As we explained previously in this final rule and in the proposed rule, in proposing the preponderance of the evidence standard, we considered how evidentiary standards have traditionally been used in court cases and the severity of the potential consequences involved in our termination for cause standards framework in Sec. 155.220(g)(1) through (3), including those consequences' impact on the ability of agents, brokers, and web-brokers to assist consumers with enrollment in coverage through the FFEs and SBE-FPs. Federal administrative and civil cases generally use a preponderance of the evidence standard, while criminal cases, in order to sustain a conviction, demand the highest standard, guilt “beyond a reasonable doubt,” under which evidence must be so strong that there is no reasonable doubt about a defendant's guilt. Between those two evidentiary standards are the “clear and convincing evidence” standard, under which a trier of fact must have an abiding conviction that the truth of the factual contention is “highly probable,”

and the “substantial evidence” standard, which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In the proposed rule, we explained--and we continue to believe--that the preponderance of the evidence standard is appropriate in our termination for cause framework under Sec. 155.220(g)(1)-(3) because it is the standard used in most Federal civil cases and administrative proceedings.

In addition, using the preponderance of the evidence standard will ensure that when an agent, broker, or web-broker is subject to enforcement action under Sec. 155.220(g)(3)(i), CMS will generally terminate their Exchange agreements unless the evidence they submit to resolve the matter to CMS' satisfaction consists of proof that, compared with the evidence supporting CMS' determination of a specific finding or pattern of noncompliance that is sufficiently severe, leads to the conclusion that the agent, broker, or web-broker was more likely than not compliant with applicable law, regulatory requirements, and the terms and condition of their Exchange agreements. This will help ensure that agents, brokers, and web-brokers are held accountable for noncompliance with applicable law, regulatory requirements, and the terms and condition of their Exchange agreements, prevent agents, brokers, and web-brokers who are noncompliant from assisting consumers with enrollment in coverage through the FFEs and SBE-FPs, and support consistent decision-making in our enforcement actions under Sec. 155.220(g)(1) through (3).

With respect to commenters' points that this evidentiary standard will punish agents, brokers, and web-brokers for “minimal” errors and deprive them of their livelihoods, we remind commenters that CMS only takes enforcement action under Sec. 155.220(g)(3)(i) when, in its determination, an agent, broker, or web-broker's conduct reflects a specific finding of noncompliance or pattern of noncompliance that is sufficiently severe, and an agent, broker, or web-broker may be determined noncompliant only if CMS finds that they violated applicable law, regulatory requirements, or the terms and condition of their Exchange agreements.\71\

\71\ See Sec. 155.220(g)(1) and (2).

As to commenters' claim that this evidentiary standard eliminates agents, brokers, and web-brokers' due process rights, we remind commenters that this policy only finalizes an evidentiary standard used in enforcement actions under Sec. 155.220(g)(1) through (3). When an agent, broker, or web-broker is subject to enforcement action under Sec. 155.220(g)(3)(i), CMS will notify the agent, broker, or web- broker of the specific finding of noncompliance or pattern of noncompliance made under paragraph (g)(1) of this section, and the agent, broker, or web-broker has 30 days from the date of the notice to resolve the matter to CMS' satisfaction. If the agent, broker, or web- broker does not submit rebuttal evidence resolving the matter to CMS' satisfaction and CMS terminates their Exchange agreements under Sec. 155.220(g)(3)(i), the agent, broker, or web-broker has the right to submit a request for reconsideration to the CMS Administrator within 30 calendar days of the written notice from CMS.\72\ The CMS Administrator will provide the agent, broker, or web-broker with a written notice of the reconsideration decision within 60 calendar days of the date the CMS Administrator receives the request for reconsideration, and this decision will constitute the agency's final determination.\73\ Use of the “preponderance of the evidence” standard to determine whether an agent, broker, or web-broker violated applicable law, regulatory requirements, or the terms and condition of their Exchange Agreement(s) does not alter this existing rebuttal and appeal framework.\74\

\72\ See Sec. 155.220(h)(1) and (2).

\73\ See Sec. 155.220(h)(3).

\74\ See Sec. 155.220(g)(2).

Comment: We received several comments stating that the preponderance of the evidence standard is too lenient of an evidentiary standard for CMS to use in assessing potential noncompliance by agents, brokers, and web-brokers under Sec. 155.220(g)(1) through (3). Some commenters claimed that lowering evidentiary standards helps agents, brokers, and web-brokers exploit consumers by reducing the number of noncompliant agents, brokers, and web-brokers whose Exchange Agreements are suspended and/or terminated. Further, some commenters asserted that this standard weakens accountability and makes it more difficult to prevent noncompliant agents, brokers, and web-brokers from assisting consumers with enrollment through the FFEs and SBE-FPs. Some commenters suggested that HHS should use a “beyond a reasonable doubt” or other stricter standard. One commenter asserted that the proposed evidentiary standard lacks strength because it relies on what a “prudent” person would do.

Response: We disagree with comments asserting that the proposed standard is too lenient, risks endangering consumers, or weakens agent, broker, and web-broker accountability. We refer commenters to previous responses to comments in this section of this final rule for detailed discussions on these issues, including our explanation of why we continue to believe the “preponderance of the evidence” standard is appropriate for us to use to assess potential noncompliance by agents, brokers, and web-brokers under Sec. 155.220(g)(1) through (3).

Comment: A few commenters stated applying a “preponderance of the evidence” standard will increase agent, broker, and web-broker scrutiny, leading to a reduction in the number of agents, brokers, and web-brokers who will be willing to assist consumers with enrollment through the SBE-FPs and FFEs in the future.

Response: We believe that adoption of the “preponderance of the evidence” standard is unlikely to increase agent, broker, and web- broker scrutiny in a manner that will reduce the number of agents, brokers, and web-brokers willing to assist consumers with enrollment through the SBE-FPs and FFEs in the future. As we explained previously in this final rule, in proposing the preponderance of the evidence standard, we considered how evidentiary standards have traditionally been used in court cases and the severity of the potential consequences involved in our termination for cause standards framework in Sec. 155.220(g)(1) through (3), including those consequences' impact on the ability of agents, brokers, and web-brokers to assist consumers with enrollment in coverage through the FFEs and SBE-FPs. We considered but declined to adopt several evidentiary standards that demanded that agents, brokers, and web-brokers subject to enforcement action under Sec. 155.220(g)(1) through (3) meet a higher evidentiary bar, and we decided that the preponderance of the evidence standard is appropriate in our termination for cause framework under Sec. 155.220(g)(1) through (3) because it is the standard used in most Federal civil cases and administrative proceedings.

In addition, as we explained previously in this final rule, our adoption of the “preponderance of the evidence” standard will enhance transparency for agents, brokers, and web-brokers and enhance public trust in the FFEs and SBE-FPs, which in turn may spur consumers to enroll in coverage through the FFEs and SBE-FPs with the assistance of agents, brokers,

and web-brokers. We believe that this increased transparency for agents, brokers, and web-brokers and improved public trust are likely to encourage agents, brokers, and web-brokers to continue assisting consumers with enrollment through the FFEs and SBE-FPs.

Comments: Some commenters suggested that applying a “preponderance of the evidence” standard will increase the cost of healthcare, limit availability for vulnerable populations, and increase discrimination against consumers. Commenters also suggested that States should have sole jurisdiction to agent, broker, and web-broker oversight.

Response: We disagree with comments asserting that applying a preponderance of the evidence standard in the context of enforcement actions under Sec. 155.220(g)(1) through (3) will increase the cost of healthcare, limit availability for vulnerable consumers, or increase discrimination. The proposed “preponderance of the evidence” standard will have no direct effect on the pricing or availability of health insurance available to consumers in FFE and SBE-FP States.\75\ If commenters intended to suggest that use of the “preponderance of the evidence” standard will deter agents, brokers, and web-brokers from assisting consumers with enrollment through the FFEs and SBE-FPs and thereby reduce healthcare accessibility and affordability and increase discrimination, we refer commenters to previous discussion in this section of this final rule explaining our belief that adopting the “preponderance of the evidence” standard in enforcement actions under Sec. 155.220(g)(1) through (3) is likely to encourage agents, brokers, and web-brokers to continue assisting consumers with enrollment through the FFEs and SBE-FPs.

\75\ See Sec. 156.255(b).

We remind commenters that section 1312(e) of the ACA states the Secretary shall establish procedures under which a State may allow agents or brokers (1) to enroll individuals and employers in any QHPs in the individual or small group market as soon as the plan is offered through an Exchange in the State; and (2) to assist individuals in applying for premium tax credits and cost-sharing reductions for plans sold through an Exchange. Section 1321(a)(1) of the ACA authorizes the Secretary to promulgate regulations for meeting the requirements of Title I of the ACA (which includes section 1312 of the ACA) with respect to the establishment and operation of Exchanges, the offering of QHPs through such Exchanges, and such other requirements as the Secretary determines appropriate. Finally, Section 1313(a)(5)(A) of the ACA directs the Secretary to provide for the efficient and non- discriminatory administration of Exchange activities and implement any measure or procedure the Secretary determines is appropriate to reduce fraud and abuse in the administration of Title I of the ACA.

After consideration of comments received, we are finalizing as proposed our proposal to permanently revise Sec. 155.220(g)(2) 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) through (3), and our proposal to add a definition of “preponderance of the evidence” to Sec. 155.20. 3. Annual Eligibility Redetermination (Sec. 155.335)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12969 through 12973), we proposed an amendment to the annual eligibility redetermination regulation by adding Sec. 155.335(a)(3) and (n) to prevent enrollees from being automatically re-enrolled in coverage with APTC that fully covers their premium without taking an action to confirm their eligibility information. Specifically, we proposed under our authority in section 1411(f)(1)(B) of the ACA, which directs the Secretary to establish procedures by which the Secretary redetermines eligibility on a periodic basis, to require at Sec. 155.335(a)(3) and (n) that when an enrollee does not submit an application for an updated eligibility determination on or before the last day to select a plan for January 1 coverage, in accordance with the effective dates specified in Sec. 155.410(f) and 155.420(b), as applicable, and the enrollee's portion of the premium for the entire policy would be zero dollar after application of APTC through the Exchange's annual redetermination process (hereafter “fully-subsidized enrollees” for purposes of this section), all Exchanges 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 or update the eligibility determination. Consistent with Sec. Sec. 155.310(c) and (f), enrollees automatically re-enrolled with a $5 monthly premium after APTC under this policy would be able to submit an application at any point to confirm eligibility for APTC that covers the entire monthly 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 proposed at new Sec. 155.335(n)(1) that the FFEs and the SBE- FPs must implement this change starting with annual redeterminations for benefit year 2026. We proposed at new Sec. 155.335(n)(2) that the State Exchanges must implement it starting with annual redeterminations for benefit year 2027. We are finalizing this proposal with modifications.

In the proposed rule (90 FR 12969), we stated that we recognize that $5 may not provide a meaningful enough incentive for individuals to re-confirm their income and plan and, as such, sought comment on other options available to us to ensure program integrity in re- enrollments. As discussed in the proposed rule and this preamble, we stated that we are increasingly concerned about the level of improper enrollments in QHPs and believe that automatic re-enrollment of consumers into zero premium plans poses a significant risk to continuing high levels of improper payments of the APTC. We sought comment on the appropriate dollar amount individuals could be required to pay under the proposed policy such that they would be meaningfully incentivized to re-confirm their income and desired plan after being automatically re-enrolled. We also sought comment on whether any APTC payments should be made on behalf of individuals with fully-subsidized plans who have been automatically re-enrolled without confirming their plan and income consistent with the limitation on annual redeterminations when an Exchange does not have authorization to obtain tax data as part of the redetermination process. Additionally, we sought comment on if the program integrity concerns with automatic re- enrollments outweigh any potential benefit of allowing Exchanges to automatically re-enroll consumers without the consumer taking any action to affirmatively consent to continuing coverage for the following plan year.

Previously in the proposed rule and this final rule, we discussed the dramatic increase in the number of improper enrollments in QHPs with APTC through the FFEs and SBE-FPs.

Among the most concerning problems are situations where an agent, broker, or web-broker improperly enrolls a consumer in a fully- subsidized QHP without their knowledge. Because these enrollees do not receive a monthly premium bill requiring action on their part, they may not be aware they are enrolled. This lack of awareness allows agents, brokers, and web-brokers to continue earning monthly commission payments from issuers for these enrollments. Improper enrollments present the most concerning situation, but the availability of fully- subsidized QHPs that require no action on the part of enrollees also leads to situations where enrollees inadvertently and improperly remain enrolled after obtaining other coverage. As a result of either of these scenarios, the enrollee is at risk of accumulating surprise tax liabilities and the financial stress of resolving these liabilities. Ultimately, the financial cost of consumers unknowingly or inadvertently remaining enrolled in fully-subsidized QHPs would fall almost entirely on the Federal Government as Federal law limits repayments of the PTC for certain consumers,\76\ and the Federal Government only recoups APTC payments from issuers for enrollments that are cancelled after a consumer or other third party, such as an issuer, discovers an improper enrollment and reports it to the Exchanges.

\76\ Section 1401 of the ACA; Sec. 36B(f)(2)(B) of the Code.

The expansion of tax credits under the ARP \77\ and IRA,\78\ significantly increased the number of enrollees who initially enrolled in a fully-subsidized QHP. As a result, this significantly increased the number of enrollees who remained enrolled in fully-subsidized QHPs through the automatic re-enrollment process. For the Exchanges on the Federal platform, 2.68 million enrollees were automatically re-enrolled for benefit year 2025 with APTC that fully covered their premium, compared to 270,000 for benefit year 2019 (84 FR 229). The enhanced tax credits are set to expire at the end of benefit year 2025, which means there will be fewer enrollees who initially enroll in a fully- subsidized QHP and fewer enrollees who remain enrolled in fully- subsidized QHPs through the automatic re-enrollment process. However, as demonstrated in Table 14, there are millions of people improperly enrolled in fully-subsidized QHPs, and therefore temporary action to ensure these individuals are properly enrolled in a QHP that they are eligible for is a necessary consumer protection.

\77\ Public Law 117-2.

\78\ Public Law 117-169.

That said, the expiration of the enhanced premium tax credits will dramatically reduce the number of individuals eligible for fully- subsidized plans and anyone being automatically re-enrolled into a silver plan will almost assuredly be required to pay a premium once the enhanced tax credits expire. While one-time action to ensure fully- subsidized automatic re-enrollees update or confirm their application information or else pay a $5 monthly premium is necessary to shed improper and fraudulent enrollments, we do not believe the ongoing burden associated with this policy is justified by its benefits if fully-subsidized benchmark plans are not widely available. Therefore, we are finalizing this policy for Exchanges on the Federal platform for PY 2026 only.

In the 2021 Payment Notice proposed rule (85 FR 7088), we sought comment on a proposal to modify 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. This would ensure that any enrollee in this situation would need to return to the Exchange and obtain an updated eligibility determination prior to having any APTC paid on the consumer's behalf for the upcoming benefit year. We also requested comments on a variation on this approach, in which APTC for this population would be reduced to a level that would result in an enrollee premium that is greater than zero dollar but not eliminated entirely. Both approaches elicit, to varying degrees, a consumer's active involvement in re-enrollment because any enrollment in a plan with an enrollee premium that is greater than zero would require the enrollee to take an action by making a premium payment to maintain coverage or else face eventual termination of coverage for non-payment.

All but one commenter opposed modifying the automatic re-enrollment process in these ways. Many believed that adopting the proposed changes could disadvantage the lowest income group of Exchange enrollees by taking away financial assistance for which they are eligible without evidence that they are at greater risk of incurring overpayments of APTC. Some commenters were specifically opposed to any requirement that State Exchanges modify their automatic re-enrollment processes because it would require costly IT system reconfigurations, consumer noticing changes, and additional investments to support increased Exchange customer service capacity that would be necessary to address consumer confusion caused by the change.

Most commenters supported the current automatic re-enrollment process, citing benefits such as the stabilization of the risk pool due to the retention of lower risk enrollees who are least likely to actively re-enroll, the increased efficiencies and reduced administrative costs for issuers, the reduction of the numbers of uninsured, lower premiums, and promotion of continuity of coverage. Many commenters also believed that existing processes, including annual eligibility redetermination, periodic data matching, and APTC reconciliation, sufficiently safeguard against potential eligibility errors and increased Federal spending. As a result, we did not finalize any changes to the automatic re-enrollment process in the 2021 Payment Notice (85 FR 29164), citing our belief that existing safeguards against APTC overpayments were sufficient.

Given the heightened urgency of program integrity concerns with enhanced APTCs, fully-subsidized plans, and automatic re-enrollments, as previously outlined in the proposed rule (90 FR 12970), we sought comment on these proposals once again. We also stated that we would consider whether other methods--such as outreach--could sufficiently prompt fully-subsidized enrollees to update or confirm their eligibility information and actively re-enroll in coverage. Current outreach methods for the FFEs and SBE-FPs, such as notices, emails, texts, and advertising, before and during the OEP are extensive and already successfully prompt over half of re-enrollees to actively confirm or update their information and actively select a plan. Most enrollees on the FFEs and the SBE-FPs actively re-enroll by the applicable deadlines for January 1 coverage. Based on our experience operating the Exchanges on the Federal platform, we stated in the proposed rule that we do not believe additional or different notifications would prompt action from fully--subsidized enrollees who choose not to submit an application for an updated eligibility determination and actively re-enroll. However, we sought comment on this idea.

Instead, we stated in the proposed rule (90 FR 12970) that we believe that it is necessary to prompt an affirmative action by enrollees who would otherwise be fully subsidized through the automatic re-enrollment process, whether such action be through a

premium payment or re-confirming their plan choice altogether. We stated that we are again considering whether to automatically re-enroll these enrollees without any APTC, which would require them to return to the Exchange and obtain an updated eligibility determination prior to having any APTC paid on their behalf for the upcoming year, or else be charged for the full-price premium during automatic re-enrollment. As described in the proposed rule, we proposed to permit issuers to attribute past-due premium amounts they are owed to the initial premium the enrollee pays to effectuate new coverage. Removing all APTC during automatic re-enrollment for fully-subsidized enrollees is likely to create a significant debt to the issuer, since the enrollee is unlikely to be able to pay the full gross premium, which would harm the enrollee financially and could impact their ability to effectuate new QHP coverage. We therefore stated in the proposed rule that we believe that this approach would create undue financial hardship for these enrollees and act as a significant barrier to accessing health coverage. We also stated that we believe this approach could result in the loss of lower- risk enrollees, who are least likely to actively re-enroll due to an inability to pay, which could destabilize the market risk pool and increase premiums and the uninsured rate. We sought comment on this idea and whether it would more sufficiently mitigate the program integrity concerns we have described.

We then considered what enrollee portion of premium amount greater than zero but less than the full price of the QHP would avoid consumer harm but still achieve active participation by the enrollee. We proposed an amount of $5, which we stated in the proposed rule (90 FR 12970) that we believe would sufficiently balance the need to require an enrollee to take action, without substantially increasing the risk of undue financial hardship, such as termination for non-payment of premiums, that a greater amount could cause.

Additionally, we stated in the proposed rule (90 FR 12970) that we believe that the $5 would still achieve the desired effect of requiring an enrollee's active participation even if their issuer has adopted a net percentage-based premium payment threshold, under which enrollees must always pay at least 95 percent of the enrollee-responsible portion of the premium. We stated that if issuers adopt such a threshold, enrollees who have a $5 premium payment due to this amendment to the annual redetermination process would be required to pay at least $4.75 or else be placed in a grace period.

We stated in the proposed rule (90 FR 12970) that we believe our proposal, which decreases the amount of the APTC applied to the policy such that the remaining premium owed by the enrollee for the entire policy equals $5, strikes an appropriate balance between encouraging active confirmation of eligibility information and enrollment decision making and ensuring market stability.

We sought comment on this proposal. Specifically, we sought comment on whether an amount other than $5 would better address the program integrity concerns we have described. In addition, we sought comment on whether there are different policies or program measures that would help to reduce eligibility errors and potential Federal Government misspending, without adding additional burden for consumers.

A comparison of QHP enrollments to estimates of consumer-reported QHP enrollments from national health insurance coverage surveys strongly suggests there has been a large increase in the number of people unknowingly enrolled in subsidized QHPs. Researchers regularly track and study the “Medicaid undercount” which represents the difference in actual Medicaid enrollments to what people report on Census surveys.\79\ This research finds that U.S. Census Bureau surveys undercount actual Medicaid enrollments, mostly due to people misreporting that they do not have Medicaid and found an increase in the Medicaid undercount between 2019 and 2022. At least part of such undercounts may be attributable to consumer misunderstanding when responding to surveys--for example a Medicaid enrollee may erroneously report not being enrolled in Medicaid due to the enrollee's familiarity with the program under a different, State-specific name (for example, Medicaid is called DenaliCare in the State of Alaska). We undertook a similar analysis to assess whether there is a similar undercount for subsidized coverage through the Exchanges. The comparison of actual subsidized QHP enrollments to QHP enrollments reported on Census surveys confirms this undercount exists and has grown substantially since 2021. As Table 1 shows, the Current Population Survey (CPS) undercount for enrollment in a QHP with APTC grew from 25 percent in 2021 to 50 percent in 2024. The undercount is even larger for consumers with incomes less than 250 percent of the FPL who likely qualify for CSRs. The undercount for these consumers grew from 33 percent in 2021 to 57 percent in 2024.

\79\ See Peter Nelson, What the Medicaid Undercount reveals about the Medicaid `Unwinding' (Center of the American Experiment May 2024); Robert Hest, Elizabeth Lukanen, and Lynn Blewett, Medicaid Undercount Doubles, Likely Tied to Enrollee Misreporting of Coverage (SHADAC December 2022), available at https://www.shadac.org/publications/medicaid-undercount-doubles-20-21; State Health Access Data Assistance Center, Phase VI Research Results: Estimating the Medicaid Undercount in the Medical Expenditure Panel Survey Household Component (MEPS-HC) (January 2010), available at https://www.shadac.org/publications/snacc-phasevi-report; State Health Access Data Assistance Center, Phase IV Research Results: Estimating the Medicaid Undercount in the National Health Interview Survey (NHIS) and Comparing False-Negative Medicaid Reporting in NHIS to the Current Population Survey (CPS) (May 2009), available at https://www.shadac.org/publications/snaccphase-iv-report; and State Health Access Data Assistance Center, Phase II Research Results: Examining Discrepancies between the National Medicaid Statistical Information System (MSIS) and the Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC) (March 2008), available at https://www.shadac.org/publications/snacc-phase-ii-report.

Table 1--CPS Undercount of CSR and APTC Subsidized Coverage

CPS current subsidized exchange CMS effectuated enrollment CSR and APTC undercount

coverage (March supplement) (February) ---------------------------

Subsidized https://www.shadac.org/publications/medicaid-undercount-doubles-20-21.

Similar to the experience with the Medicaid undercount, the increase in the undercount of people with APTC-subsidized coverage is likely due to the increase in people with multiple forms of coverage. CBO estimates that in 2023, approximately 28.7 million people \82\ had multiple types of coverage, up from 27.7 million people in 2022 \83\ and 18 million in 2021.\84\ Considering that research identifies response errors from survey participants as the main reason for the Medicaid undercount, it is reasonable to assume the same is true for the Exchange undercount. Both Medicaid managed care plans and subsidized QHPs--as a result of the enhanced premium tax credits--can have very low to no premium, can go unused by healthier people, can be confused for other types of coverage, and are available through the Exchanges. In addition, subsidized QHP enrollees tend to share similar characteristics with Medicaid enrollees who misreport at higher rates. This includes Medicaid enrollees who are adults,\85\ employed,\86\ at higher income levels overlapping with APTC income

eligibility levels,\87\ and qualify for automatic re-enrollment.\88\ The fully-subsidized nature of this group, under the enhanced premium tax credits, furthers these comparisons. Therefore, the dramatic increase in the Exchange undercount after 2021 in both the CPS and NHIS strongly suggests a substantial increase in the number of individuals with subsidized Exchange coverage who misreport not having such coverage on surveys. People may misreport coverage for various reasons, but the most likely reason for the increase in this level of misreporting in 2022 is the statutory change in 2021 expanding access to fully-subsidized QHPs.\89\ Research on the increase in the Medicaid undercount links the increase to the Medicaid continuous coverage condition under the COVID-19 PHE that kept people unknowingly covered after they obtained other coverage.\90\ Similar to the Medicaid continuous coverage condition, Federal policy regarding subsidized QHP coverage changed in response to the COVID-19 PHE in a manner that increased the risk of people remaining enrolled in fully-subsidized QHP without their knowledge. The expansion of eligibility to a fully- subsidized QHP in combination with the current Exchange annual eligibility redetermination process substantially increased the number of people with a fully-subsidized QHP able to remain continuously enrolled in a QHP from year to year without taking any action.\91\ The 2022 OEP was the first year where people with fully--subsidized QHPs provided under the ARP entered the annual redetermination process. Other policy changes and factors may have contributed to the dramatic change in the Exchange undercount in 2022. However, based on the similar experience with the Medicaid undercount, we stated in the proposed rule (90 FR 12971) that we believe the ARP's expansion of fully-subsidized QHP coverage in combination with the existing annual eligibility redetermination process that does not require the enrollees' acknowledgement or active participation, increases the risk that ineligible consumers without knowledge of their enrollments will remain enrolled, improperly increases Federal APTC expenditures.

\82\ Congressional Budget Office, (2024, June) Health Insurance and Its Federal Subsidies: CBO and JCT's June 2024 Baseline Projections. Available at https://www.cbo.gov/system/files/2024-06/51298-2024-06-healthinsurance.pdf.

\83\ Congressional Budget Office, (2003, May) Health Insurance and Its Federal Subsidies: CBO and JCT's May 2023 Baseline Projections. Available at https://www.cbo.gov/system/files/2023-09/51298-2023-09-healthinsurance.pdf.

\84\ Congressional Budget Office, (2002, May) Federal Subsidies for Health Insurance Coverage for People Under Age 65: CBO and JCT's May 2022 Baseline Projections. Available at https://www.cbo.gov/system/files/2022-06/51298-2022-06-healthinsurance.pdf.

\85\ Davern M, Klerman JA, Baugh DK, Call KT, Greenberg GD. An examination of the Medicaid undercount in the current population survey: preliminary results from record linking. Health Serv Res. 2009 Jun;44(3):965-87. doi: 10.1111/j.1475-6773.2008.00941.x. Epub 2009 Jan 28. PMID: 19187185; PMCID: PMC2699917. Available at https://pmc.ncbi.nlm.nih.gov/articles/PMC2699917/.

\86\ Boudreaux MH, Call KT, Turner J, Fried B, O'Hara B. Measurement Error in Public Health Insurance Reporting in the American Community Survey: Evidence from Record Linkage. Health Serv Res. 2015 Dec;50(6):1973-95. doi: 10.1111/1475-6773.12308. Epub 2015 Apr 12. PMID: 25865628; PMCID: PMC4693849. Available at https://pmc.ncbi.nlm.nih.gov/articles/PMC4693849/.

\87\ Davern M, Klerman JA, Baugh DK, Call KT, Greenberg GD. An examination of the Medicaid undercount in the current population survey: preliminary results from record linking. Health Serv Res. 2009 Jun;44(3):965-87. doi: 10.1111/j.1475-6773.2008.00941.x. Epub 2009 Jan 28. PMID: 19187185; PMCID: PMC2699917. Available at https://pmc.ncbi.nlm.nih.gov/articles/PMC2699917/; and Boudreaux MH, Call KT, Turner J, Fried B, O'Hara B. Measurement Error in Public Health Insurance Reporting in the American Community Survey: Evidence from Record Linkage. Health Serv Res. 2015 Dec;50(6):1973-95. doi: 10.1111/1475-6773.12308. Epub 2015 Apr 12. PMID: 25865628; PMCID: PMC4693849. Available at https://pmc.ncbi.nlm.nih.gov/articles/PMC4693849/.

\88\ Kincheloe, Jennifer, et al. Health Affairs (2006), GrantWatch: Report Can We Trust Population Surveys To Count Medicaid Enrollees And The Uninsured? Volume 25, Number 4. Available at https://www.healthaffairs.org/doi/pdf/10.1377/hlthaff.25.4.1163.

\89\ Public Law 117-2.

\90\ Robert Hest, Elizabeth Lukanen, and Lynn Blewett, Medicaid Undercount Doubles, Likely Tied to Enrollee Misreporting of Coverage (SHADAC December 2022), available at https://www.shadac.org/publications/medicaid-undercount-doubles-20-21.

\91\ Note that existing procedures under Sec. 155.335 prohibit the indefinite continuation of APTC through auto re-enrollment in various circumstances, including for tax filers who do not comply with the failure to file and reconcile rules or whose authorization for the Exchange to obtain tax data from the IRS has expired (which is limited to 5 years).

As the data discussed previously shows, individuals with Exchange coverage appear increasingly less likely to accurately report their coverage in survey data. Recent APTC changes that increased the availability of fully-subsidized coverage likely enabled more people to stay enrolled in Exchange coverage without their knowledge, which we stated in the proposed rule (90 FR 12971) is clearly a program integrity issue. To address this issue, we stated that we believe it is important to require qualified enrollees who are redetermined to be eligible for APTC that fully subsidizes their premium to take an active step to confirm their eligibility information before continuing with fully--subsidized coverage.

We sought comment on this proposal.

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 for Exchanges on the Federal platform for PY 2026. We think this policy represents an important program integrity measure to help the Exchanges on the Federal platform shed improper and fraudulent enrollments in the currently fully-subsidized QHP cohort of enrollees, which is highly concentrated in Exchanges on the Federal platform. Given the appreciably smaller estimates of improper enrollments on State Exchanges, coupled with our belief that this policy will help Exchanges shed holdover improper and fraudulent enrollments associated with fully-subsidized QHPs, we are not finalizing a parallel requirement for State Exchanges. After further evaluation and considering public comments on this proposal discussed later in this section, the Department has determined the burden this policy would have imposed on State Exchanges would not be worth it given that State Exchanges could not implement the policy before PY 2027, long after the expiration of the enhanced premium tax credits. For these reasons, we are finalizing this policy for PY 2026 only for Exchanges on the Federal platform, with a reversion to the previous policy for PY 2027 and beyond.

We also clarify this policy applies when an applicable enrollee does not submit an application for an updated eligibility determination specifically for the immediately forthcoming coverage year by the deadline to select a plan for January 1, 2026, coverage specified only at Sec. 155.410(f) (and not at Sec. 155.420(b) as proposed). Therefore, we are finalizing the following: When an enrollee does not submit an application for an updated eligibility determination for the immediately forthcoming coverage year (2026) by the last day to select a plan for January 1, 2026, coverage, and the enrollee's portion of the premium for the entire policy would be zero dollars after application of APTC, 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 until the enrollee confirms or updates the information relevant to their annual redetermination of eligibility. Consistent with Sec. 155.310(c) and (f), enrollees automatically re-enrolled with a $5 monthly premium after APTC under this policy would be able to update their application at any point to confirm information relevant to their annual redetermination for APTC and confirm their plan to reinstate the full amount of APTC for which they are eligible on a prospective basis.

We sought comment on whether the $5 amount would provide enough incentive for fully-subsidized individuals to confirm their information and whether fully-subsidized individuals should be re-enrolled without any APTC. We sought comment on other options available to us to ensure program integrity in re-enrollments. We sought comment on whether program integrity concerns outweigh the benefit of permitting Exchanges to automatically re-enroll consumers at all.

We summarize and respond to public comments received on this proposed annual redetermination policy below.

Comment: Some commenters generally supported this proposal. Many

of these commenters stated that this proposal would require fully- subsidized enrollees to confirm their information, which would incentivize these enrollees to actively enroll, receive updated eligibility determinations, and discourage improper and fraudulent enrollments that undermine program integrity. Some commenters stated that this proposal would help protect consumers from APTC repayment by requiring their confirmation or updated eligibility information. However, several of these commenters proposed additional recommendations: delay the effective date to PY 2027 to ensure Exchanges and issuers have sufficient time to educate enrollees and develop, test, and implement necessary changes; and preserve an OEP from November 1 to January 15 so that individuals impacted by this proposal have sufficient time to actively re-enroll.

Response: We appreciate these comments in support of the proposal and acknowledge commenters' concerns regarding the proposed change. We note that an effective date in PY 2026 provides sufficient time for Exchanges on the Federal platform to educate enrollees through updated notices (for example, Marketplace Open Enrollment Notice and Marketplace Automatic Enrollment Confirmation Message),\92\ which are sent before and during Open Enrollment. Exchanges on the Federal platform will also provide robust training and technical assistance to interested parties, including agents, brokers, assisters, navigators, and issuers, so they can assist enrollees in understanding the proposed change.

\92\ Samples of PY 2025 notices can be found here https://www.cms.gov/marketplace/in-person-assisters/applications-forms-notices/notices. CMs will revise this page with updated samples for PY 2026.

For reasons stated in this final rule, the proposal to shorten the OEP at III.B.7. is finalized with modifications. The changes to the OEP will take effect beginning with the OEP for PY 2027 and the rule will provide flexibility for Exchanges within set parameters. Because the proposal to shorten the OEP will not be implemented in PY 2026, and this policy at 45 CFR 155.335 (a)(3) and (n) will only be effective for PY 2026, enrollees and other interested parties will have sufficient time to take the required action to avoid the $5 monthly premium.

Comment: Most commenters opposed the proposal. Many of these commenters stated the proposal is likely to cause a decrease in enrollment as some low-income enrollees will be terminated due to non- payment of the $5 premium. Generally, commenters believed the proposal would compromise the Exchange risk pool because younger and healthier individuals are most likely to lose coverage, which will ultimately discourage carrier participation and lead to higher premiums. Some cited data showing that a nominal monthly payment causes coverage losses specifically for younger enrollees.93 94 A few commenters cited research on Massachusetts' pre-ACA exchange, which found that consumers who were passively enrolled into fully-subsidized plans were younger and healthier (44 percent lower medical spending per month).95 96 A few commenters opposed the proposal because they do not believe it achieves the stated objective of reducing improper enrollments. These commenters stated that an agent or broker could update the application by the applicable deadlines to continue an improper fully-subsidized premium enrollment. Many commenters cited other program integrity measures that they believe are sufficient to safeguard against errors in Federal spending without undue risk of coverage losses, such as the 1-year FTR policy in the proposed rule, income verification, periodic data matching, and APTC reconciliation. Some of these commenters believe HHS should directly address agent and broker fraud in the Exchanges on the Federal platform rather than imposing this requirement on consumers.

\93\ The Effects of Premiums and Cost Sharing on Low-Income Populations: Updated Review of Research Findings. Samantha Artiga, Petry Ubri, and Julia Zur. Kaiser Family Foundation. https://www.kff.org/medicaid/issue-brief/the-effects-of-premiums-and-cost-sharing-on-low-income-populations-updated-review-of-research-findings/view/footnotes/#footnote-220856-94?.

\94\ McIntyre A, Shepard M, Layton TJ. Small Marketplace Premiums Pose Financial and Administrative Burdens: Evidence from Massachusetts, 2016-17. Health Affairs. Published online January 8, 2024.

\95\ Automatic Insurance Policies--Important Tools for Preventing Coverage Loss, Adrianna McIntyre, Ph.D., M.P.H., M.P.P., and Mark Shepard, Ph.D. https://www.nejm.org/doi/full/10.1056/NEJMp2114189.

\96\ Do Ordeals Work for Selection Markets? Evidence from Health Insurance Auto-Enrollment by Mark Shepard and Myles Wagner, June 7, 2024. https://scholar.harvard.edu/files/mshepard/files/shepard_wagner_autoenrollment.pdf.

Response: We acknowledge these comments in opposition to the proposal. While other program integrity measures also safeguard against errors in Federal spending, we maintain that this policy change is necessary in 2026 to ensure the fully-subsidized population confirms or updates their information, which will help lower the currently high level of improper enrollments and dual enrollment in the Exchanges on the Federal platform with financial assistance and other minimum essential coverage, such as Medicaid or employer sponsored coverage, that persist through the annual redetermination and re-enrollment specifically. After considering these comments, we believe that an ongoing requirement is likely unnecessary as once the level of improper enrollments is reduced and the amount of fully-subsidized plans has decreased, the incentive and opportunity for ongoing improper and fraudulent enrollments is substantially lower, and the burdens associated with this policy are not justified by its benefits. Therefore, we are finalizing this policy for PY 2026 only.

With respect to the amount, we believe $5 is a nominal amount that sufficiently balances requiring action by the enrollee without the risk of undue financial hardship that a greater amount could cause. These enrollees will be incentivized to return to an Exchange, evaluate available coverage options and premiums, and make an active enrollment decision. We therefore anticipate that this policy will lead to better matches between consumers' coverage preferences and available coverage offerings in the individual market.

We do not anticipate the Exchange risk pool will be compromised as this policy retains automatic re-enrollment while introducing a nominal premium amount to encourage active consumer engagement for the fully- subsidized population. We believe $5 does not risk undue financial hardship and that fully-subsidized enrollees will be incentivized to actively enroll or make a refundable $5 payment, rather than be dropped from Marketplace coverage, due to this policy.

Exchanges on the Federal platform will educate enrollees through updated notices (for example, Marketplace Open Enrollment Notice and Marketplace Automatic Enrollment Confirmation Message),\97\ and issuers can update their discontinuation and renewal notices with information about this change. Exchanges on the Federal platform will also provide robust training and technical assistance to interested parties, including agents, brokers, assisters, navigators, and issuers, so they can assist enrollees in understanding the proposed change and continue coverage as needed.

\97\ Samples of PY 2025 notices can be found here https://www.cms.gov/marketplace/in-person-assisters/applications-forms-notices/notices. CMS will revise this page with updated samples for PY 2026.

We note that Sec. 155.220(j)(2)(iii) and (l) require agents, brokers, and web-brokers who are assisting with consumer

enrollments through the Exchanges on the Federal platform to obtain and document consumer consent before making an application or enrollment update on behalf of the consumer, a measure intended to ensure that consumer information is accurate. We also established procedures under Sec. 155.220(g) for HHS to suspend or terminate an agent's, broker's, or web-broker's Exchange agreement(s) in circumstances that involve certain fraudulent or abusive conduct or where there are sufficiently severe findings of non-compliance. We also established other standards of conduct under Sec. 155.220(j) for agents, brokers, and web-brokers that assist consumers with enrolling in coverage through the FFEs to, protect consumers and ensure the proper administration of the FFEs, and under Sec. 155.220(l) we extended this standard to agents, brokers, and web-brokers who assist consumers with enrollment through the SBE- FPs. CMS will continue to monitor and take enforcement action in response to any agent, broker, or web-broker activity that is deemed to be non-compliant under Sec. 155.220(g)(2).

Comment: Several commenters opposed the proposal because they believe the $5 amount would be insufficient to incentivize individuals to confirm their eligibility information and that agents would pay the $5 premium on behalf of the enrollee or offer inducements to the enrollee such that the enrollee pays the $5. One commenter also opposed the proposal because they believe that fraud is not limited to fully- subsidized plans.

Response: Data supports the conclusion that lower income enrollees who may be eligible for zero-dollar premium plans after application of APTC are price sensitive.\98\ We cannot be certain that $5 is the best amount to produce the desired outcome. However, after consideration of higher and lower amounts, we concluded $5 was a reasonable amount to encourage most low-income enrollees to act without being cost prohibitive such that it prevents their action. In other words, low- income enrollees who are price sensitive may interpret an invoice with a larger premium payment as insurmountable and choose not to take action to update their information to see if they can lower the bill nor pay the bill because they can't afford it. Therefore, we finalize this $5 amount to prompt enrollees to act while also balancing debt consideration for low-income enrollees if they don't act. We are finalizing this provision for Exchanges on the Federal platform for PY 2026 only.

\98\ See, e.g., The Effects of Premiums and Cost Sharing on Low- Income Populations: Updated Review of Research Findings. Samantha Artiga, Petry Ubri, and Julia Zur. Kaiser Family Foundation. https://www.kff.org/medicaid/issue-brief/the-effects-of-premiums-and-cost-sharing-on-low-income-populations-updated-review-of-research-findings/view/footnotes/#footnote-220856-94?. McIntyre A, Shepard M, Layton TJ. Small Marketplace Premiums Pose Financial and Administrative Burdens: Evidence from Massachusetts, 2016-17. Health Affairs. Published online January 8, 2024. Automatic Insurance Policies--Important Tools for Preventing Coverage Loss, Adrianna McIntyre, Ph.D., M.P.H., M.P.P., and Mark Shepard, Ph.D. https://www.nejm.org/doi/full/10.1056/NEJMp2114189. Do Ordeals Work for Selection Markets? Evidence from Health Insurance Auto-Enrollment by Mark Shepard and Myles Wagner, June 7, 2024. https://scholar.harvard.edu/files/mshepard/files/shepard_wagner_autoenrollment.pdf.

Additionally, our experience investigating improper enrollments by agents, brokers, and web-brokers does not suggest that these entities commonly enroll consumers in non-zero plans by paying premiums on their behalf. Doing so would reduce the profit available to the agent, broker, or web-broker from commissions, as well as increase the risk of being discovered as engaging in unauthorized activity (for example, because an issuer could identify if payment was made using a check or credit card belonging to the agent, broker, or web-broker). Rather, improper enrollments typically involve agents, brokers, or web-brokers enrolling consumers in fully-subsidized plans without their knowledge or consent. Therefore, we believe it is appropriate to target this proposal to fully-subsidized enrollments, where we know unauthorized activity by agents, brokers, and web-brokers is most likely.

Comment: Many commenters requested that State Exchanges be excluded from this proposal because State Exchanges are less likely to have fraudulent and improper enrollment compared to Exchanges on the Federal platform and because they believe States are best positioned to evaluate whether updates to the redetermination process are necessary for their Exchange. Many of these commenters stated that State Exchanges have sufficient verification safeguards in place due to State-specific data for eligibility verification and closer oversight, and a few commenters stated that State Exchanges have more robust system controls to prevent fraudulent activity than the Exchanges on the Federal platform, all of which they stated contributes to low instances of fraud and improper enrollment. Commenters requested that States retain flexibility to implement alternative policies and procedures to improve consumer awareness of their options for renewal. Commenters stated that State Exchange operations related to this proposal would be costly and some could not implement the proposal based on the proposed timeline. One State Exchange commented that all of the enrollees in their State already have a non-zero premium after their full APTC amount is applied. We received three comments from State Exchanges noting the numerous program integrity safeguards they currently have in place as part of their annual redetermination and re- enrollment processes that minimize their risks for unauthorized enrollments, such as their use of approved state-based data sources, which supplement the required Federal data sources to verify consumer eligibility, and the timing and specificity of their redetermination and re-enrollment notices.

Response: We appreciate these comments. As described above, we are not finalizing these requirements for State Exchanges. Much of the concerning improper and fraudulent enrollment is concentrated on Exchanges on the Federal platform. Given the temporary nature of the policy and burdens this requirement would put on State Exchanges, we are exempting them from the requirement.

Comment: Many commenters requested that HHS delay implementation to PY 2027 or later to evaluate whether the policy is necessary after implementing other program integrity measures in this rule and after expiration of the enhanced PTC. Some commenters stated this proposal is not worth the cost to implement if the enhanced PTCs expire because relatively few enrollees will qualify for a zero-dollar premium. One commenter asked HHS to collaborate with issuers to design an implementation that avoids administrative costs and minimizes consumer confusion.

Response: We appreciate these comments and are only finalizing this requirement for PY 2026 for Exchanges on the Federal platform. We understand there will be fewer consumers eligible for fully-subsidized QHPs after the expiration of the enhanced PTCs than are eligible for fully-subsidized QHPs now and, as such, do not believe that the ongoing burden associated with this policy is justified by its benefits once the Exchanges shed the improper enrollments associated with fully- subsidized QHPs.

Comment: Many commenters questioned the statutory authority Exchanges have to reduce the amount of APTC used toward an enrollee's coverage. These commenters believe the ACA does not provide any construct for Exchanges to take independent action to

adjust the tax credit based on policy preferences and expressed concern that Exchanges may arbitrarily interfere with qualified individuals' access to the full amount of the APTC. Many of these commenters stated that the Exchange must permit a qualified individual to use their tax credit in advance and must act as a facilitator of the tax credit once the qualified individual is determined eligible based on statutory criteria. Commenters believed that section 36B of the Code defines the criteria for APTC and HHS did not consider necessary modifications to that part of the law.

Some commenters believed that after an individual is determined as qualifying for APTC under section 1411 of the ACA, section 1412 compels the Federal government to pay APTC using the calculation of PTC rules in section 36B of the Code. They argued this means it is mandatory to pay the full amount of APTC for which the individual qualifies.

A few commenters believed that section 1411(f)(1)(B) of the ACA does not give HHS the authority to withhold APTC it is legally obligated to pay on behalf of every individual who is automatically re- enrolled without a redetermination finding that they are not entitled to the full APTC amount. The commenters believed that withholding payment is not a procedure to redetermine eligibility, and therefore, this proposal exceeds statutory authority.

One commenter stated that the proposal conditioning re-enrollment on the $5 enrollee premium contravenes guaranteed availability established by Vermont State law.

Another commenter stated this policy will be subject to litigation and will result in wasteful government spending that could be avoided by not finalizing the policy.

Response: We believe we have authority under the ACA to implement this provision. Section 1411(f)(1)(B) directs the Secretary to establish procedures by which it “redetermines eligibility on a periodic basis in appropriate circumstances.” We believe that recent history of improper enrollments in unsubsidized plans is an appropriate circumstance to temporarily require that the amount of PTC paid in advanced to be reduced by $5, unless and until an enrollee verifies their eligibility for a fully-subsidized premium. We emphasize that 45 CFR 155.335(n) would not independently reduce the amount of PTC an enrollee is eligible for under section 36B of the Code, but rather would reduce the amount of PTC paid in advance.

Comment: A few commenters shared that this proposal would result in additional administrative steps for agents and brokers, resulting in slower transaction times by agents and brokers and increased demand for their services in a condensed period of time if the OEP is shortened to November 1 through December 15.

Response: We acknowledge commenters' feedback. As stated above, we are finalizing this policy for Exchanges on the Federal platform for PY 2026 only, and the changes to the OEP at III.B.7. do not take effect until PY 2027. Therefore, agents and brokers will have sufficient time to help enrollees take the required action to avoid the $5 monthly premium.

Comment: A few commenters stated that consumer outreach is essential and that they would like more information from HHS about how enrollees will be informed of their individual responsibility amount.

Response: We agree with the commenters and will provide more information about consumer outreach through existing interested party forums, which include assister, agent and broker, navigator and issuer trainings.

Comment: Commenters offered the following operational suggestions if this policy is finalized as proposed: simplify the annual renewal process by allowing enrollees to confirm their eligibility information without having to recomplete the entire application; permit EDE partners to offer new features to support the active renewal process; provide information about re-enrollees to EDE partners so EDE partners and their agent and broker users can assist in outreach to enrollees who have a new financial obligation as a result of this proposal; and ensure income updates are effective on the first of the following month to limit the financial impact for enrollees subject to this proposal.

Response: We appreciate these suggestions and will consider them as we develop IT changes for this policy. We note that some EDE partners already simplify the annual renewal process by allowing agents and brokers to confirm an enrollee's eligibility information without having to click through the entire application. EDE partners may be approved by CMS to offer new features to support the active renewal process; EDE partners already have information about how to submit proposed features for CMS review and approval. We will evaluate whether more information about re-enrollment can be provided to EDE partners and their agent and broker users for their outreach purposes. We will ensure interested parties understand applicable effective dates for changes submitted by consumers.

Comment: A commenter recommended that HHS encourage State Exchanges to implement EDE. EDE is predominantly a pathway to service agents and brokers who assist consumers with Exchange enrollment, so this commenter is recommending HHS encourage State Exchanges to implement EDE, thereby increasing their agent and broker service capabilities to meet increased consumer support needs resulting from this policy.

Response: State Exchanges presently have the option to implement EDE (see 45 CFR 155.221(j)) and may make the decision to do so based on the needs of consumers in their State. HHS currently provides technical assistance to State Exchanges interested in the EDE model. State Exchanges are exempt from the requirement being finalized at 45 CFR 155.335(a)(3) and (n).

Comment: Commenters recommended HHS finalize different premium amounts other than the proposed $5. A few commenters suggested that if HHS moves forward with the proposal, it should be less than $5, such as $1. A few commenters suggested that if HHS moves forward with the proposal, it should be more than $5 but did not specify an amount. One commenter believed the amount should be similar to issuers' commission payments to agents and brokers--such as $25 for the first plan member and $20 for each additional plan member--to remove the incentive for third parties to pay the premium amount for the enrollee. However, this commenter recommended ending APTC altogether for the fully-subsidized population or for all enrollees who qualify for any amount of APTC because they believed those proposals would do the most to ensure the Federal government does not pay excess APTC, and they believed automatic re-enrollment is detrimental to the quality and price of health insurance.

Response: As described earlier, our experience investigating improper enrollments by agents, brokers, and web-brokers does not suggest that they commonly pay premiums on behalf of enrollees to secure enrollment. For the reasons described above, we believe $5 sufficiently balances requiring action by the enrollee without the risk of undue financial hardship a greater amount could cause while the market adapts to the changing subsidy environment.

Comment: Almost all commenters strongly opposed other ideas we solicited comments on, such as ending APTC during automatic re- enrollment

for enrollees who would otherwise be fully subsidized, and they robustly supported continuing to permit Exchanges to automatically re- enroll consumers altogether. These commenters believed automatic re- enrollment is critical to supporting a strong risk pool and preventing premium increases. Many commenters believed alternatives such as removing all APTC or not renewing their coverage at all for individuals who do not verify their eligibility for full-subsidized coverage would cause widespread loss of legitimate enrollments that support a healthy risk pool. Many commenters believed automatic re-enrollment promotes continuity of coverage and removes unnecessary burden for enrollees who are satisfied with their health coverage and note it is a standard practice in the industry. As described above, a few commenters cited research on Massachusetts' pre-ACA exchange, which found that consumers who were passively enrolled into fully-subsidized plans were younger and healthier (44 percent lower medical spending per month) and that eliminating auto-enrollment for health insurance reduced enrollment by 33 percent and differentially excluded young, healthy, and economically disadvantaged people.

Response: We appreciate these comments. We are not finalizing the alternative proposals to modify 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, or to prohibit Exchanges from automatically re-enrolling consumers. Similar to the commenters, we believe that these proposals present too great a risk of widespread coverage loss to legitimate enrollments. To minimize the risk of disruption while taking a necessary step to shed excess improper enrollments, we are finalizing this policy for PY 2026 for Exchanges on the Federal platform only. 4. Annual Eligibility Redetermination (Sec. 155.335(j))

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12973 through 12974), we proposed to amend the automatic re- enrollment 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. In effect, this current policy allows Exchanges to terminate an enrollee's coverage through a bronze QHP without the enrollee's active participation. These proposals would leave in place the requirements for Exchanges to take into account network similarity to the enrollee's current year plan when re-enrolling enrollees whose current year plans are no longer available, but would remove the re- enrollment hierarchy policy at Sec. 155.335(j)(4) that 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 sought comment on this proposal, and after consideration of comments, we are finalizing this policy as proposed. Based on certain public comments as further discussed below, we also clarify the flexibility that State Exchanges have regarding the re-enrollment hierarchy at the discretion of the Secretary per Sec. 155.335(a)(2)(iii). As the re-enrollment hierarchy policy is an important policy to honor consumer choice, and is not addressing enhanced-subsidy related improper enrollment, we are finalizing this policy to be effective for PY 2026 and beyond. We summarize and respond to public comments below.

Comment: Some commenters supported the proposal and agreed that removing the option at Sec. 155.335(j)(4) for Exchanges to re-enroll CSR eligible bronze enrollees into a silver QHP when certain conditions are met would help preserve consumer choice. Some of these commenters further stated that consumers select plans for a variety of reasons, such as affordability, provider network, or health savings account (HSA) eligibility, and that it is not appropriate to re-enroll them into a different plan when their current plan remains available in the coming year, even if the different plan provides higher actuarial value and the plan change would not result in a change to the consumer's product or provider network. Several of these commenters also agreed that removing Sec. 155.335(j)(4) would reduce the risk of unexpected tax liabilities for bronze enrollees who appear, based on their most recent household income attestation, to be CSR eligible.\99\ Several commenters who supported the proposal stated that removing Sec. 155.335(j)(4) would help reduce consumer confusion. A few of these cited past experiences of consumers' mistaken belief that their health insurance agent changed their coverage when, in fact, the change was due to a re-enrollment pursuant to the reenrollment hierarchy at Sec. 155.335(j). Based on these experiences, these commenters believed that allowing enrollees to stay in the same plan if it continues to be available unless they actively choose a different option would significantly reduce complaints and improve transparency. One commenter who supported the proposal asked that HHS consider delaying this change to PY 2027 to allow for issuers to incorporate this change into their product planning and filings.

\99\ See discussion in the 2024 Payment Notice (88 FR 25823), regarding this potential risk in cases where APTC amount is determined based on inaccurate household income for the future year.

Response: We agree with commenters that amending the re-enrollment hierarchy to remove the option for Exchanges to auto re-enroll bronze enrollees into a silver plan even when their same bronze plan remains available helps preserve consumer choice. We also agree with the commenter who emphasized the role that this final policy will play in helping reduce consumer confusion, as it aligns with an approach of preserving consumer choice whenever possible. We strongly agree with commenters who stated that removing this policy would reduce the risk of unexpected tax liabilities for bronze enrollees who appear, based on their most recent household income attestation, to be CSR eligible, and with those who cited HSA eligibility as a potential factor in bronze plan selection. Finally, we will not delay this change because, as noted in the proposed rule (90 FR 13015), we do not anticipate that it would result in significant burden to issuers, given that, as discussed in the 2024 Payment Notice (88 FR 25822), Exchanges were primarily responsible for the policy's implementation.

Comment: Several commenters who supported the proposal also emphasized the importance of decision support tools to help consumers select the best plan for themselves and their family's needs. These commenters stated that enhancing consumer decision support tools could help consumers understand all aspects of cost-sharing, including premiums, deductibles, out-of-pocket costs, and become more familiar with how health insurance coverage works in

general. Commenters recommended developing more personalized tools to illustrate individuals' expected health care utilization or prescription drug needs and to help them use that information to choose a plan that is best suited to their needs. They also noted that focused training for navigators, agents, and brokers could boost take-up of silver plans among those eligible for CSRs.

Response: We agree with honoring and supporting consumer choice instead of re-directing enrollment on behalf of consumers when their current plan remains available in the following coverage year. Providing consumers with the information they need to make informed choices, and then honoring consumer choices, is a matter of trust. As we stated in the proposed rule (90 FR 12974), we believe the policy at Sec. 155.335(j)(4) unnecessarily risked undermining this trust, and we will continue to explore and work to improve upon strategies that help consumers to make decisions that are best for themselves and their families based on their financial situations and health care needs. We agree with commenters who advocated for more robust decision support tools, and over the past several years we have made enhancements to the HealthCare.gov application and plan selection platforms to help income- based CSR eligible consumers understand the financial benefits of selecting a silver plan. For example, when they begin their plan selection process, these CSR eligible consumers view language explaining that they qualify for extra savings on out-of-pocket costs with a silver plan, and are offered the option to see silver plans only. Silver plans have “Extra Savings” tags, and consumers who qualify for CSRs of 94 percent or 87 percent and select a non-silver plan see a pop-up that encourages them to choose a silver plan instead. We believe that these changes, implemented over the past 5 years, have made a meaningful difference in these consumers' ability to make an informed choice about their coverage, though we will continue exploring ways to best provide consumers with information they need.

Comment: Many commenters opposed the proposal to remove Sec. 155.335(j)(4) from the auto re-enrollment hierarchy based on their belief that the policy improved access to higher actuarial value coverage for enrollees who did not previously realize that such coverage was available to them. These commenters cited concerns that consumers are largely confused about their health insurance plan options and how to choose the plan that meets their health care and financial needs, and provided studies and other references to support this concern. These commenters cited factors including the high volume of plans to choose from in certain areas, resulting in choice overload; cuts to HHS Navigator grantee funding that decreases the in-person assistance available to potential enrollees; and the lack of data or other evidence to support the assertion that confusion had decreased. One commenter who stated the policy led to better outcomes for enrollees said that consumers should not be required to have a robust understanding of actuarial values, cost-sharing, co-payments, and deductibles. Multiple commenters stated that this policy would result in a family with a household income up to two times the FPL being re- enrolled in a plan with a $21,200 maximum out-of-pocket limit rather than a plan with a $7,000 out-of-pocket limit. One commenter who opposed the proposal asked that we wait until 2027 to consider this policy based on whether Congress would renew the enhanced PTC. Another commenter said that given this policy has only been in place for two plan years, it is not yet possible to determine whether it has been successful.

Response: We disagree that many consumers remain confused or unaware about their health insurance plan options and available cost savings and strongly disagree that consumers should not need to understand how generous a plan is in terms of the percentage of benefit costs that enrollees generally must pay (i.e., actuarial value) and other aspects of health insurance coverage in order to make their own decisions regarding their health insurance coverage. When we proposed this policy in 2024 Payment Notice proposed rule (87 FR 78259), we highlighted that some CSR eligible bronze enrollees may have been initially enrolled before the more generous APTC became available with the passage of the ARP as extended by the IRA,\100\ may not have been initially income-based CSR-eligible when they first enrolled, or may have been helped by an agent, broker, web-broker, or Navigator who did not adequately explain the benefits of silver enrollment for CSR- eligible enrollees.

\100\ With the passage of the IRA, these enhanced subsidies were extended for an additional 3 years (through 2025).

In contrast, as of the start of the OEP for 2026 Exchange health insurance coverage, these enhanced subsidies will have been available to Exchange enrollees for a full five years. During this time, potential Exchange enrollees have had the chance to benefit from outreach and education services provided in part by tens of millions of dollars in Federal funding for HHS Navigator grantees, and enrollment increased significantly. Additionally, as discussed earlier, over the past five years we have made a number of enhancements to the HealthCare.gov application and plan selection platforms to help income- based CSR eligible consumers understand the financial benefits of selecting a silver plan. Therefore, as we stated in the proposed rule (90 FR 12974), we believe consumers and the agents, brokers, web- brokers, and Navigators who help them are largely aware of the more generous subsidies.\101\ Further, we disagree that it makes sense to delay this policy until PY 2027 because, regardless of whether Congress continues the enhanced subsidies under the IRA, these investments and resulting increase in consumer awareness will persist. Finally, we also disagree that the removal of the policy at Sec. 155.335(j)(4) will definitively result in auto re-enrollment of CSR eligible individuals and families into a particular bronze plan, because during the OEP, such individuals can actively choose to enroll in a silver plan.

\101\ For example, see the January 2025 Marketplace 2025 Open Enrollment Period Report: National Snapshot (https://www.cms.gov/newsroom/fact-sheets/marketplace-2025-open-enrollment-period-report-national-snapshot-2) and informational materials such as those available on HealthCare.gov: https://www.healthcare.gov/more-savings/.

Comment: A number of commenters who opposed the proposal asked if State Exchanges would continue to have flexibility to design their re- enrollment hierarchies.

A few commenters cited examples of State Exchanges' success in reducing inadvertent forfeiture of CSRs and ensuring better access to health care for those with access to a plan with a higher actuarial value with the same or similar benefit design and provider network as the lower actuarial value plan that they had actively selected. For example, a commenter described Covered California's practice since 2022 of re-enrolling CSR eligible enrollees into silver coverage, targeting individuals with incomes below 250 percent of the FPL with access to the same benefits and providers with equal or better value at the same or lower premium. This commenter emphasized that the Exchange informs these enrollees of the change and provides sufficient time to opt out of the change. The commenter also described other auto re-enrollment policies Covered California adopted that

reportedly had strong approval ratings, did not cause consumer confusion, and led to 34,000 consumers enrolled in a higher-value plan at a lower cost for PY 2024, and noted that platinum and gold crosswalks to silver plans could result in lower PTC expenditures for the Federal Government in cases where the applicable silver plan is the lowest cost silver plan. The commenter strongly recommended that CMS continue to allow States the freedom to adopt these innovative policies that make it easier for consumers to obtain the best coverage, value, and affordability for them. A few commenters raised concerns about the time and cost associated with requiring State Exchanges to implement changes to their systems, including to their re-enrollment processes.

Response: For reasons discussed earlier in this preamble, we are finalizing this policy as proposed. While we appreciate that some State Exchanges have had success with modifying their approaches to auto re- enrollment and have not received consumer complaints, based on our experience operating the Federal Exchange and Exchanges on the Federal platform, we believe that the potential consumer harm related to this policy outweighs these potential benefits. In particular, we discussed several comments earlier in this preamble that described confusion consumers in Exchanges on the Federal platform have experienced related to this policy, including a few that cited examples of consumers who assumed that their health insurance agent had re-enrolled them in a different plan against their wishes. In the 2024 Covered California Member survey, the sample size of over 2,000 auto re-enrolled people drops to under 500 when restricted to those who reported being “Aware that their Plan Changed,” \102\ suggesting many enrollees did not understand the Exchange's change to their plan. Additionally, commenters did not address the risk that switching enrollees to a higher actuarial value plan without their knowledge could increase these enrollees' risk of tax liability.\103\ We believe that this potential negative impact, combined with consumer confusion, presents sufficient risk to outweigh the potential benefits that these commenters cite. Even bronze enrollees who are aware that they have been auto re-enrolled into a silver plan and who voiced support for this change according to Covered California's 2024 Member Survey might not be aware of potential implications to their tax liability, and those who are not aware of the change are even more at risk for incurring tax liability without realizing it.

\102\ NORC at the University of Chicago and Covered California. (2024, Nov. 21). Covered California's 2024 Member Survey. https://hbex.coveredca.com/dataresearch/library/Member_Survey_2024_Public_Report.pdf.

\103\ See discussion in the 2024 Payment Notice (88 FR 25823) regarding this potential risk in cases where APTC amount is determined based on inaccurate household income for the future year.

Finally, in response to requests for clarification on flexibility for State Exchanges in this area, we clarify that Exchanges can request flexibility regarding the annual redetermination processes described in Sec. 155.335(b) through (m), which include the auto re-enrollment hierarchy, per Sec. 155.335(a)(2)(iii). That is, Sec. 155.335(a)(2) provides Exchanges with three options to conduct annual redeterminations: under Sec. 155.335(a)(2)(i), an Exchange can apply the procedures described in paragraphs (b) through (m) of this section, and under (a)(2)(ii), an Exchange can apply alternative procedures specified by the Secretary for the applicable benefit year. Section 155.335(a)(2)(iii) allows Exchanges to apply alternative procedures approved by the Secretary based on certain criteria. In the 2025 Payment Notice (89 FR 26313), we explained that State Exchanges that cannot implement or choose not to implement the re-enrollment hierarchy at Sec. 155.335(j) may seek approval from the Secretary to conduct their own annual eligibility redetermination process as described in Sec. 155.335(a)(2)(iii). We already approve State Exchanges' requests for flexibility in this area on an annual basis, as part of their submission of their eligibility re-determination and re-enrollment plans, both in order to mitigate burden and to permit innovation that allows Exchanges to best serve their enrollees.

Specifically, regulations at Sec. Sec. 155.1200 and 155.1210 outline HHS's authority to oversee the Exchanges after their establishment. In 2014, HHS developed the State Marketplace Annual Reporting Tool (SMART) to facilitate State Exchanges' reporting to HHS on how they are meeting Federal program and operational requirements, including compliance with Federal eligibility and enrollment program requirements under 45 CFR part 155.\104\ On an annual basis, HHS gathers information about State Exchanges' Open Enrollment readiness and practices. Alongside this process, HHS also collects information on State Exchange plans for auto re-enrollment implementation, and conducts follow up discussion of any related questions or concerns prior to providing approval. During years where there have been regulatory changes that impact the Exchange functions this review covers, we provide technical assistance and targeted support for State Exchanges that have questions, and as needed, conduct further follow-up during Open Enrollment to ensure their operations were successful.

\104\ The SMART is currently approved under OMB control number: 0938-1244 (CMS-10507).

5. Verification Process Related to Income Eligibility for Insurance Affordability Programs (Sec. Sec. 155.305, 155.315, and 155.320)

The ACA provides Federal subsidies to reduce premium and cost sharing payments for lower-income households who purchase QHPs through the Exchanges. To guard against fraud and abuse, the ACA establishes a set of standards and processes to verify that consumers meet the eligibility requirements for APTC and CSR subsidies. In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12956 through 12968), we proposed several changes to the processes specifically related to verifying income eligibility for APTC and CSR subsidies.

Under the statutory framework, HHS is responsible for verifying and determining income eligibility. The ACA further directs HHS to establish compatible electronic information exchange systems for enrollment applications and eligibility verification and determination. This creates a clear expectation for HHS to develop a robust data matching program between Federal agencies, State Exchanges, and other trusted data sources to determine APTC payments using the most accurate income estimates. Giving a Federal agency like HHS primary responsibility for verifying and determining APTC eligibility follows from the fact that APTC payments are Federal expenditures.

Exchanges operate as the intermediary between HHS and the applicant. They provide the applicant's information to HHS and then HHS has the primary responsibility for verifying the information. However, when the IRS cannot verify the income information, HHS may delegate its responsibility to verify household income to the Exchanges. Still, HHS retains authority to regulate and guide how Exchanges verify this household income information, as well as responsibility for the data matching program used to establish, verify and update income eligibility. As the intermediary, the

Exchanges must also make the final connection with the applicant to resolve any outstanding income inconsistencies. The Exchanges' role here is to provide notice to the applicant, collect any documentary evidence from the applicant, and facilitate any final effort to resolve the inconsistency with the IRS or other trusted data sources.

Applicants also bear important responsibilities in this process. This primarily includes a responsibility to file Federal income taxes for any year that they receive APTC and, if they have had a change in circumstances or were not required to file taxes, to report and attest to accurate income information. The ACA, however, requires verification of applicants' attestations of household income under section 1411(c) or (d), as referenced in section 1411(e)(4) of the ACA. If the applicant's household income cannot be verified, the applicant is responsible for providing satisfactory documentary evidence or taking further steps to resolve the inconsistency with the Federal information sources. If the applicant fails to resolve the inconsistency, the APTC amount must be based on the income data from Federal sources provided to HHS under section 1411(c) of the ACA.

There is a critical balance HHS must achieve between assuring responsible stewardship of taxpayer dollars with protecting access to Federal program for those who qualify for them. In circumstances presenting higher-than-normal risks, it is appropriate for the agency to take greater-than-normal precautions against waste, fraud, and abuse while balancing access to Federal benefits over the long-term.

With that as background, we proposed the following changes to the processes in place related to verifying income eligibility for APTC and CSR subsidies. a. Failure To File Taxes and Reconcile APTC Process (Sec. 155.305(f)(4)) i. Delay of FTR Process Until After 2 Consecutive Years of FTR Removed

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12958 through 12961), we proposed to amend paragraph Sec. 155.305(f)(4) to reinstate the previous policy that an Exchange may not determine a tax filer or their enrollee eligible for APTC if: (1) HHS notifies the Exchange that APTC were paid on behalf of the tax filer, or their spouse if the tax filer is a married couple, for a year for which tax data would be utilized for verification of household and family size, and (2) the tax filer did not comply with the requirement to file a Federal income tax return and reconcile APTC for that year.

In the 2024 Payment Notice (88 FR 25814), we amended the FTR process to restrict an Exchange from determining a tax filer ineligible for APTC until they have failed to file a Federal income tax return and reconcile APTC for 2 consecutive tax years. We made this change to address operational challenges that required Exchanges to determine someone ineligible for APTC without having up-to-date information on the tax filing status of tax filers, to help consumers who may be confused or may have received inadequate education on the requirement to file and reconcile, to promote continuity of coverage for consumers who may not be aware of the requirement to file and reconcile, and to reduce the administrative burden on HHS.

When we adopted this 2-tax year FTR process, we acknowledged it could place consumers at risk of increased tax liability. To mitigate this concern, in the 2025 Payment Notice (89 FR 26298 through 26299), we required Exchanges to issue FTR warning notices for enrollees in Exchanges on the Federal platform who have not filed and reconciled for 1-tax year. We also acknowledged the risk for improper enrollment by consumers who know they can ignore their FTR status for an additional year, but concluded these instances would be limited as the majority of enrollees comply with FTR. Despite the potential for large tax liabilities and the risk of improper enrollment, we concluded that this policy would have a positive impact on consumers, while still ensuring program integrity as it would provide better continuity of coverage for consumers who may not be aware of the requirement to file and reconcile. We noted that we would continue to monitor the implementation of this new policy, including whether certain populations continue to experience large tax liabilities, and would consider whether additional guidance, or any additional policy changes in future rulemaking, are necessary.

Upon further analysis of enrollment data, as we previously stated in the proposed rule (90 FR 12959), we believe the 2-year FTR process places a substantially higher number of tax filers at a greater risk of accumulating increased tax liabilities.\105\ We also stated that we believe this is because the current FTR process could incentivize tax filers to not file and reconcile because they are allowed to keep APTC eligibility for an additional year without filing their Federal income tax return and reconciling APTC. If tax filers do not file and reconcile for 2 consecutive tax years, they could have an increasing tax liability due to APTC that is not reconciled on the tax return. For example, if a tax filer had projected their household income to be less than 200 percent of the FPL but had household income over 400 percent of the FPL when filing their Federal income tax return, the requirement to repay their excess APTC could constitute a major tax liability. Average APTC per month for those receiving it is $548 for OEP 2024.\106\

\105\ Marketplace Open Enrollment Period Public Use Files, https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files.

\106\ Ibid.

Considering new evidence regarding unauthorized enrollments, it became apparent that the 2-year FTR process established under the 2024 Payment Notice could impede Exchange efforts to mitigate unauthorized enrollments. At the time, we did not estimate the number of people with an FTR status who entered the OEP and either disenrolled, actively reenrolled without APTC, or resolved their FTR status and reenrolled with APTC. Due to concerns related to the safeguarding of Federal Taxpayer Information (FTI), the Exchanges on the Federal platform are unable to track specifically how many consumers originally identified as FTR prior to the OEP ultimately resolved their FTR status. This kind of information would have helped us fully understand the population that might take advantage of the current FTR process. Nor did we attempt to estimate the portion of people with FTR status who were likely ineligible for APTC. Rather, we assumed continuity of coverage with APTC was appropriate for everyone with an FTR status.

Moreover, we did not consider how changing the notice to reflect the new FTR process would impact enrollment decisions. The prior FTR direct notice (for PY 2020 and earlier) gave notice that access to APTC would end if tax filers failed to file and reconcile for 1-tax year, while the current 1-tax year FTR direct notice for PY 2025 provides notice for tax filers identified as having a 1-tax year FTR status that they may lose their APTC in the future if they do not file and reconcile their APTC. Tax filers with a 1-tax year FTR status or their enrollees are directed to file their Federal income tax returns and reconcile their APTC as soon as possible in the current 1-tax year FTR direct notice. Indirect notices for tax filers in both the 1-tax year and 2-tax year FTR status cannot directly tell an enrollee that they need to file their Federal

income tax return but encourage doing so in order to ensure that they remain eligible for APTC, along with other reasons why they may be at risk of losing APTC to mask FTI.

Upon further analysis of enrollment and tax filing data, we believe that Exchanges on the Federal platform currently have a substantially higher than normal number of enrollees who have not filed and reconciled as compared to the previous 1-year FTR process. We also stated that we revisited the enrollment and tax filing data from the OEP for PY 2020, as well as more recent enrollment data. During OEP 2025, the initial year in which FTR was resumed, the data shows that approximately 356,000 potential reenrollments entered OEP 2025 with a 2-tax year FTR status and approximately 1,500,000 potential reenrollments entered OEP 2025 with either a 1-tax year FTR status, an extension of the deadline to file their Federal income taxes, or had filed their Federal income taxes but had not attached IRS Form 8962 to reconcile their APTC. Under the current 2-year policy for PY 2025, enrollees with a 2-tax year FTR status could have actively reenrolled (but not auto-reenrolled) and attested to having filed and reconciled while IRS data still shows them as not having filed taxes for the 2022 or 2023 tax years, and the enrollees with a 1-tax year FTR status could have either actively or automatically reenrolled in an Exchange QHP without meeting the requirement to file taxes for the 2023 tax year. Historically, internal analysis of agency data has shown that, under the 1-tax year FTR process, between 15 percent and 20 percent of consumers originally identified at OEP as FTR end up losing their APTC due to the FTR Recheck process.

As of February 2025, we did not have information on the number of consumers who were identified as having a 2-tax year FTR status before the OEP and who have filed and reconciled in order to remain eligible for APTC. We stated in the proposed rule that it is probable that due to the increase in enrollment under the 2-tax year FTR policy, the number of consumers who would remain covered into the second year would be greater than the 81,600 we previously estimated (90 FR 12960). Since publishing the proposed rule, we are updating our initial data projections as we initiated FTR Recheck operations in March 2025. Of the approximate 1,500,000 potential re-enrollments who entered OEP 2025 with either a 1-tax year FTR status, a valid tax filing extension from IRS, or had filed their Federal income taxes but had not attached IRS Form 8962 to reconcile their APTC (non-reconcilers), approximately 400,000 enrollees with either a 1-tax year FTR status or a non- reconciler status were identified during FTR Recheck. This represents a drop of 73 percent of the initially identified FTR population, suggesting that the 1-year notices sent during the OEP were relatively effective and also followed historical trends observed by HHS. The 2- year FTR status population decreased from 356,000 to approximately 270,000, a decrease of 24 percent. This suggests that the 2-year population is less responsive to notices than the 1-year population.

Furthermore, in the proposed rule (90 FR 12960), we stated that we believe the proposed 1-tax year FTR process can serve as a backstop to improper enrollments. The Paragon Health Institute provided evidence that lead generation companies associated with noncompliant agents, brokers, and web-brokers are misleading enrollees with the promise of free coverage and other enticements.\107\ In these cases, some people are likely not aware they are enrolled in QHP coverage with APTC because, in response to misleading advertisements promising cash or gift cards, they provided enough personal information for agents, brokers, and web-brokers to improperly enroll them in such coverage with APTC without their knowledge.\108\ These schemes tend to target low-income people, many of whom likely have a projected annual household income of less than 100 percent of the FPL. Under these schemes, some agents, brokers, or web-brokers improperly enroll people in QHP coverage with APTC who would not otherwise qualify. Individuals who were improperly enrolled may not realize they are enrolled in Exchange coverage until they receive a Form 1095-A. These individuals can obtain a voided Form 1095-A and avoid improper tax liabilities, but the process is burdensome and could lead to delays or errors in tax filing. Improvements have been made to the Unauthorized Enrollment (UE) casework process to reduce consumer burden; in addition, CMS and IRS have several resources about what a consumer should do if they believe they were enrolled in a UE and they need a voided Form 1095-A.\109\ In the proposed rule we stated that we believe that FTR status may provide a strong indicator that a current enrollee entering the OEP has income that makes the household ineligible for APTC. Generally, people with lower incomes do not need to file taxes unless their income is over the filing requirement. Because the income filing requirement for a single filer with no self-employment income aligns with the eligibility threshold for APTC--$14,600 for 2024 tax filing compared to $14,580 for 2024 APTC eligibility--people who inflate their income to qualify for APTC will often have an income low enough to, absent the receipt of APTC, not require them to file taxes. In this case, the FTR status likely reflects a lack of understanding of the need to file taxes based on the receipt of APTC which, if they still think they do not meet the filing requirement based on their income, means they are likely to have an income too low to meet the APTC eligibility threshold.

\107\ Blase, B; Kalisz, G. (2024, August). Unpacking The Great Obamacare Enrollment Fraud. Paragon Health Institute. https://paragoninstitute.org/private-health/unpacking-the-great-obamacare-enrollment-fraud/.

\108\ Ibid.

\109\ Resource on reporting UE to Marketplace Call Center: https://www.cms.gov/files/document/agent-broker-infographic-2024-final.pdf.

We established the current 2-tax year FTR process at the end of the COVID-19 Public Health Emergency (PHE). At that time, we had paused the removal of APTC under the FTR process because the pandemic severely impacted the IRS's ability to process tax returns for the 2019, 2020, and 2021 tax years.\110\ Continuing the FTR process during that time would have removed APTC from substantial number of eligible enrollees who timely filed tax returns but had not had their tax returns processed yet.

\110\ CMS. (2022, July 18). Failure to File and Reconcile (FTR) Operations Flexibilities for PY 2023. https://www.cms.gov/cciio/resources/regulations-and-guidance/ftr-flexibilities-2023.pdf.

While many enrollees did in fact file their Federal income taxes and reconcile APTC while FTR was paused during the COVID-19 PHE, in light of the substantial increase in improper enrollments HHS observed during PY 2024, we stated in the proposed rule (90 FR 12960) that we believe that reverting back to the pre-existing FTR policy in place before the COVID-19 PHE, is a critical program integrity measure that could further protect Exchanges and enrollees from improper enrollments. Specifically, we stated that we are concerned that the current policy of pausing removal of APTC due to an FTR status for an additional year could potentially let improperly enrolled enrollees stay enrolled for another year undetected. If an improper enrollment is not detected by the other methods that the Exchange has implemented, the proposed 1-tax year FTR process should

act as a backstop to ensure that an enrollee who is improperly enrolled loses APTC after 1 year of failing to file and reconcile instead of 2 years of failing to file and reconcile. For example, under the 1-tax year FTR process, people received a notice that they would lose their eligibility for APTC unless they met the requirement to file and reconcile. Whereas under the current 2-tax year FTR process, enrollees do not receive notification that they are imminently at risk of losing their APTC until they have had an FTR status for 2 years. As background, under the current process, Exchanges can choose to send (1) a direct notice to tax filers, (2) an indirect notice to enrollees, or (3) both a direct and indirect notice to enrollees with either 1-tax year and 2-tax year FTR status.\111\ Enrollees with a 1-tax year FTR status can receive either a direct notice that they must file and reconcile, but they are not at risk for losing APTC for the current plan year if otherwise eligible, or an indirect notice that indirectly tells the enrollee to ensure they have done all the actions necessary to keep their APTC eligibility, including filing their Federal tax return and reconciling their APTC. It is not until an enrollee receives an FTR notice for the second tax year that they are instructed to file and reconcile as soon as possible to avoid losing APTC for the applicable plan year.

\111\ Direct notices contain Federal tax information (FTI) and are sent to tax filers, while indirect notices do not contain FTI and can be sent to enrollees who may not be their tax household's tax filer.

After reviewing the tax filing data, we stated in the proposed rule (90 FR 12960) that we remain concerned that enrollees are accumulating tax liabilities due to misestimating their income. Before the COVID-19 PHE, over 50 percent of people who filed tax returns and reconciled APTC received excess APTC for the 2016, 2017, 2018, and 2019 tax years.\112\ For those who filed their taxes and reconciled their APTC, the accumulation of any tax liability is limited to a single year. In 2022, excess liability represented 11.5 percent of total APTC payments reported on tax returns.\113\ This tax liability, if not paid by the taxpayer, will continue to be an outstanding debt to the IRS and may accrue interest and penalties. To mitigate any accumulation of liability, the longstanding FTR process had disenrolled people from APTC after giving them over 6 months to resolve their FTR status after initial notification. The current process could potentially provide up to 18 months after an initial FTR notice is received for a tax filer to comply with the requirement to file and reconcile their APTC. We stated in the proposed rule (90 FR 12961) that we no longer believe this provides reasonable protection against accumulating tax liabilities.

\112\ IRS. (2024, Dec. 30). SOI Tax Stats--Individual Income Tax Returns Line Item Estimates (Publications 4801 and 5385). Dep't of Treasury. https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-line-item-estimates-publications-4801-and-5385.

\113\ https://www.irs.gov/pub/irs-pdf/p4801.pdf.

Furthermore, in the current environment, as Exchanges on the Federal platform attempt to ensure that unauthorized enrollments are removed from QHP coverage and have APTC ended, we believe that there are still a large number of ineligible enrollees, which is increasing the burden on taxpayers because, due to repayment limitations discussed previously, not all ineligible enrollees who receive APTC are required to fully repay any APTC improperly received. Those unpaid liabilities add to Federal APTC expenditures. We did not previously estimate the Federal cost of the current FTR process due to providing coverage and APTC continuity to enrollees who were ineligible for APTC and not liable for repaying the full excess of their APTC. In the proposed rule (90 FR 12961), we stated that we estimate up to 18.5 percent \114\ of people currently in FTR status may be ineligible for APTC based on the overall growth in the 100 to 150 percent of the FPL population of the Exchanges on the Federal platform between 2019 and 2024, if the growth is due to noncompliant agents, brokers, and web-brokers enrolling enrollees who are actually below the 100 percent of the FPL threshold. However, we stated in the proposed rule that this population would also be impacted by numerous other proposals in the proposed rule as well as other actions that HHS has taken over the past year to protect the Exchanges, and we are unable to isolate the proposed impact of changing the FTR policy.

\114\ Figure derived from CCIIO analysis of internal agency data.

Overall, we stated in the proposed rule (90 FR 12961) that this new analysis of the enrollment and tax filing status suggests a large number of people with FTR status are ineligible for APTC and that pausing removal of APTC due to an FTR status allows ineligible enrollees to accumulate tax liabilities. These additional liabilities create a substantial financial burden for enrollees who must repay the excess APTC and increase the Federal APTC expenditures. Moreover, we stated our view in the proposed rule that the ACA does not allow HHS to determine someone eligible for APTC if they failed to meet the requirement to file a tax return. Therefore, to align regulations with the ACA, protect people from accumulating additional Federal tax liabilities, and reduce the Federal expenditures associated with APTC expenditures for ineligible enrollees, we proposed to reinstate the FTR process that requires Exchanges to determine enrollees ineligible for APTC when HHS notifies the Exchange that a taxpayer has failed to file a Federal income tax return and reconcile their past APTC for a year for which their tax data would be utilized to verify their eligibility.

We proposed to implement the proposed 1-year FTR process beginning with OEP 2026 in the fall of 2025. This would allow enrollees currently in a 1-tax year FTR status to receive appropriate noticing informing them of the urgent need to file their Federal income tax return and reconcile APTC in order to remain eligible for APTC.

We sought comment on this proposal.

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 a modified policy under which all Exchanges will be required to deny APTC once an applicant has failed to file and reconcile APTC for 1 year, but only through the end of PY 2026. Thereafter, the 2-year FTR policy in effect today that allows an Exchange to deny APTC only once an applicant has failed to file and reconcile APTC for 2 consecutive years, will spring back into effect. While the 1-year FTR policy is needed right now to reduce the number of improper APTC payments in Exchanges on the Federal platform, its utility is less apparent in the context of the expiration of the expanded subsidies and fully-subsidized benchmark plans, which removes much of the incentive for unscrupulous agents and brokers to fraudulently enroll consumers into Exchange coverage who then may not know they need to file Federal income taxes and reconcile APTC. Commenters also expressed concern that the 1-year FTR may result in coverage losses because the tax filing process is complex, and many consumers are not fully aware of the requirements to file and reconcile. Commenters suggested that this could especially be true for young persons, which might result in a less healthy risk pool. Commenters also expressed concern that low-income consumers would be negatively affected by proposals requiring household income verification because persons in this group have a much more difficult time predicting and verifying income

due to unpredictable nature of their income.

Therefore, to balance competing concerns, this policy will sunset automatically after the completion of one new coverage year, PY 2026, on December 31, 2026. The two-year FTR policy will be in effect for PY 2027 and beyond, beginning with Open Enrollment for PY 2027. As such, we are adding a new special rule at Sec. 155.305(f)(4)(iii), which states that for PY 2026, Exchanges must follow the 1-year FTR policy and 1-year FTR notice requirements.

Comment: Many commenters opposed the proposed policy change to revert to the 1-year FTR policy stating that the two-year policy strikes a better balance between ensuring that enrollees file their Federal income taxes and reconcile APTC, while also allowing for the fact that the IRS data is often delayed due to long processing times, especially for paper filers and amended income tax returns.

Response: While we agree that long IRS processing times of Federal income tax returns, especially for those filing paper and amended tax returns, may impact an Exchange's FTR operations, we believe this is unlikely a sufficient reason to maintain the current two-year FTR process for 1 year while addressing the imminent program integrity concerns. Further, we attempt to mitigate the long IRS processing times with the FTR Recheck process, which allows for enrollees who have filed by the October 15 extended filing date to attest to doing so, while maintaining eligibility for APTC for the following coverage year. FTR status is rechecked early in the coverage year to compare attestations with more recently updated FTR data. If a consumer is still showing as FTR after FTR Recheck, then the consumer receives a notification before a final check of FTR status before the Exchange terminates eligibility for APTC. Consumers who believe they have erroneously been found ineligible for APTC should contact the Marketplace Appeals Center.\115\

\115\ The Marketplace Appeals Center can be contacted at 1-855- 231-1751.

Comment: Many commenters expressed concern over the short time frame for implementing the 1-year FTR policy and asked to extend the implementation date until OEP 2027. They noted that many of their plans for OEP 2026 are already being finalized, and their time and State budgets have already been committed to different projects, which will prevent State Exchanges from completing the necessary IT infrastructure and eligibility logic changes to revert to a 1-year FTR policy.

Response: We understand these concerns, however, we believe that implementing this policy as soon as practicable and implementing the 1- year FTR policy during PY 2026 is most appropriate to address imminent improper enrollment concerns associated with fully-subsidized plans and the expanded subsidies generally. As we explain earlier in this section, under the 1-year FTR policy, consumers are more likely to discover their improper enrollments after 1 year, instead of 2 years, lessening their risk of increased tax liability due to premium subsidies paid on their behalf. That said, we understand that once the excess improper enrollments have been shed and the expanded subsidies are no longer shielding enrollees from all costs associated with coverage, the efficiency of maintaining the 1-year FTR policy is less clear. Thus, we are finalizing this policy as proposed, but with a modification that Exchanges will be required to implement the 1-year FTR policy through the conclusion of PY 2026 on December 31, 2026.

Comment: Many commenters expressed concern that the proposed 1-year policy would increase coverage loss, especially among those who are lower-income individuals and homeless as they would no longer be able to afford their monthly Exchange premium after APTC is terminated, as well as having a negative impact on the risk pool. Relatedly, many commenters expressed concern about the potential increase in IRS delays and the impact that delayed data could have on the 1-year process.

Response: We thank these commenters for their concern. We share commenters' concerns about the risk of coverage losses among lower- income individuals. However, we believe that imminent program integrity concerns merit the need for a temporary policy. As the Department is concerned with potentially unwarranted coverage loss, we are finalizing this policy for PY 2026 only, with a reversion to the previous 2-year policy for PY 2027 and beyond. This approach allows us to balance ensuring that consumers who have not filed their Federal income taxes and reconciled APTC due to improper enrollment, do not retain unwanted or unneeded coverage as well as preventing the loss of coverage by enrollees who have complied with tax filing requirements over the long- term. We also note that, if an enrollee believes that they lost APTC erroneously due to FTR, they can file an appeal with the Marketplace Appeals Center.

Comment: A few commenters stated that the change in the FTR policy does not meet the Administrative Procedure Act (APA) requirements for reasoned decision-making because they believe that HHS has failed to provide the public with adequate data to adequately comment on the proposed rule.

Response: In the proposed rule (90 FR 12959 through 12961), we provided historical data for the 1-tax year FTR process as well as data estimates provided in the 2024 Payment Notice for the 2-tax year FTR process to represent the FTR population prior to the publishing of the proposed rule. This data showed that more consumers would have an FTR status (either 1 year or 2 year) as compared to the prior 1-tax year process, which would increase Federal expenditures. In addition, we provided tax filing status data that supported the current 2-year FTR process placing a substantially higher number of consumers at risk of accumulating increased tax liabilities than compared to a 1-year FTR process. We believe that this data supports the need for and the reasonableness of the FTR policy change while providing adequate notice to the public to comment on this policy change.

As we explained in the proposed rule (90 FR 12959), the Initial FTR Recheck data from the 2-year policy was not available at the time of publishing the proposed rule. We have provided updated data in preamble of this final rule about the FTR population following the FTR Recheck process and is current as of April 2025. We believe this data further supports the need for this near-term policy change after which we can closely monitor its impacts. HHS is of the view that the best way forward is to act now to guard against improper payments of APTC and the potential for increased tax liability by finalizing the 1-year policy for all Exchanges effective for the 2026 coverage year.

We also note that some commenters may believe that we have additional data regarding the FTR population. We reiterate that due to FTI privacy concerns, we have a limited set of data regarding the FTR population and to protect FTI, the data generally, does not trace how an enrollee moves through the FTR process in order to protect FTI. Instead, we examined the overall population level data that shows how the FTR population decreases as tax filers either file and reconcile or lose eligibility for APTC or QHP coverage for other, non-FTR related reasons.

Comment: Commenters expressed concern that the change could increase coverage loss, as well as negatively impact the risk pool because healthy

individuals are less likely to jump through administrative hurdles to keep their coverage. They also expressed concern that many people will forgo their health coverage, thereby leading to lower levels of community health and increased incidence of communicable disease, potentially even increasing diseases such as HIV/AIDS if they are not well controlled due to lack of insurance and ability to purchase medications.

Response: We appreciate and share commenter concerns about the potential for increased coverage loss and potential negative impacts on the risk pools. For this reason and others outlined in section III.B of this final rule, we think it is prudent to closely monitor the effects of the implementation of this policy for a year to measure the impacts of the change in the FTR policy on the number of enrollees who lose coverage due to FTR. Finally, as mentioned above, consumers may submit an appeal to the Marketplace Appeals Center if they believe that they lost APTC erroneously due to FTR.

Comment: Many commenters expressed concern that the tax filing process is complex, and many consumers are not fully aware of the requirements to file and reconcile, especially for the population that is more transient, as well as those not as financially or technologically literate. They noted that many of these consumers are simply unaware of how the tax system works, and consumers are not trying to purposefully game it and potentially incur criminal penalties from not filing Federal income taxes. They recommended States partner with providers who serve those who are experiencing homelessness to ensure consumers are aware of the need to file and reconcile.

Response: We appreciate these concerns, but also note that HHS does not have authority over the Federal income tax rules in the Internal Revenue Code. We note that the IRS's Volunteer Income Tax Assistance (VITA) curriculum includes information on the requirement to file and reconcile and that through VITA, IRS-certified volunteers are available to help individuals who need assistance in preparing their own tax returns, including people who make $67,000 or less, persons with disabilities, and limited English-speaking taxpayers. We will continue to educate consumers about the requirement to file and reconcile using notices throughout the FTR process and also encourage State Exchanges to work with homeless service providers in their States to ensure consumers are aware of the need to file and reconcile.

Comment: A few commenters expressed support for the 1-year FTR policy and noted that the proposed changes would save taxpayer money by reducing APTC payments on behalf of ineligible enrollees or consumers who were unaware of their enrollment. One commenter agreed with HHS' concern for preventing accumulating balances of back taxes on behalf of consumers.

Response: We agree with the commenters and note that reverting back to a 1-year FTR policy will help mitigate the risk of improper enrollment in the Exchanges, while also protecting consumers from incurring large tax liabilities due to failing to file and reconcile APTC. Finalizing this policy for 2026 allows us to balance these imminent concerns with longer-term desires to streamline enrollment processes.

Comment: A State Exchange noted that only 1 percent of their enrollees failed to file a tax return for 2 consecutive tax years when they ran FTR Recheck this year.

Response: Due to IRS data constraints, if State Exchanges used the Hub service to call IRS for their consumers' FTR statuses between December 8, 2024 and March 29, 2025, it is highly likely that a consumer with a 2-year FTR status would return a 1-year FTR response from the IRS. Unfortunately, this error was not discovered until Exchanges on the Federal platform started FTR Recheck operations in January 2025. While we understand that many State Exchanges' FTR populations do not mirror the Exchanges on the Federal platform for a variety of reasons, it seems likely that the State Exchanges that had such low 2-year FTR rates may have called the IRS Hub service while the IRS's data was not being correctly reported. We understand that many State Exchanges did not perform FTR Recheck operations until later in the coverage year.

Comment: Many State Exchanges recommended that they should retain flexibility regarding their notices because they need to meet both Federal and State requirements and forced alignment with requirements for Exchanges on the Federal platform could open States to burdensome requirements and possible litigation. Other State Exchanges noted that they only provide enrollment options through their Exchange website and their Navigators work with their enrollees to help project their income and educate them on the need to file and reconcile.

Response: We acknowledge State Exchanges' request to retain flexibility in their notice requirements. HHS has retained the current flexibility regarding FTR notices allowed to State Exchanges in the finalized rule and these flexibilities would remain in place whether Exchanges are required to use a 1-year or 2-year FTR policy.

Comment: A few commenters stated that HHS should fully repeal FTR processes because there is no statutory authority for it.

Response: We disagree with commenters that there is no statutory authority for Exchanges to conduct FTR. Consumers who receive APTC are required to file income taxes pursuant to section 6011(a) of the Code and regulations prescribed by the Secretary of Treasury. Section 36B(f) of the Code requires taxpayers to reconcile their APTC under section 1412 of the ACA with their PTC allowed under section 36B of the Code. FTR regulations, implemented pursuant to the Secretary of HHS' general rulemaking authority under section 1321(a) of the ACA, facilitate compliance with those requirements and were implemented as part of the original Exchange Establishment Rule. ii. Conforming Change to Notice Requirements

To conform with this proposed FTR process, in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12961 through 12962), we proposed to revise the notice requirement at Sec. 155.305(f)(4)(i) and remove the notice requirement at Sec. 155.305(f)(4)(ii). When we finalized the current FTR process for PY 2025 in the 2024 Payment Notice (88 FR 25814) to require 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 tax years, we did not impose a requirement for Exchanges to notify such enrollee during the first year that they failed to file and reconcile. We then amended Sec. 155.305(f)(4) in the 2025 Payment Notice (89 FR 26298 through 26299) to require that all Exchanges send one of two notices to tax filers or enrollees with an FTR status for 1 year, and again in the 2026 Payment Notice (90 FR 4472 through 4473) to require that all Exchanges send one of two notices to tax filers or enrollees with an FTR status for 2 consecutive tax years. Accordingly, for both an enrollee's first and second year with an FTR status, all Exchanges must have either (1) notified the tax filer directly of their FTR status and educate them of the need to file and reconcile or risk being determined ineligible for

APTC if they fail to file and reconcile for a second consecutive year, or (2) sent an indirect notification to either the tax filer or their enrollee that informs them they are at risk of being determined ineligible for APTC in the future. The indirect notice must do so without indicating that the tax filer has failed to file and reconcile their APTC for both the first year and the second year that they have been found not to have done so in order to protect FTI.

Because we proposed to amend Sec. 155.305(f)(4) to require Exchanges to determine people ineligible for APTC after one tax year of FTR status rather than 2 consecutive tax years, the current notice requirement aimed at tax filers in a 2-tax year FTR status would no longer apply. Therefore, we proposed to revise the notice requirement at Sec. 155.305(f)(4)(i) and remove the notice requirement at Sec. 155.305(f)(4)(ii). We invited comment on this proposal.

To ensure tax filers and enrollees receive advanced notice of their FTR status and the risk for being determined ineligible for APTC after removing this notice requirement, we proposed to reinstate the notice procedures that existed before we established the current FTR process for Exchanges on the Federal platform. See Table 3 for summary of notices sent.

Table 3--FTR Recheck Notices and Timing

Notices Timing

Enrollees with FTR status receive Marketplace Fall (prior to OEP

Open Enrollment Notice (MOEN) with FTR language beginning).

& tax filers receive OE FTR direct notice. Tax filers receive FTR Recheck direct notice and Early winter (shortly

enrollees receive FTR Recheck Indirect Notice after OEP ends).

upon completion of FTR Recheck. Upon final recheck, enrollees losing APTC Spring.

receive updated Eligibility Determination

Notice (EDN) and tax filers receive Stop APTC

direct notice.

If enrollees have attested to filing and reconciling, enrollees would be discontinued from APTC only after the IRS checks and rechecks their FTR status four times. We stated in the proposed rule (90 FR 12962) that we believe this gives ample notice to enrollees who may have been confused about the requirement to file and reconcile and provides the IRS enough time to process tax returns for enrollees who complied. We also stated that we believe this procedure ensures that enrollees who are eligible for coverage continue to receive coverage. Under this proposed requirement at Sec. 155.305(f)(4)(i)(B), State Exchanges would be responsible for administering their own notice procedure with flexibility to send either direct notices containing FTI, or indirect notices which do not contain any protected FTI, or both.

We sought further comment on whether State Exchanges should be required to align with Exchanges on the Federal platform on this consumer noticing and recheck process.

After consideration of comments and for the reasons outlined in the proposed rule, final rule, and our responses to comments, including the reasons outlined in Section III.B of this final rule, we are finalizing the addition of Sec. 155.305(f)(4)(iii) for all Exchanges. Once these policies sunset at the end of PY 2026, the 2-year FTR policy will apply to all Exchanges, as well as the requirements to send FTR notices under the currently effective versions of Sec. Sec. 155.305(f)(4)(i)(B) and (f)(4)(ii). We summarize and respond to public comments received on the proposed FTR notice policy below.

Comment: Several commenters were concerned with ensuring that enrollees receive adequate notice of appeal and extension rights if there is a mistake in the FTR process.

Response: We agree with commenters that enrollees should receive adequate notice about the requirement to file their Federal income taxes and reconcile APTC, which is why the Exchanges on the Federal platform exceed the requirements of this rule in notifying tax filers and/or their enrollees. Exchanges on the Federal platform provide a direct notification to the tax filer and an indirect notification that does not disclose FTI to the enrollee before the OEP, at the time of FTR Recheck, as well as when an enrollee's APTC is terminated. HHS includes instructions in both the APTC termination notice to the tax filer after removal of APTC as well as the enrollee's updated Eligibility Determination Notice on how to contact the Marketplace Appeals Center to appeal their FTR status if a consumer believes they have filed and reconciled.\116\ We recommend that State Exchanges also include this information in their notices to enrollees and/or tax filers.

\116\ https://www.cms.gov/marketplace/in-person-assisters/applications-forms-notices/notices.

Comment: Many commenters expressed concern that the 1-year FTR process would not provide sufficient notice and would be insufficient to meet due process requirements because the notices are spread out over a year, and because the indirect notice does not explain in sufficient detail why the individual is losing APTC or what they could do to remediate the issue and be successful in appeal. They believed the current 2-year process, including the associated notices, should remain in place.

Response: While we appreciate the commenters' concern, we believe the 1-year FTR process would provide sufficient notice. A consumer would receive their first FTR notice approximately six months before losing their eligibility for APTC for failing to file their income taxes and reconcile their APTC. While an indirect notice may not specifically state that a consumer has been identified as failing to file their Federal income tax returns and reconcile, it should say that a consumer needs to file their Federal income tax return and reconcile APTC to remain eligible for APTC. We note that the notice policies that we finalize in this rule describe the minimum requirements for these notices, and States are free to provide a direct notice to the tax filer as well. We have provided guidance to State Exchanges to ensure the notice content is adequate.\117\

\117\ OMB Control No. 0938-1207.

b. 60-Day Extension To Resolve Income Inconsistency (Sec. 155.315)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12962 through 12963), we proposed to remove Sec. 155.315(f)(7) which requires Exchanges to provide an automatic 60-day extension in addition to the 90 days currently provided by Sec. 155.315(f)(2)(ii) to allow applicants additional time to provide documentation to verify household income.

According to section 1411(e)(4)(A) of the ACA, part of the process to verify the accuracy of information provided on

applications requires Exchanges to provide applicants an opportunity to correct an inconsistency with HHS or other trusted data sources when the inconsistency or inability to verify the information is not resolved by the Exchange. This requires Exchanges to give applicants notice of the inability to resolve the inconsistency and verify the information. Exchanges must also provide the applicant an opportunity to either present satisfactory documentary evidence or resolve the inconsistency with HHS or other trusted data sources during the 90-day period beginning on the date on which the notice is sent to the applicant. Section 1411(e)(4)(A) of the ACA also states HHS may extend the 90-day period for enrollments occurring during 2014.

When we explained the legal basis for a 60-day extension in the 2024 Payment Notice (88 FR 25819), we stated the proposal aligns with current Sec. 155.315(f)(3), which provides extensions to applicants beyond the existing 90 days if the applicant demonstrates that a good faith effort has been made to obtain the required documentation during the period. We noted that it is also consistent with the flexibility under section 1411(c)(4)(B) of the ACA to modify methods for verification of the information where we determined such modifications would reduce the administrative costs and burdens on the applicant. However, as discussed previously, section 1411(c)(4)(B) of the ACA specifically limits modifications on how information is exchanged and verified between HHS and trusted data sources and does not extend to other aspects of the verification process. Therefore, section 1411(c)(4)(B) of the ACA does not provide a statutory basis to modify the length of the 90-day response period.

Section 1411(e)(4)(A) of the ACA also limits modifications to the 90-day response period. This language allows HHS to extend the 90-day period in 2014. This flexibility was clearly intended to accommodate any issues that might arise during the first year HHS administered eligibility determinations for premium and cost-sharing subsidies. By expressly including this specific allowance to extend the 90-day period for 2014, the language strongly suggests Congress did not intend to allow any further extensions to the 90-day period. Therefore, we do not believe Sec. 155.315(f)(7) conforms with the statute.

Based on this reading of the statute, we stated in the proposed rule (90 FR 12963) that we question whether the extension of the 90-day period when an applicant demonstrates a good faith effort to obtain documentation during the period under Sec. 155.315(f)(3) conforms with the statute. Due to the ad hoc nature of this good faith effort extension, we stated that we believe this is likely an appropriate use of our authority. In contrast, the automatic 60-day extension, in effect, categorically suspends the 90-day period and replaces it with a 150-day period which we believe falls well outside our authority.

We stated in the proposed rule (90 FR 12963), that even if the statute allowed an automatic 60-day extension, our review of how applicants used the 60-day extension shows that the benefits we previously anticipated have not materialized. When we adopted the 60- day extension in the 2024 Payment Notice (88 FR 25819 through 25820), we determined the change would ensure consumers are treated equitably, ensure continuous coverage, and strengthen the risk pool. However, we stated in the proposed rule (90 FR 12963) that upon further review of the prior experience and the current experience using the 60-day extension, we find the 60-day extension largely does not deliver the benefits anticipated. Instead, we stated that we find the change weakened program integrity.

As we stated in the proposed rule (90 FR 12963), we previously determined that 90 days is often an insufficient amount of time for many applicants to provide income documentation, since it can require multiple documents from various household members along with an explanation of seasonal employment or self-employment, including multiple jobs. The previous review of income DMI data indicated that when consumers receive additional time, they are more likely to successfully provide documentation to verify their projected household income. We stated that between 2018 and 2021, over one third of consumers who resolved their DMIs on the Exchange did so in more than 90 days.

We further stated in the proposed rule (90 FR 12963) that while we previously found one-third of consumers who resolve income DMIs used an extension between 2018 and 2021, our review from 2024 shows that applicants who successfully used the extension represented 55 percent of the total income DMIs. We also found that the percent of all applicants with an income DMI who used an extension represented 60 percent of total income DMIs. We noted that after implementing the 60- day extension, we did not see that the extension improved these statistics. Of those who successfully resolved their income DMI in 2024, 58 percent used the extension which is about the same as before in 2022. This suggests that, before the automatic 60-day extension, anyone who needed a 60-day extension was granted one under Sec. 155.315(f)(3), and the automatic 60-day extension only served to keep people who were able to provide documentation within 60 days (instead of 120 days) covered for a longer period. Additionally, we estimated this increased APTC expenditures by $170 million in 2024. Therefore, we determined that the automatic 60-day extension did not provide a meaningful benefit to consumers and weakened program integrity.

We sought comment on this topic and suggestions to alleviate this concern.

As we discussed in other aspects of the proposed rule, there are often countervailing impacts on the risk pool and program integrity from the policy decisions we make. In this case, we stated in the 2024 Payment Notice (88 FR 25820) that consumers in the 25-35 age group were most likely to lose their APTC eligibility due to an income DMI, resulting in a loss of a population that, on average, has a lower health risk, thereby negatively impacting the risk pool. Therefore, we concluded that adding the automatic 60-day extension would improve the risk pool by making it easier for younger and healthier populations to enroll.

In the proposed rule (90 FR 12963), we stated that we must weigh this potential positive impact on the risk pool against the substantial increase in APTC expenditures that we identified from ineligible people who stay enrolled and receive APTC for an additional 60 days. We stated that we believe the cost to taxpayers and decline in program integrity outweigh any possible benefit to the risk pool.

We stated in the proposed rule (90 FR 12963) that providing a 60- day extension for households with income DMIs only serves to increase APTC payments and tax liabilities for ineligible enrollees during the extension. Therefore, we stated that we believe the cost of the extension outweighs the benefits.

As stated previously and in the proposed rule, we now believe that the automatic 60-day extension falls outside of our authority and therefore statutory language compels us to make this change. As such, we must make this change permanent.

We sought comment on this proposal.

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, as proposed, the removal of 155.315(f)(7). This amendment will be applicable as of the effective date of this rule. We summarize and respond below to public comments received on the proposed removal of the 60-day extension for households to resolve income DMIs.

Comment: Some commenters supported the proposal, most of whom were advocacy groups or large issuers who supported the proposal's focus on addressing fraud. One supportive commenter referenced surprise tax bills as an additional benefit of updated verification requirements.

Response: We acknowledge and appreciate the commenters' support for this proposal, which we believe will reduce fraud in Exchanges.

Comment: Many commenters expressed concern that the proposed policy would disproportionately impact some consumer groups and present barriers to enrollment. Specific groups referenced included, among others, low-income people, rural individuals, persons with disabilities, people of color, Tribal communities, and seniors.

Response: We acknowledge commenters' concern. While we do not believe the 60-day automatic extension is consistent with our statutory authority under the ACA, as discussed in the proposed rule (90 FR 12962 through 12963), consumers with difficulties resolving their data matching issues remain eligible for the extension outlined in Sec. 155.315(f)(3). We will continue to evaluate program performance to identify inconsistency resolution trends among all groups and the impact of these operational changes on identified groups.

Comment: Many commenters expressed concerns that proposed policy would adversely affect consumers who are employed in the gig economy or seasonal work.

Response: We recognize that consumers with multiple streams of income information experience more complex income DMI verification processes and may encounter increased administrative burden in providing the documentation to resolve their DMIs. We believe that the policy we are finalizing in this rule still provides sufficient time for consumers to provide documentation for verification because a review of income inconsistency resolution data before and after the implementation of the extension did not demonstrate a significant increase in resolution with the additional 90 days, indicating under most conditions consumers across all income data matching issue scenarios, including gig workers, can verify their data matching issues in the provided timeframe. Furthermore, we want to emphasize that this change does not prevent consumers from receiving an extension as outlined in Sec. 155.315(f)(3) should they meet the applicable criteria.

Comment: Some State Exchanges noted that the payment integrity data CMS proposed is inconsistent with their data and requested additional flexibilities in extensions for their distinct populations. The particulars of the inconsistencies noted by these State Exchanges varied by State, however, the Massachusetts Commonwealth Health Insurance Connector Authority provided an example, stating “the Health Connector does not experience those challenges that CMS describes as occurring within the FFM.” Specific concerns raised by States included, among others, a lack of analysis of Medicaid expansion vs non-expansion States and the lack of analysis in the proposed rule of which States utilize third party agents and brokers.

Response: We acknowledge that State Exchanges have nuances in their demographics and payment integrity data, however, we believe that this change is necessary given that the requirement to automatically provide a 60-day extension at Sec. 155.315(f)(7) is inconsistent with our statutory authority. Because this is a statute-driven change, we believe that this change must be implemented across all Exchanges, regardless of the data matching dynamics in the particular context of implementation. Furthermore, we believe that consumers should have sufficient time to submit documentation to verify their projected household income within the inconsistency period without the automatic 60-day extension given that the income inconsistency resolution data before and after the 60-day extension as referenced in the proposed rule (90 FR 12963), indicating that this change is not anticipated to unreasonably adversely impact consumers in State Exchanges. Finally, we note that Sec. 155.315(f)(3) already allows State Exchanges to extend the 90-day period in Sec. 155.315(f)(2)(ii) when an applicant demonstrates that a good faith effort has been made to obtain the required documentation during the period. This finalized change removes the requirement for all Exchanges to provide an automatic, general 60- day extension, but it does not restrict a State Exchange's flexibility on exercising its extension authority on a case-by-case basis.

Comment: Some commenters, particularly individual advocacy groups, stated that CMS should evaluate the inclusion of other data sources into income verification processes rather than removing the 60-day extension in order to support program efficiency and integrity.

Response: We may continue to evaluate data sources which may be more appropriate for income verification procedures, however, we are making this change to fulfill our responsibility to align policy with statutory authority which is independent of considerations for additional verification methods. We believe that additional data sources could complement the changes we are finalizing to the automatic extension, however, their inclusion would not substitute for the necessity of making this change. We take the position that ultimately this change will improve program integrity, and believe that consumers should still have sufficient time to submit documentation to verify their projected household income within their inconsistency period with or without additional changes to the utilization of trusted data sources.

Comment: Commenters expressed concern with the data referenced in the proposed rule to support this proposal, reporting that they were not satisfied that the reported metrics sufficiently demonstrated evidence of widespread fraudulent behavior. Specifically, some commenters questioned the data findings referenced in the proposed rule, including the data limitations and exclusions, and the limited data regarding enrollment trends changing around the COVID-19 PHE. Others noted that the data referenced was not representative of State Exchange data dynamics.

Response: We acknowledge the need to collect and report on high quality metrics to evaluate and monitor program integrity across the Exchange. While this change is determined to be necessary on the grounds of statutory alignment and thus is independent of the identified data concerns, we will continue to evaluate data on income verification operations on an ongoing basis to assess the impact of this operational change and continue to evaluate opportunities to strengthen program integrity and efficiency.

Comment: Many commenters opposed this proposal, citing concerns that these administrative changes would create consumer and bureaucratic burden which could in turn destabilize the risk pool.

Response: We acknowledge commenters' concerns around administrative burden. However, as discussed in the proposed rule (90 FR

12963), this change is necessary given that the current 60-day extension is inconsistent with the statute, necessitating implementation of this change across the Exchanges. Ultimately, after an analysis of program data, we believe that the positive impact to program integrity will outweigh any negative impacts to the risk pool. c. Income Verification When Data Sources Indicate Income Less Than 100 Percent of the FPL (Sec. 155.320(c)(3)(iii))

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12963 through 12967), we proposed to revise Sec. 155.320(c)(3)(iii) to require Exchanges to generate annual household income inconsistencies in certain circumstances when a tax filer's attested projected annual household income is equal to or greater than 100 percent of the FPL and no more than 400 percent of the FPL, while the income amounts returned by the IRS, the SSA, and current income data sources is less than 100 percent of the FPL. This change would re- codify a provision the Department finalized in the 2019 Payment Notice (83 FR 16985), that was later vacated by the United States District Court for the District of Maryland in City of Columbus v. Cochran, 523 F. Supp. 3d 731 (D. Md. 2021), finding there was insufficient evidence of prevalent fraudulent behavior justifying the administrative burden and corresponding coverage impacts. In the proposed rule, we stated that though we believe we had a clear legal basis for finalizing the provisions in the 2019 Payment Notice, we also believe circumstances have changed substantially since the court vacated the prior rulemaking. The Department, in the proposed rule and this final rule, has provided a reasoned justification to reinstate the policy, supported by data and related estimates documenting the consumer harm and significant losses of taxpayer dollars illustrating the reasons this income DMI is necessary. While we previously acknowledged in the 2019 Payment Notice that we did not have firm data on the number of applicants who might be inflating their income to gain APTC eligibility, there is now clear evidence from enrollment data that shows potentially millions of applicants are inflating their incomes or having applications submitted on their behalf with inflated incomes.\118\ Additionally, while concerns were raised in City of Columbus v. Cochran about consumers who may project a higher income than they receive due to the nature of low-wage work making it difficult to predict their annual household income, we stated that we believe enough consumers--and the agents, brokers, and web-brokers helping them apply--are intentionally inflating their incomes to qualify for fully-subsidized plans that justifies the creation of this income DMI type, as data shows below.

\118\ See Hopkins, B.; Banthin, J.; and Minicozzi, A. (2024, Dec. 19). How Did Take Up of Marketplace Plans Vary with Price, Income, and Gender? American Journal of Health Economics, 1(11). https://www.journals.uchicago.edu/doi/10.1086/727785.

Section 155.320(c)(3)(iii) sets forth the verification process when household income attestations on applications increase from the prior tax year or are higher than trusted data sources indicate. Generally, if income data from our electronic data sources indicate a tax filer's attested projected annual household income is more than the household income amount represented by income data returned by the IRS and the SSA and current income data sources, Sec. 155.320(c)(3)(iii) requires the Exchange to accept the attestation without further verification. Currently, Exchanges are generally not permitted to create inconsistencies for consumers when the consumers' attested household income is greater than the amount represented by income data returned by IRS and the SSA and other trusted data sources.

However, in the 2019 Payment Notice (83 FR 16985), we concluded that where electronic data sources reflect household income under 100 percent of the FPL and a consumer attests to household income between 100 percent of the FPL and 400 percent of the FPL and where the attested household income exceeds the income reflected in trusted data sources by more than a reasonable threshold, it would be reasonable to request additional documentation to protect against overpayment of APTC because the consumer's attested household income could make the consumer eligible for APTC when income data from electronic data sources suggest otherwise. Additionally, consumers who have attested household income higher than 100 percent of the FPL, but data sources show income below 100 percent of the FPL, may be motivated to overestimate their income to gain eligibility for APTC where they would not be eligible otherwise, especially in non-Medicaid expansion States. In contrast, consumers who have higher attested annual household income than trusted data sources reflect, but where both the attested and income from data sources is above 100 percent of the FPL, are not motivated to overestimate their income as they would simply receive less APTC. Still today, the risk of APTC overpayments under these circumstances is true because tax filers may be eligible for PTC with household income below 100 percent of the FPL if APTC was paid based on the tax filer having estimated household income of at least 100 percent of the FPL.\119\ Barring other changes in circumstance, these tax filers will not have to repay any APTC. That taxpayers are not required to repay APTC in this situation magnifies the need for Exchanges to take additional reasonable steps to verify the household incomes of persons for whom Federal trusted data services report household income of less than 100 percent of the FPL.

\119\ See 26 CFR 1.36B-2(b)(6)(i). This rule does not apply if the taxpayer, with intentional or reckless disregard for the facts, provided incorrect information to the Exchange for the year of coverage. See 26 CFR 1.36B-2(b)(6)(ii).

In the 2019 Payment Notice (83 FR 16985), we concluded it would be reasonable to request additional documentation to protect against overpayment of APTC despite not having firm data on the number of applicants that might be inflating their income. We viewed this policy as a critical program integrity measure to address the findings from a U.S. Government Accountability Office (GAO) study on improper payments that determined our control activities related to the accuracy of APTC calculations were not properly designed.\120\ Specifically, this study found that “CMS does not check for potentially overstated income amounts, despite the risk that individuals may do so in order to qualify for advance PTC.” \121\

\120\ U.S. Government Accountability Office (2017, July). Improper Payments: Improvements Needed in CMS and IRS Controls over Health Insurance Premium Tax Credit. P. 36. https://www.gao.gov/assets/d17467.pdf.

\121\ Ibid.

Based on this finding, the GAO recommended that HHS direct the CMS Administrator to take the following action: “Design and implement procedures for verifying with IRS (1) household incomes, when attested income amounts significantly exceed income amounts reported by IRS or other third-party sources, and (2) family sizes.” To support this recommendation, the GAO cited its own testing of 93 applications which found 11 applications for individuals residing in States that did not expand Medicaid where IRS data provided to CMS during application review indicated incomes less than 100 percent of the FPL.\122\ After citing these GAO findings and recommendations, we concluded in the 2019 Payment Notice (83 FR 16986) that, particularly to the extent funds

paid for APTC cannot be recouped through the tax reconciliation process, it is important to ensure these funds are not paid out inappropriately in the first instance.

\122\ Ibid. at 37.

Though we cited evidence from the GAO study in the 2019 Payment Notice (83 FR 16986), the United States District Court for the District of Maryland in City of Columbus v. Cochran stated that HHS “failed to point to any actual or anecdotal evidence indicating fraud in the record.” \123\ The court went on to conclude that “HHS's decision to prioritize a hypothetical risk of fraud over the substantiated risk that its decision result in immense administrative burdens at best, and a loss of coverage for eligible individuals at worst, defies logic.” With this final rule, we believe we have addressed concerns raised in this case through new data illustrating the findings raised in the GAO study.

\123\ 523 F. Supp. 3d 731, 762 (D. Md. 2021).

After the court vacated HHS' income verification requirements, we reviewed data from a recent study analyzing the time period before the original income verification requirement was implemented and found data support that applicants inflated their income. A recent study analyzing CMS enrollment data for the 39 States that used HealthCare.gov between 2015 and 2017 found that many people with household incomes too low to qualify for APTC in States that did not expand Medicaid have a strong incentive to attest to income just above the eligibility threshold to obtain APTC.\124\ While the data in the study predates the 2019 Payment Notice (83 FR 16986), the study was published in 2024, and identifies vulnerabilities that still exist today following the court's vacatur of the income verification requirement. The study's authors found far higher numbers of enrollees who reported household income just above the income threshold in non-Medicaid expansion States versus Medicaid expansion States. We stated in the proposed rule (90 FR 12964) that we believe this data is a strong indicator that increased enrollment volume since 2021 has exacerbated the vulnerabilities the study identified as existing between 2015 and 2017.

\124\ Hopkins, B.; Banthin, J.; and Minicozzi, A. (2024, Dec. 19). How Did Take-Up of Marketplace Plans Vary with Price, Income, and Gender? American Journal of Health Economics, 1 (11). https://www.journals.uchicago.edu/doi/10.1086/727785.

In addition, the study identified that enrollees attested to very precise household incomes that suggested they were aware of the income thresholds to gain eligibility for APTC.\125\ This finding is consistent with applicants who did not provide their best household income estimate but instead provided an estimate to maximize the premium and CSR subsidies they receive or were assisted in their applications by entities who were aware of these thresholds and who could profit from their enrollment. In the proposed rule (90 FR 12964 through 12965), we stated that this led us to believe that while some consumers may have difficulty estimating their annual household income due to the uncertainty present in low wage work, many consumers are intentionally inflating their incomes. The study's authors then compared actual enrollment on HealthCare.gov for enrollees who reported household income just above the eligibility threshold from $11,760 to $12,500 to estimated potential enrollment from Census surveys and found actual enrollment was 136 percent higher than the total population of potential enrollments.\126\

\125\ Ibid.

\126\ Ibid.

A more recent analysis of 2024 open enrollment data shows plan selections on HealthCare.gov among people ages 19-64 who reported household income between 100 percent and 150 percent of the FPL in non- Medicaid expansion States were 70 percent higher than potential enrollments estimated from Census data at that same income level.\127\ Based on this mismatch between enrollment and the eligible population, this study estimates four to five million people improperly enrolled in QHP coverage with APTC in 2024 at a cost of $15 to $20 billion.\128\ These data provide substantial evidence that applicants with household incomes below the APTC income eligibility threshold are strategically inflating their household incomes--or, based on evidence described elsewhere in this rule, are getting assistance from agents, brokers, or web-brokers who have a financial incentive to misstate enrollee income to secure commissions from enrollments of consumers who, absent financial assistance, would not enroll--when they apply for APTC.\129\ These individuals are then often being enrolled in fully-subsidized QHPs. We stated in the proposed rule (90 FR 12965) that we believe the scale of actual enrollments in excess of potential enrollments eligible for financial assistance in certain States suggests evidence of improper enrollments, some by agents and brokers.\130\ In these cases, enrollees may not even know they are enrolled, and agents, brokers, and web-brokers strategically enroll them at income levels just above the income eligibility threshold so they qualify for fully-subsidized plans. Enrollees never need to pay a premium which would otherwise alert the enrollee to the improper enrollment.\131\ Therefore, to strengthen program integrity and reduce the burden of APTC expenditures on taxpayers, we proposed to require all Exchanges to generate annual household income inconsistencies in certain circumstances when applicants report a household income that is greater than the income amount represented by income data returned by the IRS and the SSA and current income data sources.

\127\ Blase, B.; Gonshorowski, D. (2024, June). The Great Obamacare Enrollment Fraud. Paragon Health Institute. https://paragoninstitute.org/private-health/the-great-obamacare-enrollment-fraud.

\128\ Ibid.

\129\ We note that in the proposed rule (90 FR 12965), we included a table which showed a substantial increase in the percent of returns with APTC that report excess APTC at lower household income levels between 2019 and 2022. We concluded this suggests a substantial increase in people who earn less than the eligibility threshold for PTC who incorrectly report higher incomes and then qualify for APTC, which, in turn, provides further evidence that applicants with household incomes below the APTC income eligibility threshold are strategically inflating their household incomes to qualify for APTC. After reviewing comments and a closer examination of what is driving the increase in the percent of returns reporting excess APTC at lower income levels, we no longer believe these data provide additional evidence that people are strategically inflating their income. While the evidence presented in this final rule continues to strongly support the conclusion that people are inflating their incomes to qualify for APTC after access to fully- subsidized QHPs expanded, we now understand this expanded access to fully-subsidized plans in 2021 led to the increase in the percent of returns with excess APTC at lower income levels for a different reason. The reason stems from a discrepancy in how Exchanges on the Federal platform report the premium for the benchmark plan used to determine the APTC. The premium for the benchmark plan is generally reported as the full amount in dollars and cents while the APTC is rounded to the nearest dollar amount. This reporting discrepancy was generally not an issue before 2021 because everyone was subject to a required contribution percentage greater than zero. Where a required contribution percentage is set at zero, APTC that is rounded up creates excess APTC.

\130\ See Ibid.

\131\ For example, from January 2024 through August 2024, CMS received 183,553 complaints that consumers were enrolled in coverage through an Exchange on the Federal platform without their consent (also known as an “unauthorized enrollment”). Additionally, from June 2024 through October 2024, CMS suspended 850 agents and brokers' Exchange agreements for reasonable suspicion of fraudulent or abusive conduct related to unauthorized enrollments or unauthorized plan switches. 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.

Section 155.320(c)(3)(iii)(A) generally requires the Exchange to accept a consumer's attestation to projected annual household income when the attestation reflects a higher household income than what is indicated in data from the IRS and SSA. This approach makes sense from a program integrity perspective when both the attestation and data from trusted data sources are over 100 percent of the FPL, since an attestation that is higher than data from trusted data sources in that situation would reflect a lower APTC than would be provided if the information from trusted data were used instead. However, where electronic data sources reflect income under 100 percent of the FPL, a consumer attests to household income between 100 percent of the FPL and 400 percent of the FPL, and the attested household income exceeds the income reflected in trusted data sources by more than some reasonable threshold, we stated in the proposed rule (90 FR 12966) that we believe it would be reasonable, prudent, and even necessary in light of the program integrity weaknesses just outlined to request additional documentation, since the consumer's attested household income could make the consumer eligible for APTC that would not be available using income data from electronic data sources. In cases where a consumer receives this DMI, but they do legitimately have annual household income above 100 percent of the FPL, we stated that we believe that the existing DMI process and corresponding time frame provides them plenty of time and opportunities to confirm their annual household income with minimal burden.

Sections 1411 through 1414 of the ACA establish the framework for verifying and determining income eligibility for APTC and CSR subsidies. Requiring further documentation for verification when there is an income inconsistency between the household income provided on the application and the income indicated by the IRS and other data sources makes sense within this statutory framework. The statute compels HHS to, at a minimum, submit the income information provided by applicants to the IRS for verification without exception. Without additional documentation or other supporting evidence, HHS would generally deny eligibility for APTC and CSR subsidies based on the inconsistency with IRS data. When the IRS cannot verify an applicant's income, the statute requires HHS to take additional steps to verify income, thus providing HHS clear discretion to use additional trusted data sources. To support these verifications, section 1413 of the ACA further requires HHS to establish data matching arrangements to verify eligibility through reliable, third-party data sources. However, HHS must also weigh the administrative and other costs of a data matching program against its expected gains in accuracy, efficiency, and program participation, such as when an applicant reports higher household income than reported by trusted data sources and both household income amounts are above 100 percent of the FPL, illustrating no financial incentive for inflating household income. In addition to the program integrity weaknesses discussed previously, we stated in the proposed rule (90 FR 12966) that we believe this statutory framework compels HHS to request additional documentation when applicants attest to household income above 100 percent of the FPL, but trusted data sources show income below 100 percent of the FPL. We requested comments on whether adding these additional data matching issue requirements will outweigh its expected gains as described above.

Accordingly, we proposed to modify Sec. 155.320(c)(3)(iii)(D) and (c)(3)(vi)(C)(2) to specify that Exchanges on the Federal platform would follow the procedures in Sec. 155.315(f)(1) through (4) to create an annual income DMI for consumers if: (1) The consumer attested to projected annual household income that is greater than or equal to 100 percent but not more than 400 percent of the FPL; (2) the Exchange has data from IRS and SSA that indicates household income is below 100 percent of the FPL; (3) the Exchange has not assessed or determined the consumer to have income within the Medicaid or CHIP eligibility standard; and (4) the consumer's attested projected annual household income exceeds the income reflected in the data available from electronic data sources by a reasonable threshold established by the Exchange and approved by HHS. We proposed that a reasonable threshold must not be less than 10 percent and can also include a threshold dollar amount.\132\ We sought comments on this proposed reasonable threshold, especially comments that furnish data that could help us ensure that it is properly calibrated to maximize program integrity while minimizing unnecessary administrative burden. Additionally, we stated that this requirement would not apply if an applicant is a non- citizen who is lawfully present and ineligible for Medicaid by reason of immigration status. In accordance with the existing process in Sec. 155.315(f)(1) through (4), if the applicant fails to provide documentation verifying their household income attestation, we stated that the Exchange would redetermine the applicant's eligibility for APTC and CSRs based on available IRS data, which under this proposal would typically result in discontinuing APTC and CSR as required in Sec. 155.320(c)(3)(vi)(G). We further stated that the adjustment and notification process would work like other inconsistency adjustments laid out in Sec. 155.320(c)(3)(vi)(F). We also proposed to modify Sec. 155.320(c)(3)(iii)(A) to add a cross-reference to paragraph Sec. 155.320(c)(3)(iii)(D).

\132\ This 10 percent threshold aligns with Annual Income Threshold Adjustment FAQ guidance which was published on 10/22/21 here: https://www.cms.gov/cciio/resources/regulations-and-guidance/income-threshold-faq.pdf.

Finally, in the proposed rule (90 FR 12966), we stated that we estimate that answering verification questions and submitting supporting documents would take consumers approximately 1 hour. We stated that we believe such a burden is minimal and is significantly outweighed by the benefit of APTCs for those individuals found to be eligible for them as well as the benefits of reducing improper enrollment. Additionally, even if consumers end up needing longer than the 1-hour estimation due to difficulty in obtaining documentation that may be present, we stated that we believe that the period given to resolve this DMI gives them enough time, and if a consumer ends up needing more time, they are able to request an extension in certain circumstances as described in 45 CFR 155.315(f)(3).

We sought comment on this proposal.

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 as of the effective date of this final rule, but with a modification under which the policy and related requirements will sunset for all Exchanges at the end of PY 2026 with a reversion to the previous policy in PY 2027. Like other policies within this rule, we believe it is critical to addressing imminent concerns with improper enrollments related to fully-subsidized plans. As discussed, there is ample evidence of strategic behavior whereby predatory agents, brokers, and web brokers are enrolling people, often without their knowledge, into fully-subsidized plans and, because these individuals often are shielded from ever repaying subsidies, the taxpayer is on

the hook for 100% of improperly paid APTCs on their behalf.

We respect the fraught history of this specific policy, however, and understand the importance of targeting it appropriately towards clear and demonstrable fraud concerns. We understand with the expiration of the enhanced subsidies the same concerns may not exist. Thus, we believe this policy should run through the remainder of PY 2025 after the rule is effective and all of PY 2026 to help the Exchanges shed excess improper enrollments and, once the market has readjusted to the changing subsidy environment in PY 2027, the policy will no longer be effective as concerns about holdover improper enrollments from fully-subsidized plans will likely have abetted. This means that, beginning in PY 2027, Exchanges will instead be required to consider an annual household income attestation verified if IRS returns tax data indicating that the household's annual income is less than the application's attestation of annual household income, even if that IRS data is below 100 percent of the FPL in scenarios where the attested projected annual household income would qualify the tax payer as an applicable taxpayer per 26 CFR 1.36B-2(b). As we explain in this section and in section III.B of this final rule, HHS is of the view that implementing this income verification policy in instances where a consumer is attesting to annual household income above 100 percent of the FPL, but IRS data shows income below 100 percent of the FPL, is a reasonable and necessary step to ensure accurate eligibility determinations based on projected household income during this time of clearly high levels of improper enrollments. However, in consideration of comments, we are finalizing this policy to be applicable only temporarily through the end of PY 2026. Additionally, while in the proposed rule we connected this to the statutory framework, and while it is clear this is allowed by statute, we recognize the statute includes in 1411(c)(4)(B) the provision to weigh the administrative and other costs of a data matching program against its expected gains in accuracy, efficiency, and program participation.

Additionally, independent of comments, we are including a minor modification to remove the reference to 400 percent of the FPL as the maximum to account for possibilities of subsidy eligibility beyond those at 400 percent of the FPL or below. Instead, we are stating that this income DMI is generated in circumstances where the attested projected annual household income would qualify the taxpayer as an applicable taxpayer per 26 CFR 1.36B-2(b). This change also better aligns with existing regulatory text. We summarize and respond to public comments received on the proposed policy to require Exchanges to generate annual household income inconsistencies when a tax filer's attested projected annual household income is equal to or greater than 100 percent of the FPL and no more than 400 percent of the FPL below but income from the IRS shows annual household income below under 100 FPL.

Comment: Some commenters supported the proposal, stating it would improve program integrity, especially as incorrect income estimations threaten program integrity. One commenter stated that the proposal will help address the increase in improper and fraudulent enrollments. Multiple commenters mentioned this will help stop the “backdoor” of getting ineligible people coverage in non-Medicaid expansion States.

Response: We agree that this policy will improve program integrity in response to urgent concerns. Given the large amount of improper behavior cited in the proposed rule and in this final rule, we agree that this policy may help limit associated improper enrollments largely resulting from fully-subsidized plans. We acknowledge that this is particularly impactful in non-Medicaid expansion States.

Comment: Some commenters expressed support for how the proposal could help the income verification process and the resulting positive effects of that. Multiple commenters believe that this proposal's improved income verification process could help with correct APTC determinations, with one commenter stating they believe these changes would help result in a more stable and affordable marketplace.

Response: We agree that this policy will help with the income verification process by ensuring income verification occurs when consumers may have an incentive to overestimate their income. Implementing this policy may help ensure accurate income amounts and corresponding APTC determinations and we believe that the improvement to the income verification process outweighs any temporary disruptions as the temporary policy assists Exchanges in reducing the current high levels of improper enrollment.

Comment: Some commenters supported our proposal but believed that CMS needs to take further actions to address program integrity issues such as eliminating or limiting the “safe harbor” provision in 26 CFR 1.36B-2(b)(6)(1) or making enrollment pending during the income DMI process rather than allowing for preliminary eligibility.

Response: We appreciate the concerns for program integrity from commenters. We note that HHS does not have regulatory authority over 26 CFR 1.36B-2(b)(6)(1) as this is an IRS regulation. We believe, however, that this policy is the best way to address the specific concern around overestimation of income for these individuals while balancing long- term need to ensure enrollment processes are as efficient as possible. It is not permissible under 1411(e)(4)(B) of the Affordable Care Act to prevent consumers from using their coverage until they submit documents to resolve their income DMIs. Additionally, we maintain that it is important to balance program integrity with ensuring access to coverage and believe this temporary policy maintains that balance.

Comment: Many commenters expressed concerns that this proposal would negatively impact consumers' ability to enroll in affordable coverage and recommended CMS not finalize the proposal. Specifically, commenters mentioned that the policy would result in a decrease of enrollment and would be a barrier to enrolling in the first place, in part due to the administrative burden of submitting documents to resolve their income inconsistency. Additionally, commenters mentioned expiration of an annual income DMI would typically lead to a loss of APTC, which means consumers would be forced to either drop coverage or pay unaffordable premiums, including if they are in process of appealing their DMI expiration. One commenter mentioned how many sick consumers end up having to take on debt or skip essential bills to pay for coverage after losing their financial assistance.

Response: We understand that some consumers may temporarily end up having their financial assistance reduced or removed, resulting in coverage loss and financial burden. However, the income DMI process allows 90 days \133\ to submit documentation, including submitting new documents if their previously submitted documents were deemed insufficient to resolve, and we previously estimated that submitting documentation will only take 1 hour, so we believe that the administrative burden of submitting documents is

minimal. Additionally, if consumers need more time to resolve their income inconsistency, they are able to request an extension to the 90- day period on a case-by-case basis. We also emphasize that it is important that consumers receive accurate APTC eligibility to help protect taxpayer spending on APTC, which is why we believe it is important to have this income DMI in place even if some consumers are unintentionally harmed through loss of APTC. We acknowledge the concern on how the continued loss of APTC occurs even during the appeals process but emphasize that it is important for consumers to resolve their income DMI before it expires to maintain continuous financial assistance and not end up having to go through an appeal. It is important to note that these are temporary measures enacted in response to unprecedented concerns over improper enrollments.

\133\ In section III.A.3.b of this final rule, Sec. 155.315(f)(7) is being removed. This regulation currently requires Exchanges to give an automatic 60-day extension to the 90-day income DMI period if the income DMI has not yet resolved after those 90 days.

Comment: Many commenters stated that loss of coverage and financial barriers would result in poor health outcomes for many consumers, such as relying more on emergency services and threatening the ability of consumers to make timely, informed, and autonomous decisions about their health, in particular related to pregnancy. Many of these commenters stated these negative health outcomes would be compounded for those who are already experiencing difficulties in accessing health care. Additionally, nearly all community health centers that commented on this proposal stated that this would disproportionally affect consumers who use their services, resulting in negative health outcomes for them. Given this, these commenters did not recommend we finalize this proposal.

Response: While we understand the concerns of the commenters, we want to emphasize that many of these annual household income attestations are inaccurate and are made by agents, brokers, and web- brokers without consumers' knowledge as a part of other potentially inappropriate activity such as unauthorized enrollments, which can lead to consumers experiencing hardship when they go to use health coverage and find out they are enrolled in a plan they were unaware of. These are largely functions of the incentives and opportunities created by the existence of fully-subsidized plans and these outcomes in themselves represent consumer harms that we also must attempt to mitigate. By making this policy temporary to address these imminent concerns while Exchanges shed excess improper enrollment, we believe we strike the right balance of program integrity with long-term enrollment policy efficiencies.

Comment: Many commenters stated they are concerned that low-income consumers who would be more affected by this proposed policy have a much more difficult time than other consumers in predicting and verifying income due to unpredictable income. They stated this is compounded by the fact that Exchange eligibility is based on future income, rather than previous years' income, and therefore tax data is typically not able to accurately predict and verify their expected future annual household income. Additionally, some commenters pointed out that these lower income consumers typically are not required to file taxes, so they are more likely to not have tax data available to verify their income. Many commenters also listed reasons why a consumer may have unpredictable income--such as starting a new job or losing a job, pay raises, plans to work more in the future--and stated that consumers should not be penalized for these changes by losing APTC eligibility after DMI expiration.

Response: We acknowledge that consumers with more unpredictable income may have a more difficult time estimating their income. We have made improvements over the years to account for this concern, including creating an income calculator tool that we recommend consumers use if they are having difficulty estimating their income.\134\ Additionally, we understand that income can change throughout the year and highly recommend that consumers update their Marketplace application when their household income changes to ensure they are receiving the most accurate eligibility determination. We also emphasize that in scenarios where new consumers to the Exchange may not have tax data available because they were not previously required to file tax returns, they would not receive the type of income DMI described in this policy, as this policy specifically generates an income DMI in scenarios where IRS returns data under 100 percent of the FPL but consumers attest to annual household income above 100 percent of the FPL. Without having filed taxes, they would not have IRS data returned for them and would therefore not generate the type of income DMI described in this policy, though they may be impacted by other income verification policies in this rule such as the one described in section III.B.3.d. Finally, even if a consumer would normally not be required to file a tax return due to their income, notifications include language to remind consumers that once they have received APTC, they are required to file a tax return to reconcile their APTC. As these policies are temporary, we believe they strike the right balance between urgent program integrity concerns and long-term enrollment efficiencies.

\134\ https://www.healthcare.gov/income-calculator/.

Comment: Many commenters stated how it is more difficult for low- income consumers to submit documents to resolve their DMIs. Specifically, they stated it can be more challenging to find documents that show their predicted annual household income because common documents such as tax documents and paystubs are either inaccurate or not available. One commenter requested that we add to this final rule what documentation CMS would accept for this new income DMI to prove anticipated income.

Response: We provide a robust list of acceptable documents that households can submit to resolve their income DMIs, many of which clearly can convey future year income and including potential documents self-employed consumers can submit, and include this list in multiple consumer notices and on CMS' website.\135\ We recommend that consumers who cannot obtain tax forms or paystubs that reflect their projected household income submit other suggested income documents that may be more available and accurate.

\135\ https://www.healthcare.gov/help/how-do-i-resolve-an-inconsistency/#household-income.

Comment: Many commenters specifically noted the challenges that gig workers would face with this proposal. Commenters mentioned how this type of work has grown substantially since the ACA was passed, and recommended that CMS reconsider how this proposal and general verification processes account for the realities of the gig economy. One commenter stated that nearly a third of all gig workers are uninsured, and that 48 percent believe their work status has made it more difficult to access health insurance. One commenter suggested that CMS needs to do additional research around economic and employment trends since the ACA passed, with a particular focus on gig workers, and consider flexible updates related to that.

Response: We appreciate the concern for gig workers. We are aware of how gig workers may have a more difficult time verifying their income and we have made operational changes over the past few years to improve how our systems and processes better account for the

types of documents gig workers may use to verify their income. Regarding what documents gig workers should submit to verify their annual household income, we recommend they submit a self-employment ledger that outlines whose income it includes, where the income is from, the start date of the income, either the frequency (such as biweekly) of the income or the end date, and the specific income amounts. This can include documents from employers that employ gig workers or from online services that outline this information. We are open to additional changes and improvements to better assist consumers working in the gig economy on getting and staying in coverage. However, we do not believe that this policy is especially burdensome for consumers with legitimate income attestations and will help prevent fraudulent attestations from continuing to receive improper financial assistance. That said, by making this policy temporary, we believe we strike the right balance of program integrity with long-term enrollment efficiencies.

Comment: Many commenters expressed concerns about how this policy would impact the risk pool. Specifically, commenters stated that younger consumers, who are also typically healthier, tend to have lower and less predictable streams of income. Commenters also mentioned that healthier consumers are less motivated to get insurance, particularly when they encounter administrative burdens such as additional required paperwork, while sick consumers are often more motivated to overcome administrative barriers to coverage. Commenters stated that all of this results in fewer young and healthy consumers entering the risk pool, which would result in increased premiums for everyone, leading to a decrease in enrollment and increased health care costs for everyone.

Response: We disagree that requiring additional documents is a large administrative burden that will result in young, healthier, less motivated consumers not getting insurance. The 90 days Congress provided under the statute gives consumers sufficient time to identify documents and resolve their income DMI, and we estimate that identifying and submitting documentation for an income DMI typically takes consumers only 1 hour. The Department is of the view that younger individuals generally are accustomed to requirements to prove their eligibility for a variety of benefits and activities, including proving their identities and incomes, such that dedicating a single hour to verification activities is unlikely to lead to significant numbers of young persons abandoning their insurance applications once the process is started. Additionally, we are finalizing this policy temporarily to help the Exchange address urgently high levels of improper enrollments while balancing long-term enrollment efficiencies. This limited period of effectiveness will mitigate any adverse impacts on the risk pool that might result if this policy dissuades younger, healthier persons to abandon their applications for insurance.

Comment: Many commenters expressed concerns about the costs and burdens for this proposal on Exchanges. Commenters mentioned that they believe the proposal would increase administrative costs and be operationally challenging for Exchanges to implement, and that Federal funds would be better spent elsewhere. Many also said that State Exchanges do not currently have appropriated funds or other financial resources to implement this change by the applicability date of 60 days after this rule's finalization, with one State Exchange unsure if they can implement it at all due to their State's limits on how they can use Federal tax information. Finally, one commenter stated it was unclear that money would be saved through unspent APTC.

Response: We acknowledge the costs associated with implementing this proposal. We are confident that the Exchanges on the Federal platform can implement this proposal by the rule's effective date and are not concerned with implementation operations. Additionally, we believe that the costs associated with implementing and operating this policy are justified, as this is a critical program integrity measure to ensure consumers who may not be eligible for APTC are not erroneously receiving APTC throughout the entire plan year. Because of that, while we understand State Exchanges are concerned about the implementation and ongoing costs, we believe that the program integrity gains outweigh the potential costs to State Exchanges. Additionally, by requiring Exchanges to sunset this proposal starting in PY 2027, operational costs for Exchanges will only occur for the remainder of PY 2025 after this rule's effective date and all of PY 2026, resulting in lower costs to Exchanges for operations over time. As illustrated later in the regulatory impact analysis section of this rule, we estimate that APTC savings will be greater than operational costs.

Comment: Some commenters expressed concerns about potential administrative and cost burdens to other interested parties such as issuers and health care professionals who help consumers enroll. Commenters mentioned how historical data has illustrated that administrative complexity and uncertainty result in an increase in operational and administrative costs for issuers, particularly for smaller issuers and those serving in rural communities, which typically results in those costs being passed on to consumers.

Response: As outlined in the regulatory impact analysis section of this rule, the administrative and cost burden is minimal in comparison to the APTC savings. We will ensure that information on this policy, how it affects consumers and other interested parties, and best steps to address and easily resolve income DMIs are readily available to issuers and other interested parties. We will make sure this is made available on HHS' public-facing website within 60 days of the effective date of this rule to help all interested parties be prepared to address this policy with their clients and, therefore, minimize potential burden. Additionally, we believe benefits on program integrity likely outweigh potential minimum administrative or cost burdens on issuers, especially due to the temporary nature of the provisions to address program integrity while Exchanges adapt to the changing subsidy environment, as the primary concern is related to fully-subsidized plans, which are due to dramatically decrease in PY 2026 prior to the provisions sunsetting in PY 2027. We reiterate our commitment to helping interested parties understand and account for changes in this rule.

Comment: Many commenters did not agree with the assertion that numerous consumers are intentionally overestimating their income. These commenters did not believe we provided enough evidence of such behavior being widespread. Additionally, many commenters stated that these discrepancies between attestation and final annual household income are due to consumers honestly projecting their annual household income to be above 100 percent of the FPL but instead finishing the year with their actual annual household income below it, such as due to working less than anticipated or because of the difficulty of estimating future year income. A few commenters also pointed towards the enhanced subsidies causing more people to enroll in the Exchange and as a result, simply having more discrepancies. As a conclusion, many commenters believed that this proposal would not improve program integrity, with many stating that nothing has

changed since this DMI type was vacated by the court in City of Columbus v. Cochran, and therefore recommended against finalizing the policy as proposed.

Response: We acknowledge that many consumers may be estimating their household income accurately based on the best information available to them at the time. However, we have also identified data suggesting that consumers--or agents, brokers, or web-brokers assisting them--may be intentionally misestimating income. As laid out in the proposed rule, one study illustrated that many consumers attested to very precise annual household income amounts, suggesting that they knew the exact income thresholds to gain eligibility for APTC.\136\ For people who attested to those precise thresholds, this same study found that enrollment in corresponding plans was 136 percent higher than the total population of potential enrollments. These numbers, combined with other data sources that are cited and discussed earlier in this section III.A.3.c of the preamble, show clear indications of some consumers intentionally attesting to annual household income just above 100 percent of the FPL to gain APTC eligibility they may not have been eligible for with a more accurate annual household income attestation.

\136\ Blase, B.; Gonshorowski, D. (2024, June). The Great Obamacare Enrollment Fraud. Paragon Health Institute. https://paragoninstitute.org/private-health/the-great-obamacare-enrollment-fraud.

While we believe this was also the case during the time that the 2019 Payment Notice originally implemented this proposal, we did not have clear data available to outline in the 2019 Payment Notice illustrating this, something that is mentioned in Columbus v. Cochran as a reason why this policy was originally struck down. However, given the data we now have now as set forth in the proposed rule, higher enrollment data illustrates that this problem is much more prevalent than it was prior to 2021. We respect the concerns many have with this proposal and, as such, are finalizing a temporary policy targeted at the most demonstrable program integrity concern--fully-subsidized plans and the holdover improper enrollment that data suggests will persist temporarily following the expiration of the expanded subsidies. After allowing this policy to work to right-size enrollment to ensure those receiving subsidies are eligible for such subsidies, this policy will sunset as the reduction in fully-subsidized plans reduces the urgency of its program integrity features.

Comment: Some commenters, while they agreed with the widespread problem of improper payment of APTC caused by overinflating incomes above 100 percent of the FPL, did not believe that this proposal is the best way to address it. Most of these commenters believed that CMS should focus on improving agent, broker, and web-broker enforcement rules, as many commenters believed they primarily are driving this fraudulent behavior. Some commenters also expressed concerns with the Exchanges on the Federal platform's usage of Enhanced Direct Enrollment (EDE) platforms, claiming that having third parties host the eligibility and enrollment platform allowed agents, brokers, and web- brokers to more easily engage in fraud or improper behavior.

Response: We acknowledge commenters' concerns that some agents, brokers, and web-brokers are fraudulently attesting to household income on behalf of consumers, oftentimes without their knowledge, and that this is often done through direct enrollment pathways. Both States and the Federal Government are taking steps to address agents, brokers, and web-brokers participating in actions or schemes that result in improper enrollments. We have increased program integrity measures aimed at non- compliant agents, brokers, and web-brokers, including, for example, requiring agents, brokers, and web-brokers to perform a three-way call with their client and the HealthCare.gov call center to effect certain changes to some consumers' applications or coverage. We also work closely with EDE partners on program integrity issues. Improving program integrity may require multiple approaches, and we believe this policy will work well in partnership with agent, broker, and web-broker enforcement actions to help prevent this type of improper behavior.

Comment: Many commenters expressed concerns with the data and studies the proposed rule cited as proof of program integrity concerns. These commenters cited concerns related to studies' methodology and analytical approach, limitations and usage of data, inconsistent income definitions, and that they did not account for other factors at the same time such as the COVID-19 PHE and Medicaid disenrollment. Many commenters stated that the estimation of 4-5 million fraudulently enrolled consumers is inaccurate and an overestimation. One commenter also stated that CMS should gather more data to see how program integrity changes made in 2024 have affected this fraudulent behavior and wait to implement this proposal until that is available to show the impact of those policies.

Response: We disagree with the commenters' concerns on the validity of data sources utilized in the proposed rule to support the proposal. We believe the various data sources cited suggest that households are fraudulently attesting to income directly above the FPL. Notwithstanding, in light of commenters' concerns and as explained in section V.C.18 of this final rule, we are finalizing this policy so that it will be applicable only for PY 2026, providing further opportunities to monitor this policy's effects instead of codifying it to be applicable indefinitely. We clarify that consumers will have the opportunity in the DMI process to show through documents that their attestation of estimated household income is accurate. We will continue to monitor and collect data regarding DMIs and how changes, such as those made in 2024 and this final rule, have impacted enrollment.

Comment: A handful of commenters mentioned that CMS should address better how Medicaid and CHIP eligibility intersects with the population of consumers who may overestimate their income for Exchange coverage. They state that some consumers may be eligible for Medicaid or CHIP one month but not the next, meaning that it is possible they could be eligible for Exchange coverage in those months they are not Medicaid/ CHIP eligible. Some commenters pointed out how many State Exchanges have more robust integration with Medicaid and CHIP eligibility systems, resulting in more accurate and timely eligibility determinations. One commenter also sought clarification on why the Exchanges on the Federal platform would fail to determine if someone is Medicaid or CHIP eligible.

Response: We acknowledge commenters' concerns regarding the intersection of the Medicaid and CHIP population and the Exchange population. We continue to improve on our integration with State Medicaid and CHIP agencies to facilitate Medicaid and CHIP eligibility determinations, but we do not currently have the same capabilities as State Exchanges. However, we do collect both monthly and annual projected income as a part of the application process for the Federal Exchange, and we base Medicaid eligibility on monthly, not annual, income. Exchanges on the Federal platform determines or assesses eligibility for Medicaid and CHIP based on State rules for eligibility. If a consumer was previously determined

eligible for Medicaid or CHIP, but their income has changed such that they believe they will no longer be eligible for Medicaid or CHIP coverage, we encourage them to return to the Exchange to update their income and receive an updated eligibility determination.

Comment: All State Exchanges, as well as many other commenters, expressed concerns related to the proposed requirement for State Exchanges to implement this proposal. Most commented that State Exchanges do not have the type of fraudulent behavior this proposal attempts to address because nearly all State Exchanges have expanded Medicaid. States also said they are not seeing any indication of agents, brokers, or web-brokers purposefully overestimate income to be above 100 percent of the FPL in their State. Some also commented that they do not have agents, brokers, web-brokers or EDE partners in their Exchange, which they attribute in part for the lack of this type of program integrity concern. Additionally, some commenters mentioned that many State Exchanges have more robust and cost-effective income verification processes, and that implementing this new requirement would stifle innovation.

Response: We appreciate that State Exchanges may not have experienced the same challenges of agents, brokers, and web-brokers improperly overestimating income resulting in improper payment of APTC. We also acknowledge that many State Exchanges have robust income verification processes and can integrate well with additional data sources and their State's Medicaid and CHIP programs and appreciate that State Exchanges continue to ensure accurate income eligibility determinations. However, the persistently high levels of fraud associated with fully-subsidized plans, which are widely available on both Federal and State Exchanges, lead us to still believe this is a vital program integrity policy that is important for all Exchanges, including State Exchanges, to implement. Specifically, data illustrated in this section of the preamble shows that all States, including State Exchanges in non-Medicaid expansion States, experience some instances of consumers overestimating their annual household income. Even in States where this may occur in lower numbers, we still believe it is vital to have this policy in place to ensure that these consumers' annual household income is fully verified and they are receiving the correct eligibility determinations. However, given these concerns by State Exchanges, we believe that instituting the requirement that all Exchanges sunset this proposal after PY 2026 will balance the need for program integrity with overall costs to Exchanges. This modification is also intended to be responsive to State Exchange comments noting that this measure may not be necessary to ensure program integrity in these State Exchanges in the long term. We also acknowledge that while we have found that agents, brokers, and web-brokers intentionally overestimate income, consumers also often intentionally overestimate their annual household income without the assistance of an agent, broker, or web-broker, so we believe this is still necessary in State Exchanges that choose not to allow agents, brokers, or web-brokers on their Exchange. As this is primarily a function of the incentive and opportunity created by the expanded subsidies, we believe it to be necessary to implement on all Exchanges until excess improper enrollment levels have abetted. We reiterate that State Exchanges will continue to be able to check additional income data sources after IRS to attempt to verify a household's income which may minimize the burden of reviewing paper documents submitted for verification.

Comment: Some commenters believed that, in addition to making this proposal optional for State Exchanges, CMS should only implement this proposal for States that have not expanded Medicaid. Commenters recommended this because consumers in non-expansion States with annual household incomes below 100 percent of the FPL may fall in a “coverage gap” because they do not meet the income requirements for Medicaid in their State or for APTC. Such consumers typically do not have another affordable option for coverage available. Given this, those consumers are potentially motivated to intentionally overestimate their income in order to gain eligibility for APTC. In contrast, consumers in expansion States do not fall into this “coverage gap” and therefore have less reason to intentionally overestimate their income since they likely will be eligible for Medicaid or CHIP if their income is below 100 percent of the FPL and they meet all other eligibility criteria.

Response: We understand commenters' concerns that consumers in Medicaid expansion States may have less motivation to intentionally overestimate their annual household income than those in non-expansion States. In order to balance urgent program integrity concerns with long-term operation costs and enrollment efficiencies, we are sunsetting this policy after PY 2026. We do want to emphasize that agents, brokers, and web-brokers who are intentionally misrepresenting a household's annual household income attestation are motivated to do so regardless of Medicaid expansion status, as any commissions they are trying to receive that are tied to those enrollments would occur regardless. We also note the potential selection issues that may exist among people who reside in Medicaid expansion States with State Exchanges who may take advantage of the lack of income verifications to select coverage through State Exchanges with APTC over Medicaid based on their health status. To the extent coverage through State Exchanges provides better access to providers or other benefits to people with higher health care needs compared to Medicaid, the lack of income verification could harm the individual market risk pool.

Comment: A few commenters requested that CMS delay the implementation of this proposed rule, with the earliest timeline suggested being the beginning of PY 2026 rather than 60 days from the effective date of the final rule, given concerns about operational challenges and administrative burdens, especially for issuers.

Response: We do not believe that a delay in implementing this rule is necessary or appropriate given it is a temporary policy designed to address urgent program integrity concerns. Exchanges on the Federal platform are able to implement this policy by the final rule's effective date, and, given the minimal implementation burden on the Federal Exchange, we believe State Exchanges should similarly be able to implement this policy by the rule's effective date. With respect to concerns about burden on issuers, CMS will ensure that issuers are informed of the change in policy and what they should do to help enrollees, both current and new, prepare for potentially receiving a DMI ahead of the policy's implementation. Additionally, since consumers will still receive the full time period to resolve their income DMI and receive temporary eligibility during that period as is the case for other DMI types, we believe issuers will have enough time to help their enrollees determine documents to submit to resolve their DMI before clients' DMIs would potentially expire and result in loss of APTC. Given that the time frame of when this type of DMI could actually expire and affect an enrollee's coverage is at least 150 days from the rule's effective date (accounting for this

policy's implementation of 60 days after the rule's effective date and the 90 days households have to resolve this type of DMI), as well as our plans to inform and prepare issuers for this change, we believe that this implementation timeline is feasible for issuers.

Comment: Some commenters suggested other types of improvements to the income verification processes. Many of these commenters encouraged Exchanges on the Federal platform to use other data sources to verify income, such as the State Wage Information Collection Agency; data from State agencies that have unemployment or human service programs; and the National Directory of New Hires. They suggested that using such additional data sources would reduce the reliance on Federal tax data, align better with State Exchanges that use some of these data sources, and help the APTC verification process become more streamlined and accessible. One commenter said that Exchanges should be required to leverage income data through the Verify Current Income Hub, as this would help reduce improper enrollments and better direct consumers to the correct coverage pathway, and that the data's accuracy and efficiency outweighs the cost of using the service. One commenter suggested that Exchanges on the Federal platform should implement a “facilitated enrollment” program. Some commenters suggested changes to how APTC and PTC work, including basing APTC on prior year income and working with Congress on legislation changes on APTC recoupment rules.

Response: We appreciate the comments with additional ways in which Exchanges on the Federal platform can improve the income verification process. We continue to explore utilizing additional data sources to verify income as well as other innovations and improvements. However, additional data checks would take additional time and resources to set up and integrate with existing processes, and some of the data sources State Exchanges utilize are unavailable on the Federal level. As outlined in 155.320 (c)(3)(vi)(A), the Federal Exchange must weigh whether the available data will provide sufficiently accurate income information for enough consumers to justify the costs of both connecting to these data sources and continuing to pay for the data. Additionally, we do not believe that those would replace the need for this policy, as even with additional trusted data sources available to potentially verify household income above 100 percent of the FPL, there will still be consumers for whom the Exchange is unable to verify household income. We would like to clarify that we currently use the Verify Current Income Hub that one commenter suggested but continue to allow State Exchanges flexibility in what additional data sources they use beyond IRS.

Comment: One commenter stated that because this policy was originally vacated in City of Columbus v. Cochran, the proper place to contest this is in court rather than through this rule.

Response: We believe that the proposed and final rule address the concerns raised in City of Columbus v. Cochran and therefore reinstating this policy via rulemaking is appropriate. Specifically, we have provided additional data demonstrating that consumers overestimate their income so it is above 100 percent of the FPL when IRS data sources show their income is below 100 percent of the FPL in order to be determined eligible for APTC. Additionally, circumstances have changed since the original proposal in the 2019 Payment Notice with many more consumers being aided by agents, brokers, or web-brokers, some of whom have used this gap in the income verification process to enroll consumers with subsidies without their knowledge, making setting income DMIs for this population even more needed than it was in the original 2019 Payment Notice proposal.

Comment: One commenter expressed concerns that that the proposed language could allow a State to perform Periodic Data Matching (PDM) more than twice a year, resulting in consumers erroneously losing their coverage without any legitimate increase in program integrity.

Response: We clarify that this proposal does not relate to PDM. This proposal only refers to the process that occurs when a consumer applies for coverage or updates their Marketplace application, and does not involve Exchange-initiated verification of income.

Comment: Some commenters expressed concern that we are denying APTC to low-income consumers if they do not immediately verify with tax data.

Response: We clarify that if tax data from the IRS does not verify an applicant's attestation of annual household income, we then check other available income data sources and, if those do not verify their attested annual household income, the household would be given an income DMI. The applicant would be given 90 days \137\ to submit documentation to verify their projected annual household income, during which time the applicant would be given temporary eligibility for financial assistance based on their application attestation allowing them to use APTC to enroll in coverage. It is only after that 90-day period has passed that the household, if they had not yet verified their income DMI, would have their APTC decreased based on tax data, potentially to zero if IRS data indicates they would be ineligible for APTC altogether. Given this, we highly recommend consumers submit documents to verify their income during that 90-day period to ensure they maintain their financial assistance and health coverage, and, if they need more time beyond that 90-day period, they can request additional time on a case-by-case basis.

\137\ In section III.A.3.b of this final rule, Sec. 155.315(f)(7) is being removed. This regulation currently requires Exchanges to give an automatic 60-day extension to the 90-day income DMI period if the income DMI has not yet resolved after those 90 days.

Comment: We requested comments on our proposal's minimum income threshold of 10 percent for all Exchanges, and the inclusion of an optional dollar amount. This minimum income threshold is utilized by Exchanges to compare an applicant's attested annual household income with income amounts provided from trusted data sources or documents submitted by the applicant. This information allows the Exchange to determine whether applicant's attested annual household income is within a reasonable threshold of the income reported from a trusted data source or documents, such that the Exchange can consider the applicant's attested annual household income verified. Comments on the threshold proposal were mixed. Most commenters believed that 10 percent is not a generous enough threshold as it does not account for variability in projected annual household income from documents, but there was no consensus on whether 20, 25, or 50 percent was the correct percentage. One commenter cautioned CMS against having too generous of a threshold, as they believed this could lead to income being verified despite substantial variation between attested annual household income and income from trusted data sources or documents, but they did not suggest an alternative threshold. None of these commenters mentioned the inclusion of an optional dollar amount.

Response: We appreciate the comments on the proposed minimum threshold amount and would like to clarify that this is simply a minimum, and not a maximum, threshold level

that all Exchanges must have. Because Exchanges may have a threshold higher than the one specified in regulation, no commenters requested a threshold lower than the 10 percent threshold or recommended against including an optional dollar amount as considered in the proposed rule, and because no comments were received expressing concerns with the ability to include an optional dollar amount in addition to the percentage difference, we are finalizing this as proposed, and will not specify a specific threshold dollar amount or provide flexibility for Exchanges to adopt one. d. Income Verification When Tax Data is Unavailable (Sec. 155.320(c)(5))

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12967 through 12968), we proposed to remove Sec. 155.320(c)(5), which requires Exchanges to accept an applicant's or enrollee's self- attestation of projected annual household income when the Exchange requests tax return data from the IRS to verify attested projected annual household income, but the IRS confirms there is no such tax return data available. This requirement currently operates as an exception to the requirement to verify household income with other trusted data sources under Sec. 155.320(c)(1)(ii) and the alternative verification process under Sec. 155.320(c)(3)(vi). These provisions generally require that, in the event the IRS and other trusted data sources cannot resolve a DMI, applicants must submit documentary evidence or otherwise resolve the DMI with the inconsistent information source. Therefore, by removing this exception, this proposal would require Exchanges to verify household income with other trusted data sources when tax return data is unavailable and follow the full alternative verification process.

As we detailed previously in this preamble, there is a growing body of evidence that shows a substantial number of improper enrollments on the Exchanges. Some agents, brokers, and web-brokers and applicants are taking advantage of weaknesses in the Exchanges' eligibility framework to enroll consumers in coverage with APTC subsidies without their knowledge and when consumers are not eligible. We believe the recent change in the 2024 Payment Notice (88 FR 25818 through 25820) to allow applicants to self-attest to income when IRS data is unavailable may have contributed to weakening the Exchange eligibility system.

We made the change to accept attestation when HHS successfully contacted the IRS but IRS data was unavailable because we believed that the standard alternative verification process was overly punitive to consumers and burdensome to Exchanges when IRS data is unavailable. To explain the punishing aspects of the prior alternative verification process, we itemized the legitimate reasons for a tax return to be unavailable aside from a consumer's failure to file a tax return, including tax household composition changes (such as birth, marriage, and divorce), name changes, or other demographic updates or mismatches. We then concluded the consequence of receiving an income DMI and being unable to provide sufficient documentation to verify projected household income outweighs program integrity risks as, under Sec. 155.320(c)(3)(vi)(G), consumers are determined completely ineligible for APTC and CSRs.

After revisiting this issue, we stated in the proposed rule (90 FR 12967) that we no longer believe the prior alternative verification process was overly punitive. We stated that our use of the term punitive to characterize the process improperly suggests the process involved a punishment when the process solely involved establishing eligibility to receive a government benefit and did not involve a judgment to mete out consequences of bad behavior. Instead, the process focused on ensuring that applicants are eligible for APTC to both protect against making improper payments and to protect the applicant from accumulating unnecessary tax liabilities. In the proposed rule, we stated that as we reassess the current verification process, we note that the existence of legitimate reasons for tax return data to be unavailable does not diminish the need to have an accurate estimate of income. As discussed previously, an accurate household income estimate is a critical program integrity element of the ACA's framework for verifying and determining eligibility for APTC.

In making our reassessment, we investigated the difficulty of providing documentation to verify household income and believe eligible applicants can meet the requirement with relative ease. People with legitimate reasons for not having tax data available like marriage, the birth of child, name changes, and other demographic updates would have the opportunity to be verified through other trusted data sources. However, if other trusted data sources cannot verify the household income and applicants must provide documentation, we previously estimated (88 FR 25893) that consumers would take 1 hour to submit documentation on average. We sought comment on the accuracy of this estimate of administrative burden. We stated in the proposed rule (90 FR 12967) that we believe eligible applicants would likely have documentation to verify their household income as readily available to them as the standard tax filer without an income DMI.

For these people, prior to the implementation of the 2024 Payment Notice, we found that half of all resolved income DMIs generated when IRS income data was unavailable were resolved within 90 days. Therefore, to the extent applicants failed to resolve their income DMI, we believe this largely reflects how the prior process successfully stopped ineligible people from enrolling.

Regarding the burden on Exchanges, we previously estimated the administrative task under the prior policy accounts for approximately 300,000 hours of labor annually on the Federal platform. We concluded this was proportionally mirrored by State Exchanges, which may also access approved State specific data sources to verify income data. We expect APTC subsidized enrollment to be lower in the coming years.

Considering the amount of improper enrollments under the current policy, we stated in the proposed (90 FR 12967) rule that we believe this administrative burden of requiring people with an income DMI due to unavailable IRS data to provide documentation to verify income is more than offset by the program integrity benefits.

In addition to the policy concerns mentioned above, we stated in the proposed rule (90 FR 12967) that the Department now believes this policy violates statutory requirements for verifying income under section 1411(d) of the ACA and addressing income inconsistencies under section 1411(e)(4)(A) of the ACA, including by restricting Exchanges from using the process under Sec. 155.315(f)(1) through (4), as well as 1411(c)(4)(B) and 1412(b)(2). We previously stated in the 2024 Payment Notice that the requirements for Exchanges under Sec. 155.320(c)(5) complied with section 1411(c)(4)(B) of the ACA and section 1412(b)(2) of the ACA, but stated in the proposed rule (90 FR 12967), that we believe our previous statutory justifications for this policy were mistaken and inconsistent with Congress' intent.

Therefore, to strengthen the program integrity of the eligibility determination

process for APTC, we proposed to remove Sec. 155.320(c)(5).

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule, this final rule, and our responses to comments, we are finalizing this policy as proposed, but with a modification under which the policy and related requirements will sunset for all Exchanges at the end of PY 2026. Beginning in PY 2027, the income verification policy under Sec. 155.320(c)(5), which was in effect prior to the finalization of this rule, will become effective again. As we explain in this section and in section III.B of this final rule, HHS is of the view that the best way to address program integrity concerns created by the proliferation of fully-subsidized plans policy is to require further verification when the IRS reports no tax return data is available for a tax-filer. Notwithstanding, we share concerns related to the risk of coverage loss by low-income persons. For this reason, we will codify this policy to be applicable only from this rule's effective date until the end of PY 2026 to balance these concerns.

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

Comment: Many commenters supported the proposal, including many advocacy groups and issuers who stated the proposal would reduce fraud. Additionally, one professional association and one advocacy group supported the proposal because it would protect enrollees against surprise tax bills by verifying attested information.

Response: We appreciate the commenter's support and agree that this proposal will help mitigate currently high levels of fraud in Exchanges. An accurate annual household income estimate is a critical program integrity element for verifying and determining eligibility for APTC. We believe that verifying annual household income with other trusted data sources and then following the alternative verification process when a tax return is unavailable will strengthen program integrity.

We also agree with the commenters who stated that removing this exception to verification of annual household income may protect consumers from incurring large tax liabilities, due to incorrect income information. Once these provisions have helped reduce holdover fraud from the expansion of subsidies, they will go away.

Comment: Some commenters supported the proposal but provided recommendations such as: providing exceptions for certain situations, providing State Exchanges with implementation flexibility, ensuring Exchanges are prepared to implement this proposal without undue harm to consumers, requiring Exchanges to check additional data sources when tax data is unavailable, obtaining new data sources for income verification (such as the National Database for New Hires), and delaying implementation.

Response: We appreciate the commenters' recommendations on additional ways to improve the income verification process. We do not agree that exceptions to the verification process should be provided because the policy is temporary in nature and that would not align with our goal of addressing urgent program integrity concerns. Once these policies sunset at the end of PY 2026, the requirement for Exchanges to accept an applicant's or enrollee's self-attestation of projected annual household income when the Exchange requests tax return data from the IRS to verify attested projected annual household income, but the IRS confirms there is no such tax return data available will once again apply to all Exchanges.

Comment: Most professional associations, provider groups, and advocacy groups opposed this proposal, stating that it would create barriers for vulnerable consumers, increase administrative costs, and destabilize the risk pool because these changes could increase adverse selection because sicker individuals have greater incentive to put in the time and effort necessary to resolve income verification issues.

Response: We acknowledge commenters' concerns around administrative burdens like cost and potential extra verifications steps and risk pool impacts. Reintroducing income verification for applicants for whom no tax return data is available would increase burden on some applicants, but the currently high level of improper enrollments, which we believe to be driven by the incentives and opportunities created by the expanded subsidy regime, call for immediate action to improve program integrity. That said, we understand that reactions to crisis levels of improper enrollments may not strike the right balance with proper enrollment access over the long term and, as such, are making this policy temporary. Additionally, while in the proposed rule we connected the need to use alternative income verification methods when the IRS returns no data to the statutory framework, and while the proposal is allowed by statute, we recognize the statute includes in section 1411(c)(4)(B) the provision to weigh the administrative and other costs of a data matching program against its expected gains in accuracy, efficiency, and program participation. In response to comments detailed later in this section related to consumer and State Exchange burden and risk pool concerns, and as explained in section III.B. and elsewhere in this final rule, we are finalizing this policy to be effective only through the end of the PY 2026. This will allow this policy, as well as the other policies in this rule, to reduce the high levels of holdover improper enrollments while mitigating long-term burden.

Comment: Some providers, provider groups, and organizations expressed concern that it could take vulnerable enrollees longer than 1 hour to submit documentation related to this income verification requirement.

Response: We recognize that it may take certain consumers longer than 1 hour to submit documentation related to this income verification requirement, and note that the 1-hour estimate is an average. However, there are no data to support an alternative estimate of the time it would take a consumer to submit income verification documentation.

Comment: Many commenters who opposed the proposal believed that when self-attestation does not match trusted data sources, this is not indicative of fraud, but rather people whose income fluctuates often or dramatically enough that their projected household annual income would not match records for previous years.

Response: We acknowledge the commenters' concern about the variable nature of consumer income. We proposed to require Exchanges verify household income when data from the IRS is unavailable. This is different from when a consumer's attestation does not match trusted data sources. If the additional verification processes result in the consumer's attestation not matching the trusted data sources, the Exchange would generate an income DMI. We acknowledge that many income DMIs are created by eligible consumers and during the income DMI resolution process, eligible consumers have the opportunity to verify their income using a list of acceptable documents. Nevertheless, based on the data set forth in this rule, we maintain our concern that agents, brokers, and web-brokers may make improper attestations without consumers' knowledge leading to unauthorized enrollments, and that further income verification is needed to protect consumers from the resulting harm.

Comment: Many State Exchanges opposed this proposal, stating that it would cause unnecessary income DMIs and significantly increase administrative burdens for applicants and members and lead to coverage erosion that would adversely affect the States' risk pool since younger people are more likely to not have IRS data available.

Response: We acknowledge the increase in DMIs that may result from finalization of this proposal. We believe that the increases in program integrity outweigh the increased administrative burdens that may be encountered and believe that it is necessary to ensure accurate projected household income attestations and eligibility determinations. Although reintroducing income verification for applicants with no tax return data would increase the burden on some applicants, we do not anticipate this burden would deter many eligible people from enrolling. This is because eligible applicants would likely have documentation other than tax information, such as pay stubs, to verify their household income as readily available to them as the standard tax filer who is verified through the IRS. Because of the availability of these documents to verify annual household income, the removal of Sec. 155.320(c)(5) would not deter many eligible people from enrolling and will not destabilize the risk pool, especially given the provision's temporary nature.

Comment: Multiple States stated that State Exchanges should retain flexibility to determine the income verification processes and procedures necessary and appropriate to meet program integrity standards when determining eligibility for coverage and financial assistance. Some States also opposed implementing this policy on the grounds that the problem it would address is not present on their State Exchanges according to internal State analysis.

Response: We appreciate the various comments highlighting how this program integrity risk looks different for State Exchanges and the recommendation to allow State Exchanges to retain flexibility to determine income verification operations. We acknowledge that many State Exchanges have robust income verification processes and can integrate well with additional data sources and their State's Medicaid and CHIP programs and appreciate the State Exchanges continue to ensure accurate income eligibility determinations. States have existing flexibilities, such as the option to call other data sources if the IRS does not have data available when verifying income, therefore we do not believe that additional flexibilities in implementing this rule are necessary. For this reason and others outlined in section III.B of this final rule, we think the temporary nature of this sunset modification is also intended to be responsive to State Exchange comments noting that this measure may not be necessary to ensure program integrity in these State Exchanges in the long term.

Comment: Two Tribal organizations opposed this proposal because it would create barriers to enrollment for American Indian and Alaskan Native people who are not required to file taxes. They stated that the proposal would complicate enrollment, delay access to care, and increase administrative strain on Exchanges.

Response: We acknowledge that there are cases where consumers, including Tribal members, are exempt from filing Federal income taxes and thus the IRS may have no tax data upon which to verify the consumer's household income. Tax data, however, is not the only way for Exchange applicants to verify annual household income. When tax return data is unavailable to immediately verify a consumer's attestation of annual household income, the Exchange would trigger the rest of the verification and data matching process. Specifically, an Exchange can check other available income data sources and, if those do not verify the annual household income, the household would be given an income DMI. During the 90-day period, they would be given temporary eligibility for financial assistance based on their application attestation and can use that APTC to enroll in and start coverage. It is only after that 90-day period has passed that the applicant or tax- filer, if they had not yet resolved their income DMI, would have their APTC decreased based on available tax data. The Department is of the view that this 90-day period provided under statute provides ample time for applicants to provide proof of their household income before their APTC is reduced. While we understand this may result in negative outcomes for some consumers and increased administrative burden on the Exchanges, we believe implementing this policy is necessary due to the program integrity benefits and protection of consumers enrolled without their knowledge. The temporary nature of this policy strikes the right balance between urgent program integrity concerns and long-term enrollment efficiencies.

Comment: Some commenters expressed concern that APTC would be denied to consumers if they do not have IRS data available to verify their income.

Response: We clarify that when tax return data is unavailable to immediately verify a consumer's attestation of annual household income, they would go through the rest of the verification and data matching process. Specifically, we then check other available income data sources and, if those do not verify the annual household income, the household would be given an income DMI. During the 90-day period, they would be given temporary eligibility for financial assistance based on their application attestation and can use that APTC to enroll in and start coverage. It is only after that 90-day period has passed that the household, if they had not yet verified their income DMI, would have their APTC decreased based on tax data, potentially to zero. Given this, we highly recommend consumers submit documents to verify their income during that 90-day period to ensure they maintain their financial assistance and health coverage. 6. Premium Payment Threshold (Sec. 155.400)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12974 through 12976), we proposed to modify Sec. 155.400(g) to remove paragraphs (2) and (3), which establish an option for issuers to implement a fixed-dollar and gross percentage-based premium payment threshold (if the issuer has not also adopted a net percentage-based premium threshold), and modify 155.400(g) to reflect the removal of paragraphs (2) and (3). Under these provisions, issuers on the Exchanges can implement (1) a percentage-based premium payment threshold policy; and (2) a fixed-dollar premium payment threshold policy. However, to preserve the integrity of the Exchanges, we stated in the proposed rule that we believe it is important to ensure that enrollees do not remain enrolled in coverage for extended periods of time without paying at least some of the premium owed, and therefore proposed to limit issuers to the net percentage-based premium payment threshold established in the 2017 Payment Notice (81 FR 12271), and modified in the 2026 Payment Notice (90 FR 4475 through 4478) to allow issuers to set at 95 percent of the net premium or higher. We are finalizing these changes as proposed 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.

In the 2026 Payment Notice (90 FR 4475 through 4478), we implemented an option for issuers to establish a fixed-dollar premium payment threshold policy, under which issuers can consider enrollees to have paid all amounts due during the following circumstance: the enrollees pay an amount that is less than the total premium owed and the unpaid remainder of which is equal to or less than a fixed-dollar amount of $10 or less, adjusted for inflation, as prescribed by the issuer. In addition, we implemented a gross percentage-based premium payment threshold policy, under which issuers can consider enrollees to have paid all amounts due when the enrollee pays an amount that is equal to or greater than 98 percent of the gross premium, including payments of APTC, as prescribed by the issuer. If an enrollee satisfies the fixed-dollar or gross percentage-based premium payment threshold policy, the issuer may avoid triggering a grace period for non-payment of premium or avoid terminating the enrollment for non-payment of premium. However, these premium payment thresholds may not be applied to the binder payment.

As we noted in the proposed rule (90 FR 12975), we have compiled data regarding enrollments effectuated during the OEP. Those data reflect a continuing increase in improper enrollments on the Exchanges. For example, in December 2024 HHS received 7,134 consumer complaints of improper enrollments, an increase from the 5,032 complaints received in December 2023. We stated in the proposed rule (90 FR 12975) that although these numbers represent a decrease from the high of 39,985 complaints received in February 2024,\138\ the fact that the number of complaints for 2024 remains substantially higher than for 2023 demonstrates that previous program integrity measures \139\ have not resulted in a decrease in improper enrollments, and additional measures are necessary to prevent rampant waste and abuse of Federal funds and protect consumers from surprise tax liabilities and other negative impacts that may flow when consumers are enrolled in coverage without their knowledge. We further stated that this has caused us to reconsider the need for additional program integrity measures, as reflected throughout this proposed rule, and in particular whether the new premium threshold provisions appropriately safeguard program integrity and whether the value of the new premium threshold provisions outweighs the potential harms to program integrity. We also explained that given the increased need to protect program integrity reflected in the enrollment data, and the limited probability that any issuer has implemented one of the new types of available premium threshold policies, we believe the burden of eliminating these policies on issuers and consumers is outweighed by the potential increase in program integrity.

\138\ From internal HHS data, using the most recent numbers available. HHS has previously published data on consumer complaints of unauthorized enrollments, such as in the update published in October 2024. 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.

\139\ Measures such as those announced in our update from October 2024 on preventing unauthorized agent and broker activity. 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.

We stated in the proposed rule that under both the fixed-dollar and gross percentage-based thresholds, it is possible for enrollees in certain circumstances to avoid paying premium for multiple months before entering delinquency or losing coverage. For example, an enrollee whose premium after the application of APTC was $1 (and where the issuer had adopted a $10 premium threshold policy) could, after paying binder, not pay any premium for the next 9 months before they would enter delinquency, and due to the APTC grace period would not have coverage terminated for an additional 3 months (though the termination would be effective the last day of the first month of grace). In instances where an issuer implemented a gross premium threshold of 98 percent, an enrollee's gross premium might be $600, making their threshold $12; if the consumer owed $2 after application of APTC, they could, after paying binder, not pay any premium for the next 6 months before they would enter delinquency, and due to the APTC grace period would not have coverage terminated for an additional 3 months (though the termination would be effective the last day of the first month of grace). We stated in the proposed rule (90 FR 12975) that this policy therefore increases the risk that improper enrollments remain undetected, since the enrollee is less likely to receive invoices, and a delinquency \140\ or termination notice alerting them to the improper enrollment in the case that the individual or entity submitting the improper enrollment used false contact information. In addition, we stated that an enrollee who stops paying premiums in the belief that this would lead to termination of coverage may instead find that the coverage has continued for several months due to the issuer having implemented a fixed-dollar or gross percentage-based premium threshold, with the additional risk that the enrollee has accumulated a large amount of debt if the issuer has adopted a gross premium percentage-based threshold and the enrollee's pre-APTC premium is much higher than the de minimis $10 fixed-dollar threshold. We noted that, in contrast, this is not the case with the long-established net percentage-based threshold, under which enrollees must always pay at least some premium to avoid delinquency or loss of coverage (in cases where the premium is not covered 100 percent by APTC).

\140\ Per Sec. 156.270(f), if an enrollee is delinquent on premium payment, the QHP issuer must provide the enrollee with notice of such payment delinquency. Issuers offering QHPs in Exchanges on the Federal platform must provide such notices promptly and without undue delay, within 10-business days of the date the issuer should have discovered the delinquency.

As we explained in the proposed rule (90 FR 12976), because of these program integrity concerns, we remain concerned that these policies allow enrollees to unknowingly remain in coverage they did not consent to be enrolled in or remain in coverage that they no longer need or are utilizing, if a third party or agent, broker, or web-broker paid the enrollee's binder payment on their behalf in order to effectuate enrollment. In the October 10, 2024 Federal Register (89 FR 82366 through 82369), we provided an analysis of Exchange data for PY 2023, where we found that there were 184,111 total policies terminated for non-payment in which $10 or less was owed by the enrollee, representing approximately 12.25 percent of the total number of policies terminated for non-payment that year. As such, in the proposed rule, we estimated that, if finalized, the proposed rule would likely result in about 184,111 policy terminations after application of the available grace period. We noted that this would likely be representative of both enrollees who desired coverage but failed to take the necessary action, and enrollees who were unaware of their coverage either because they had intended for it to terminate due to nonpayment, or because they were improperly enrolled by agents, brokers, or web-brokers.

In the proposed rule (90 FR 12976), we stated that we have also become

aware of instances in which consumers who are enrolled in Medicaid are, without their knowledge or consent, enrolled into unwanted QHP coverage with APTC for which they are not eligible. In 2024, we received 44,151 complaints alleging that Medicaid beneficiaries were enrolled without their consent into QHP plans, of which 12,954 were deemed medically urgent.\141\ These cases have caused disruptions in coverage for consumers, due to Medicaid's refusal to pay for services \142\ when the consumer is enrolled in a QHP, and has also caused delays in payments to health care providers. As noted previously, we stated that we expect that the removal of these premium threshold options would make it more difficult for some agents, brokers, and web-brokers to keep consumers enrolled without their knowledge or consent, and thereby reduce the potential for these kinds of disruptions in coverage.

\141\ See Sec. 156.1010(e).

\142\ As required by section 1902(a)(25) of the Social Security Act, Medicaid is the payer of last resort.

We refer readers to the proposed rule (90 FR 12974 through 12976) for a more detailed discussion of our proposal.

We sought comment on this proposal.

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 as proposed for all Exchanges, 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. This will address the urgent improper enrollment concerns previously noted, and allow the Department to collect additional data on the effects of this policy. Thereafter, the FFE and SBE-FPs will, and State Exchanges may, offer issuers the flexibility to implement the premium payment thresholds outlined in the 2026 Payment Notice (90 FR 4424). We summarize and respond to public comments received on the proposed modifications to the premium payment thresholds below.

Comment: Most commenters opposed the proposal because removing premium payment thresholds could create barriers to coverage for low- income enrollees who struggle to pay full premiums. For example, many commenters stated that health center patients are disproportionately financially strained compared to other patients, and that 61 percent have incomes below 200 percent of the FPL.

Response: We recognize that it may be more difficult for low-income consumers to pay premiums but believe that the urgent concern of addressing the high level of improper enrollments driven in part by individuals not paying any premium outweighs, at least temporarily, the burdens associated with enrollees being terminated for failure to pay a portion of their premium. Once the high levels of improper enrollment have been addressed, those concerns may no longer persist. The Department also acknowledges that collection of additional data, as well as gaps or losses in coverage due to this provision would be possible under a more permanent policy, and in response to comments, the Department is finalizing this policy so that it addresses the urgent program integrity concerns in PY 2026 without ongoing effects after PY 2026.

Comment: Some commenters opposed the proposal because it could disproportionately impact vulnerable populations, increase the uninsured rate, and destabilize insurance markets. Commenters stated that consumers with chronic conditions might be able to utilize either the gross-premium percentage-based or fixed-dollar thresholds to avoid coverage gaps. Commenters also stated that the resulting loss of coverage could lead to poorer outcomes and increased healthcare costs. Many commenters stated that the additional thresholds allow issuers to focus on collecting most of the premium rather than pursuing small outstanding amounts that might lead to coverage loss.

Response: We agree that it is in the best interest of all enrollees to remain in steady coverage that they desired to obtain. However, under a fixed-dollar or gross premium percentage-based threshold, a consumer could unknowingly remain in unwanted coverage for a longer period of time than under the net premium percentage-based threshold before entering delinquency, while also accumulating debt, a dynamic that has been exacerbated by the currently high levels of improper enrollment.

Comment: Many commenters stated that removing the fixed-dollar and gross premium percentage-based thresholds would not address program integrity concerns, since both require the enrollee to pay their binder in full before such thresholds would apply. One commenter recommended that HHS increase efforts to monitor third party premium payments so that agents and brokers are not paying binder payments or subsequent premiums, and noted that some issuers have seen increased third party payment activity in recent months, and would appreciate the Exchange's increased vigilance to monitor third party premium payments, particularly as these payments do not fall under the exceptions at Sec. 156.1250.

Response: We disagree that rescinding the fixed-dollar and gross premium percentage-based thresholds would not address program integrity concerns, because although payment of binder is required, both policies permit issuers to keep consumers enrolled in coverage for multiple months without making any payments or otherwise indicating they are aware of the coverage they are enrolled in. This policy balances the urgent need for program integrity with the long-term desire for flexibility and enrollment efficiencies.

Comment: Many commenters stated that the proposed rule did not provide sufficient evidence that agent and broker fraud has anything to do with premium payment thresholds or that these flexibilities have been abused by anyone. In addition, commenters stated that the data on unauthorized enrollments from PYs 2023-2024 did not reflect the effect that new premium payment policies would have on improper enrollments because these provisions did not take effect until January 15, 2025. Commenters recommended instead that CMS wait to rescind these thresholds until there has been sufficient time to gather and analyze data on the impacts of these new premium payment thresholds and continue to prohibit fixed-dollar thresholds for binder payments.

Response: As we noted previously, CMS continues to observe a high level of unauthorized enrollments, which we attribute largely to the proliferation of fully-subsidized plans. Although the fixed-dollar and gross percentage-based premium thresholds have only been in place for a short amount of time, the Department believes that allowing the use of fixed-dollar and gross percentage-based premium payment thresholds by issuers at this time is likely to exacerbate this problem at a critical period. In order to protect consumers from fraudulent enrollments and ensure that they are only enrolled in healthcare coverage that they want and need, rather than in coverage that they are unaware of and do not want, we believe it is important to safeguard against potential vulnerabilities added to this dynamic by the fixed-dollar and gross- premium thresholds. As with other policies, this addresses the imminent program integrity concerns while reverting back to the previous policy once the market has had a year to address the lack of expanded subsidies.

Comment: One commenter stated that CMS is inappropriately prioritizing concerns about enrollees' future tax liabilities over the potential for future health care liabilities.

Response: We disagree that we are prioritizing concerns about enrollees' future tax liabilities over the potential future health care liabilities. This temporary policy balances urgent program integrity concerns with the long-term desire for flexibility and enrollment efficiencies.

Comment: One commenter stated that if enhanced PTCs expire at the end of 2025, many more people will be enrolled in plans with nominal premiums (rather than fully-subsidized premiums) in future years, exacerbating the risk of disenrollment due to nonpayment of small premium amounts.

Response: Although expiration of the enhanced subsidies may lead to an increase in the number of enrollees whose coverage is terminated for non-payment, including non-payment of small amounts of premium, it is also important to ensure that consumers are protected from improper enrollment. Temporarily eliminating the fixed-dollar and gross percentage premium thresholds, while maintaining the net premium thresholds, appropriately strikes a balance between ensuring that Exchange enrollees do not lose coverage for owing only a small percent of their net premium, while ensuring they do not remain enrolled in coverage for extended periods of time without paying any premium. After allowing the temporary program integrity policies in this rule to help the Exchanges shed the currently high levels of improper enrollment, our policies revert back to those in effect prior to this rule, balancing urgent program integrity needs with long-term desire for flexibility and enrollment efficiencies.

Comment: Several commenters stated that disruptions due to non- payment terminations may mean a loss for providers of anticipated reimbursement revenue and an increase in uncompensated care--further challenging the financial health of health centers, which will lead to less access to care for patients.

Response: We recognize that temporary interruptions in care may mean a temporary loss of revenue for providers and increase uncompensated care. However, since issuers have not yet implemented either the fixed-dollar or gross premium percentage-based thresholds, the risk of lost revenue is minimal as a result of this temporary policy.

Comment: Several State Exchanges and State-specific advocacy organizations stated that this provision would limit the ability of their State to manage their own unique health insurance market, where most State Exchanges already see lower rates of fraud.

Response: We appreciate these comments and concerns raised by State Exchanges, but we maintain that the policy proposals above are an appropriate balance of temporary measures to address urgent program integrity concerns with long-term flexibility for State Exchanges. The temporary actions are necessary to protect consumers from accruing large tax liabilities and ensure program integrity, but the rule reverts back to existing policy once immediate concerns have been addressed, and State Exchanges regain the flexibility those policies created. Given our expectation that the expiration of enhanced subsidies will substantially decrease improper enrollments, the Department believes it is reasonable to adopt certain policies temporarily in response to commenter concerns.

Comment: Several commenters stated that issuers have historically managed payment thresholds and are best positioned to implement these thresholds due to their deep understanding of enrollee needs and local market dynamics.

Response: While issuers have insight into payment habits of their enrollees, Exchanges must provide guardrails to ensure the integrity and affordability of their markets.

Comment: Several commenters stated that many issuers may have already made substantial investments to implement the new thresholds. Reversing course now could render those investments as sunk costs and could exert modest upward pressure on premiums. Commenters also stated that promoting continuous coverage contributes to a more stable and balanced risk pool, and in turn reduces premiums.

Response: We recognize that some issuers may have begun implementation of one or both of these premium payment thresholds. However, we believe that the urgent program integrity concerns outlined in this final rule outweigh the costs that may be associated with issuers modifying their systems to eliminate the fixed-dollar and gross percentage-based premium payment thresholds. Further, these measures are temporary and work to implement these premium payment thresholds will be relevant once again as issuers prepare for PY 2027.

Comment: A few commenters supported the proposal because of its intention to address existing program integrity concerns.

Response: We agree that eliminating the fixed-dollar and gross percentage-based premium payment threshold will address program integrity concerns, as it will ensure that consumers must always pay some amount of their monthly premium (at least 95 percent) and will prevent consumers, especially those who are victims of unauthorized enrollments, from accruing significant premium debts. We believe finalizing these proposals through PY 2026 strikes the right balance in addressing urgent program integrity concerns with long-term desires for flexibility and enrollment efficiencies.

Comment: One commenter stated that the grace period for premium payments would be shortened with the finalization of this rule.

Response: We clarify that this final rule does not modify the grace period for enrollees receiving the benefit of APTC described in Sec. 156.270(d).

Comment: One commenter stated that the net premium threshold amount (which must be at least 95 percent of net premium) was being modified with this proposal.

Response: We clarify that this final rule does not modify the net percentage-based premium payment threshold described in Sec. 155.400(g)(1). 7. Annual Open Enrollment Period (Sec. 155.410)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12976 through 12979), we proposed to amend Sec. 155.410(e), which provides the dates for the annual individual market Exchange OEP in which qualified individuals and enrollees may apply for or change coverage in a QHP. Specifically, we proposed to add Sec. 155.410(e)(5) and (f)(4) to change the OEP for benefit years starting January 1, 2026, and beyond so that it begins on November 1 and runs through December 15 of the calendar year preceding the benefit year and to set an effective date of January 1 for QHP selections received by the Exchange on or before this December 15 OEP end date. The Exchange OEP is extended by cross-reference to non-grandfathered individual health insurance coverage, both inside and outside of an Exchange, under the guaranteed availability regulations at Sec. 147.104(b)(1)(ii). We also proposed conforming revisions to Sec. 155.410(e)(4) and (f)(3).

In previous rulemaking, we have adjusted the length of the OEP to account for various circumstances

impacting the stability of the risk pool, Exchange operations, and the consumer experience (see Table 4). In setting the OEP, as we explained when we set the initial enrollment period in the Exchange Establishment Rule (77 FR 18387), we attempt to balance the risk of adverse selection--a situation where individuals with higher risk are more likely to select coverage than healthy individuals--with the need to ensure that consumers have adequate opportunity to enroll in QHPs through an Exchange.

\143\ See CMS (2018). Public Use Files: FAQs, https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/marketplace-products/downloads/2018_public_use_file_faqs.pdf.

\144\ See CMS (2019). Public Use Files: FAQs. https://www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/marketplace-products/downloads/2019publicusefilesfaqs.pdf.

\145\ See CMS (2020). Public Use Files: FAQs. https://www.cms.gov/files/document/2020-public-use-files-faqs.pdf.

\146\ See CMS (2021). Public Use Files: FAQs. https://www.cms.gov/files/document/2021-public-use-files-faqs.pdf.

Table 4--Summary of Open Enrollment Period Length for Exchanges on the Federal Platform

[PY 2014-2027]

Duration

Plan year OEP start date OEP end date (days) Notes

2014............................. 10/1/2013 3/31/2014 182 Lengthy first enrollment period

to allow time for consumers to

explore new options and to raise

awareness. 2015............................. 11/15/2014 2/15/2015 93 Planned OEP for PY 2015 was

October 15 to December 7, but

challenges and delays meant the

OEP was extended. 2016............................. 11/1/2015 1/31/2016 92 Proposed a shorter OEP but

finalized more modest change

primarily to limit the burden of

a shift on Exchanges still

experiencing implementation

challenges. 2017............................. 11/1/2016 1/31/2017 92 2018............................. 11/1/2017 12/15/2017 45 Cleanup for late Exchange

activity \143\ occurred between

December 16, 2017 and December

23, 2017 for the 39 States that

used HealthCare.gov. 2019............................. 11/1/2018 12/15/2018 45 Cleanup for late Exchange

activity \144\ occurred between

December 16, 2018 and December

22, 2018 for the 39 States that

used HealthCare.gov. 2020............................. 11/1/2019 12/15/2019 45 Cleanup for late Exchange

activity \145\ occurred between

December 16, 2019 and December

21, 2019, which included the

additional time from December 16-

18 provided to consumers who

were unable to enroll by the

original deadline. 2021............................. 11/1/2020 12/15/2020 45 Cleanup for late Exchange

activity \146\ occurred between

December 16, 2020 and December

21, 2020 for the 36 States that

used HealthCare.gov. 2022............................. 11/1/2021 1/15/2022 76 2023............................. 11/1/2022 1/15/2023 76 2024............................. 11/1/2023 1/16/2024 77 In 2024, January 15 was a Federal

holiday; accordingly, consumers

had until midnight on Tuesday,

January 16 (5 a.m. EST on

January 17) to enroll in

coverage. 2025............................. 11/1/2024 1/15/2025 76 2026............................. 11/1/2025 1/15/2026 76 2027............................. 11/1/2026 12/15/2026 45

Sources: Marketplace Open Enrollment Period Public Use Files and Marketplace Open Enrollment Fact Sheets.

Consistent with our original policy establishing a December OEP end date for PY 2015 that promotes a full year of coverage, we maintained an OEP set to November 1 to December 15 for PYs 2018, 2019, 2020, and 2021. During this time, we observed several benefits from a 45-day OEP that ends on December 15 for coverage starting January 1 compared to OEPs ending on February 15 for benefit year 2015 and January 31 for benefit years 2016 and 2017. As discussed in the 2022 Payment Notice proposed rule (86 FR 35167 through 35168), prior enrollment data suggested that the majority of new consumers to the Exchange selected plans prior to December 15 so they had coverage beginning January 1. We stated in the proposed rule (90 FR 12978) that we believe this data shows consumers became accustomed to the deadline. Also, we stated that it reduces consumer confusion by aligning more closely with the open enrollment dates for other coverage for many employer-based health plans. We also observed that consumer casework volumes related to coverage start dates and inadvertent dual enrollment decreased in the years after the December 15 end date was adopted, suggesting that the consumer experience, as well as program integrity, was improved by having a singular deadline of December 15 to enroll in coverage for the upcoming plan year. We noted how confusion over the deadline could cause someone to wait until January 15 and miss out on a whole month of coverage. In addition, the extended OEP requires enrollment assisters to stretch budget resources over an additional month.

In the 2022 Payment Notice proposed rule (86 FR 35168), we also identified negative impacts from a 45-day OEP that ends on December 15. In particular, we observed that consumers who receive financial assistance, who do not actively update their applications during the OEP, and who are automatically re-enrolled into a plan are subject to unexpected plan cost increases if they live in areas where the second lowest-cost silver plan has dropped in price relative to other available plans. In this situation, consumers would experience a reduction in their allocation of APTC based on the second lowest-cost silver plan price but are often unaware of their increased plan liabilities until they receive a bill from the issuer in early January, after the OEP has concluded. We noted that extending the OEP end date to January 15 would allow these consumers the opportunity to change plans after receiving updated plan cost information from their issuer and to select a new plan that is more affordable to them. We also noted concerns from some Navigators, certified application counselors (CACs), agents, and brokers

regarding a lack of time to fully assist all interested Exchange applicants with comparing their different plan choices. In light of these negative impacts, we sought comment on whether an extended OEP would provide a balanced approach to provide consumers additional time to make informed choices and increase access to health coverage, while mitigating risks of adverse selection, consumer confusion, and issuer and Exchange operational burden. While some commenters expressed substantial concern over these risks, we concluded the experience from State Exchanges that extend their OEP suggested an extension in January does result in increased enrollments and would not introduce adverse selection into the market. Therefore, we concluded the negative impacts of an OEP ending in December justified extending the OEP to end on January 15 for PY 2022 and beyond. This extension to the OEP has now been in place for PYs 2022, 2023, 2024, and 2025. We refer readers to Table 4 for a summary of OEPs in effect from PY 2014 to PY 2025.

We noted in the proposed rule that with our experience implementing this extended OEP over the past 4 years, we have had the opportunity to more closely assess whether this extension achieves the right balance between an adequate opportunity to enroll in a QHP and the added risk for adverse selection, consumer confusion, and unnecessary burden on issuers and Exchanges. This assessment reveals that only a small number of consumers took advantage of the additional time to switch to a lower-cost plan after receiving a bill from their issuer in January with higher plan costs. During the most recent OEP, fewer than 3 percent of enrollees (470,000 individuals) ended their FFE or SBE-FP coverage between December 15, 2024, and January 15, 2025, including those enrollees who switched to other plans as well as those who did not. We also compared the enrollment growth for Exchanges on the Federal platform to State Exchanges under the previous December 15 end date. While most State Exchanges (12 out of 20) use the same enrollment schedule as Exchanges on the Federal platform, 7 State Exchanges use enrollment windows past January 15.\147\ For the best comparison, we focused on enrollment among people enrolled in APTC subsidized plans without CSRs. This controlled for the variable of whether States expanded Medicaid or not.\148\ From 2017 (the year before the end date changed to December 15) to 2021 (the last year of the December 15 end date), we found that Exchanges on the Federal Platform experienced a larger (47 percent) growth in enrollment among people who enrolled in coverage with only APTC compared to 28 percent growth among people enrolled with only APTC through State Exchanges. This suggests the change to the December 15 OEP end date did not compromise access to coverage for people selecting plans through the Exchanges on the Federal platform. Some of these people may have switched to a more affordable plan after receiving a bill in January with unexpected plan costs. However, we stated in the proposed rule (90 FR 12978) that we expect that upon finalizing the proposed addition of Sec. 155.335(n), a higher proportion of enrollees will actively re-enroll and compare their plan options prior to December 15, reducing the need for changes after December 15. To the extent people are switching coverage during the extended period, this may also be due, in part, to improper plan switching. In the 2024 OEP for Exchanges on the Federal platform, 1,490,000 consumers were added to coverage between 12/15 and 1/15. Overall, this is about 9 percent of all consumers (~16.4 million) who selected coverage in the entire 2024 OEP. After implementation of a shorter OEP, we expect some portion of these 1,490,000 consumers will adjust their behavior and enroll earlier, some portion will acquire coverage through another means, and the remainder will miss the opportunity to enroll due to this change to the OEP duration.

\147\ See CMS. (2024, Oct. 17). State-based Marketplaces: 2025 Open Enrollment. https://www.cms.gov/files/document/state-exchange-oe-chart-py-2025.pdf.

\148\ Whether or not a State expanded Medicaid affects the lower end of the CSR eligibility income range. In States that have expanded Medicaid, the lower income threshold for CSR eligibility is 138 percent of the FPL, while in non-expansion States it is 100 percent of the FPL. As a result, whether or not a State has expanded Medicaid can have a substantial impact on enrollment differences between States.

As we have noted elsewhere, we recently began receiving substantially more consumer complaints alleging improper enrollments by agents and brokers who switch enrollees to new QHPs offered on the Exchange or update enrollees' current policies without their knowledge, to capture commissions.\149\ However, in the proposed rule, we also noted that when the enhanced subsidies made available under the ARP and IRA expire at the end of 2025, plan costs for the majority of Exchange enrollees will increase, so there may be an increase in the proportion of enrollees seeking to drop coverage or change plans for PY 2026 after December 15, 2025. Due to changing plan costs, enrollees may need more time to make their PY 2026 plan selections. We sought comment on whether to delay the effective date for the proposal to update the OEP end date until the OEP preceding PY 2027, given the special circumstances for PY 2026 financial assistance.

\149\ Based on internal CMS data, in the first 3 months of 2024, we received 50,000 complaints of improper enrollments and 40,000 complaints of improper plan switches attributed to agent or broker noncompliant behavior.

Based on the foregoing analysis, we stated in the proposed rule (90 FR 12979) that we do not anticipate that changing the OEP end date from January 15 to December 15 would have a negative impact on a consumer's opportunity to enroll in QHPs through an Exchange. We sought comment on how changing the OEP end date to December 15 would impact QHP enrollment opportunities, consumer confusion, and burden.

In making this proposal, we stated in the proposed rule (90 FR 12979) that the OEP plays a crucial role in protecting the stability of the individual market risk pool within the structure of the ACA. Adverse selection remains a serious concern under the ACA's guaranteed availability and modified community rating requirements. The average plan liability risk score in the individual market remains substantially higher than the small group market, showing that higher- than-average risks continue to select into the individual market. This higher risk leads to higher premiums for those who purchase coverage through the individual market.

We understood there was still an ongoing risk of adverse selection when we decided to extend the OEP end date to January 15. However, we concluded this risk of adverse selection was outweighed by the benefits of increased consumer enrollments and opportunities to switch plans for consumers with unexpected plan costs.

In the proposed rule (90 FR 12979), we stated that our new analysis of this experience extending the OEP to end January 15 suggests that these benefits did not materialize. Accordingly, without any clear benefit, we stated that we no longer believe the benefits of the OEP extension outweigh the risk of adverse selection. We sought comment on whether the risk of adverse selection supports changing the OEP end date to December 15.

We anticipated in the proposed rule (90 FR 12979) that if an OEP end date of December 15 were finalized, this change would apply to all Exchanges,

including State Exchanges, for the 2026 coverage year and beyond.

Given our proposal to adopt a standard OEP, we sought comment on whether we should also prohibit Exchanges from extending an OEP through application of a blanket SEP. Where available, we requested that comments include data demonstrating the impact of the OEP end date on enrollment and adverse selection. Additionally, we sought comment on the overall effects and impacts of OEP duration and OEP placement within the calendar year, including suggestions regarding the ideal duration and placement to minimize adverse selection and maximize consumer choice.

We sought comment on this proposal.

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 the following modifications: the changes to the OEP period will take effect beginning with the OEP for PY 2027 and the rule will provide flexibility for all Exchanges within set parameters. Newly added Sec. 155.410(e)(5)(i) states that the OEP must begin by November 1 of the year preceding the coverage year and must end by December 31 of the year preceding the coverage year. Newly added Sec. 155.410(e)(5)(ii) limits all Exchange OEPs to a maximum of nine weeks in duration. Each State's Exchange OEP is also extended by cross-reference to non-grandfathered individual health insurance coverage outside of the Exchange per Sec. 147.104(b)(1)(ii). Thus, beginning with the OEP for PY 2027, the dates of the OEP each year for Exchanges operating on the Federal platform will be November 1 through December 15 of the preceding year; however, the final rule provides flexibility for all Exchanges, including those on the Federal platform, to adjust OEP dates, within the outlined parameters, in future years as operational processes evolve.

For example, in some cases the timelines and operations established by Exchanges for premium rate filings and consumer noticing may currently preclude beginning the OEP earlier than November 1. In addition, while some Exchanges already have a December 31 cutoff date for January 1 coverage, many Exchanges, including the Exchanges on the Federal platform, have generally made coverage effective on February 1 when a plan selection is made between December 16 and December 31. Per Sec. 155.410(f)(4), as finalized in this rule, all plan selections made during the OEP must be effective as of January 1 of the plan year. Therefore, in order to elect a December 31 end date to the OEP, the Exchange and its issuers must be capable of making coverage effective the very next day following a December 31 plan selection. Under this final rule, Exchanges may adopt any start date on or before November 1, and may adopt an end date as late as December 31, as long as operational processes allow for meeting all other Exchange requirements associated with the OEP. As we believe the open enrollment period length is largely independent of subsidy levels set by Congress and the current high levels of improper enrollment we are attempting to mitigate, we are finalizing these changes for PY 2027 and beyond. We summarize and respond to public comments received on the proposed change in OEP dates below. and respond to public comments received on the proposed change in OEP dates below.

Comment: Almost all commenters expressed support for delaying implementation of a shorter OEP, if finalized as proposed. Most commenters cited the sunset of enhanced PTC as a potential cause for consumer confusion during the upcoming OEP, which will require additional consumer support and staffing on the part of issuers, agents, brokers, web-brokers and Exchanges. Commenters expressed concern that these dynamics would be exacerbated by a shorter OEP. Many issuers asserted that shortening the OEP in a year when consumers most need additional time to assess and change plans has the potential to create market instability. Some stated that there is not adequate time to incorporate this change into premium rate filings for PY 2026.

Several organizations stated that there is insufficient time to notify consumers and conduct educational outreach about this provision prior to the OEP for PY 2026, and decreased Navigator enrollment support funding for PY 2026 \150\ may contribute to consumer confusion.

\150\ See CMS (2025, Feb 14). Press Releases: CMS Announcement on Federal Navigator Program Funding. https://www.cms.gov/newsroom/press-releases/cms-announcement-federal-navigator-program-funding.

Some commenters said that technical modifications and testing were already underway for PY 2026 OEP, so adding modifications would be challenging and costly for Exchanges and their issuers to incorporate.

Response: We recognize that finalizing a rule that changes the OEP dates only a few months prior to the start of an OEP for a plan year during which nearly all enrollees receiving financial assistance will experience changes in their APTC eligibility or amount has the potential to be challenging for consumers, Exchanges, and issuers. In light of these concerns, we are modifying the effective date for the OEP change to begin for the PY 2027 OEP rather than the PY 2026 OEP.

Comment: Commenters addressing the proposal to amend Sec. 155.410(e) to shorten the annual OEP in all individual market Exchanges, including State Exchanges, all expressed support for States to retain flexibility to set their own OEP dates. Issuers and issuer associations that supported the proposal for a shorter OEP for the FFEs recommended that CMS permit State Exchanges to continue setting their own OEP dates. All State Exchanges that submitted comments also supported giving State Exchanges flexibility to set their own OEP, primarily stating that States better understand local market conditions, such as consumer demographics, enrollment patterns, fraud, risk, and adverse selection, and therefore are better positioned to decide the length of OEP that will work best for their residents. These commenters also noted the need for flexibility in case of natural disasters.

Response: After consideration of the comments received, we are modifying our proposal to provide flexibility for States to set their own OEP dates, with the condition that, beginning with the OEP for PY 2027, the end date is no later than December 31 of the preceding year and all Exchange OEPs have a maximum length of 9 weeks. We specify the 9-week duration because it will allow most Exchanges to maintain their OEP start date of November 1 and extend their OEPs through the latest allowed end date of December 31. If an Exchange preferred to start the OEP earlier, such as on October 15, the 9-week durational limit would ensure that the Exchange's OEP length does not place excessive burden on issuers and enrollment partners. We believe that a 9-week OEP provides more than sufficient time for consumers to submit an application, compare their plan options, and enroll in advance of the new year. During the PY 2025 OEP, 97 percent of all Exchange enrollments occurred by the end of the ninth week. The latest allowable OEP end date of December 31, coupled with the finalized effective date rules in Sec. 155.410(f) will ensure that all OEP enrollees have full year coverage effective January 1 of the plan year for which they are enrolling. We also note that throughout the year, Special Enrollment Periods are available for consumers who live in areas that are experiencing a natural disaster (or other national or State-level emergency) when

it is designated a Federal Emergency Management Agency (FEMA) incident.

Comment: Several commenters supported shortening the annual OEP as proposed, beginning with PY 2027 or later. One commenter cited consistency across Exchanges to help consumers remember key dates and reduce confusion from having two deadlines for two different coverage start dates. Two commenters opined that the shorter OEP would reduce adverse selection and ensure the stability of the individual market. One commenter noted that an OEP that ends before the start of the next calendar year begins allows health plans to better predict risk and pricing models.

Response: We agree with these comments and are finalizing the policy to end the annual OEP for all Exchanges no later than December 31 of the calendar year preceding the applicable benefit year, beginning with PY 2027. This approach balances State flexibility with consistency, because beginning with the PY 2027 OEP all Exchange OEP enrollments across the country will have a January 1 effective date. The single effective date ensures that consumers have only one deadline. Ending the OEP before the plan year begins will mitigate adverse selection because consumers will not be able to switch plans in January based on emergent health needs or delay enrollment by forgoing January coverage with the option of enrolling later instead. The December 31 end date and the 9-week durational limit will shorten the OEP for all Exchanges once effective for the PY 2027 OEP.

Comment: Many interested parties expressed concerns about the proposed revision to the annual OEP. Commenters noted that a shorter OEP would have potential for reduced enrollment and an increase in the uninsured population. Some commenters commented on the importance of the OEP providing enough time to support consumer choice and informed decisions about coverage, noting in particular that vulnerable populations, including those in rural areas with limited digital access, those with language barriers, and those with disabilities, may need additional time and assistance to enroll. Many commenters also noted that some consumers need enough time to switch plans.

Response: We agree that the OEP must provide sufficient time for all entities involved in the annual open enrollment process to conduct outreach, provide assistance, and enroll in coverage. We intend to conduct outreach to consumers in States with Exchanges operating on the Federal platform to ensure that they are aware of the newly shortened OEP are prepared to enroll or re-enroll in 2027 coverage. By providing flexibility to State Exchanges to set their OEP dates within set parameters, we anticipate that Exchanges can time their OEP period to best accommodate the needs of the specific populations in their States, including vulnerable populations. By delaying the effective date until PY 2027, Exchanges can increase outreach to vulnerable populations or consider tactics other than an extended OEP to promote their participation.

Comment: Many commenters said that a shortened enrollment period would strain agents, brokers, enrollment assisters, and call center capacity as they would be supporting the same number of people in a shorter timeframe. Some commenters noted that the reduction in Federal funding for Navigators compounds the capacity concerns regarding consumer assistance.

Response: A shorter enrollment period may require agents, brokers, web-brokers, enrollment assisters, and the Marketplace call center to assist the same number of people over a shorter timeframe. As noted above, during the PY 2025 OEP, 97 percent of all Exchange enrollments occurred by the end of the ninth week. The final rule provides States flexibility to set their OEPs up to nine weeks in length. We encourage Exchanges to work with the enrollment support interested parties in their States to establish the OEP dates that best align with their capacity.

Comment: Several commenters shared data from California, New York, Massachusetts and Virginia State Exchanges showing that those who enroll later in the OEP may on average be younger, healthier, and therefore less costly consumers. Commenters worried that if some such consumers miss the shortened deadline, it could destabilize the risk pool and increase premiums. Many said that long-term effects would lead to higher uninsurance rates, uncompensated care, and clinician burnout that could strain the health care ecosystem.

Response: We noted the crucial role that the OEP plays in protecting the stability of the individual market risk pool within the structure of the ACA. Adverse selection remains a serious concern when a longer OEP allows consumers to wait until the coverage year begins before deciding whether to enroll. Enrollment periods are one of the few tools established by the ACA to mitigate adverse selection and contribute to a more stable, affordable market. Under the final rule, beginning in PY 2027, consumers will have one clear and consistent deadline for January 1 coverage within their Exchange that will not differ from the end date of the OEP. By delaying the effective date until PY 2027, Exchanges have sufficient time to message the clearer OEP end date to consumers, especially the younger and healthier consumers who may tend to enroll later in the OEP. While we cannot foresee to what extent younger and healthier consumers will enroll before the updated deadline, we do believe consumers are deadline- driven. Given that State Exchange markets may experience unique patterns of enrollment and have State-specific history of OEP dates and enrollment outcomes, we are maintaining flexibility for State Exchanges to set their own OEP dates in this final rule within set parameters. Moreover, we believe that addressing adverse selection through all the provisions of this rule will lead to lower premiums that will do more to encourage younger and healthier consumers to enroll than additional time does today. Therefore, we believe that the adjusted OEP period will not lead to negative long-term consequences.

Comment: A few commenters responded to our request about the overall effects and impacts of OEP placement within the calendar year. Several commenters recommended that if CMS moves up the OEP end date to December 15, the Exchanges should also move up the OEP start date to October 15 to ensure consumers have sufficient time to enroll while still maintaining a deadline for a January 1 coverage start. Others suggested that December 31 be the last date of OEP for coverage effective January 1. Several also mentioned that the OEP falls during a busy holiday season, which brings its own time constraints and financial challenges for consumers and business owners.

Response: We appreciate the comments noting potential benefits of an OEP start date prior to November 1st. Therefore, the final regulation at Sec. 155.410(e)(5) allows all Exchanges to set an earlier start date for their OEP if desired. This change provides additional flexibility to States as compared to the previous policy at Sec. 155.410(e)(4)(iii) which did not allow an Exchange to set a start date for their OEP earlier than November 1 unless that earlier start date was already in place as of November 1, 2023. The rule does not require any Exchange to establish an earlier OEP start date given that the timing for issuer rate filings may make it difficult to a start OEP prior to November 1. We agree that an end date

of December 31 or earlier coupled with the effective date rules at Sec. 155.410(f) will ensure that all effective dates (other than those pursuant to a SEP) will be on the same day (January 1 of the coverage year).

Comment: A commenter noted that that many brokers write both Medicare and individual market business, and a shorter OEP would reduce agents' ability to balance these overlapping enrollment periods. Some commenters worried that the overlap of the Exchange OEP with the Medicare Advantage OEP may confuse consumers or strain the capacity of agents and brokers.

Response: Ending the Exchange OEP prior to January will align more closely with enrollment periods for other coverage such as employer coverage which benefits consumers because it allows consumers to compare their options within the same timeframe when they need to switch from one coverage type to another at the end of the plan year. In addition, each year since 2010 the Medicare Annual Enrollment Period has run from October 15 to December 7, and this rule provides flexibility for Exchanges to partially align their OEP with that period. However, given the capacity concerns voiced by agents and brokers and associated organizations, the final OEP policy strikes a balance between goals of consistency with other OEPs and not straining the capacity of enrollment assistance entities. We note that the Medicare Advantage OEP occurs annually from January 1 to March 31, so the Exchange OEP, with its last possible end date of December 31, will not overlap.

Comment: Some commenters noted that future Medicaid changes could cause more consumers to be eligible for Exchange coverage and therefore the OEP would need to be long enough to ensure an opportunity for them to enroll.

Response: We are not aware at this time of Medicaid eligibility changes that would disrupt Exchange enrollment expectations. Consumers who lose eligibility for Medicaid or CHIP qualify for a Special Enrollment period under Sec. 155.420 and thus would not be limited to the annual OEP for Exchange enrollment.

Comment: Some commenters noted that an OEP that extends beyond January 1 allows a valuable “free look” period during which consumers can change plans. One commenter noted that Exchange enrollees who are automatically re-enrolled into a plan may not learn of cost increases until after they receive their first bill in January. Another commenter noted that an enrollee may discover their plan's clinician directory included inaccurate information only after the enrollment period begins.

Response: We provide notice in advance of the OEP to consumers about the importance of updating information for the future plan year and actively comparing plan options and prices. We note that section 2799A-5 of the Public Health Service Act requires issuers to verify and update their provider directories on a regular basis. They are required to verify that their provider directories are accurate at least once every 90 days and to update the directory within 2 business days of provider or facility notice of network agreement termination. Additionally, if a plan participant receives information from the issuer's provider directory that a provider or facility is in-network when the provider or facility is in fact not in network, the issuer may not charge a cost-sharing amount greater than the cost-sharing amount that would apply to the item or service if the provider or facility was in-network. 8. Monthly Special Enrollment Period for APTC-Eligible Qualified Individuals With a Projected Household Income at or Below 150 Percent of the Federal Poverty Level (Sec. 155.420)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12979 through 12982), we proposed to remove Sec. 155.420(d)(16) to repeal the monthly SEP for APTC-eligible qualified individuals with a projected annual household income at or below 150 percent of the FPL, which we refer to as the “150 percent FPL SEP.” To conform existing regulations to the repeal of this SEP, we also proposed to remove Sec. 155.420(a)(4)(ii)(D) (which adds plan category limitations and permits eligible enrollees and their dependents to use the 150 percent FPL SEP to change to a silver level plan) and Sec. 155.420(b)(2)(vii) (regarding when coverage is effective for this SEP), and Sec. 147.104(b)(2)(i)(G) (as discussed in section III.A.1 of this final rule). We also proposed to amend the introductory text of Sec. 155.420(a)(4)(iii) to remove reference to paragraph (d)(16). Finally, we also proposed to revise paragraphs (a)(4)(ii)(B) and (a)(4)(ii)(C) to move the placement of the word “or” for clarity given the proposed removal of paragraph (a)(4)(ii)(D).

We created the 150 percent FPL SEP to provide additional opportunities for low-income consumers to take advantage of free or low-cost coverage that section 9661 of the ARP made available on a temporary basis during the COVID-19 PHE. When we first finalized this SEP and then made it permanent in the 2025 Payment Notice (89 FR 26320), we projected that it would increase premiums due to adverse selection and, as a result, increase both the financial hardship on consumers who pay the full premium and the Federal cost of APTC. While we previously concluded the enrollment benefits of this SEP outweighed these costs and risks for adverse selection, we now believe that the SEP in combination with the widespread availability of zero-dollar premium plans has increased opportunities and incentives to conduct improper enrollments, as well as increased the risk for adverse selection, as the 150 percent FPL SEP incentivizes consumers to wait until they are sick to enroll in Exchange coverage. In the proposed rule (90 FR 12979), we encouraged commenters and other interested parties to provide comments on whether and how the 150 percent FPL SEP has exacerbated these issues. Finally, we stated that we believe that the single, best interpretation of the statute is that it does not authorize the Secretary to add the 150 percent FPL SEP to the list of SEPs enumerated at sections 1311(c)(6)(C) and (D) of the ACA.

As background, section 9661 of the ARP amended section 36B(b)(3)(A) of the Code to decrease the applicable percentages used to calculate the amount of household income a taxpayer is required to contribute to their second lowest cost silver plan for tax years 2021 and 2022.\151\ For those with household incomes at or below 150 percent of the FPL, the new applicable percentage is zero. The IRA extended this provision to the end of PY 2025. As a result of these changes, many low-income consumers whose QHP coverage can be fully subsidized by the APTC have one or more options to enroll in a silver-level plan without needing to pay a premium after the application of APTC.

\151\ Public Law 117-2.

To provide certain low-income individuals with additional opportunities to newly enroll in this fully-subsidized or low-cost coverage, in part 3 of the 2022 Payment Notice (86 FR 53429 through 53432), we finalized, at the option of the Exchange, a new monthly SEP for APTC-eligible qualified individuals with projected household income at or below 150 percent of the FPL. We also finalized a provision stating that this SEP is available only during periods of time when a taxpayer's applicable percentage, which is used to calculate the amount of household income a tax filer is required to contribute to their second lowest cost

silver plan, is set at zero, such as during tax years 2021 through 2025, as provided by section 9661 of the ARP and extended by the IRA. As background, the applicable percentages are used in combination with other factors, including annual household income and the cost of the benchmark plan, to determine the PTC amount for which a taxpayer can qualify to help pay for a QHP on an Exchange for themselves and their dependents. These decreased percentages generally result in increased PTC for PTC-eligible tax filers.

In the 2025 Payment Notice (89 FR 26320), we removed the limitation that the 150 percent FPL SEP is available only during periods of time when the applicable percentage is set to zero. However, given concerns regarding the growth of improper enrollments using this SEP, we proposed that this SEP would end as of the effective date of the final rule, and not in December 2025, when the provisions extended by the IRA sunset. We stated in the proposed rule (90 FR 12980) that we believe ending the 150 percent FPL SEP across all Exchanges immediately is necessary due to the rise in improper enrollments, as the 150 percent FPL SEP was one of the primary mechanisms that certain agents, brokers, and web-brokers used to conduct unauthorized enrollments to improperly enroll consumers in fully-subsidized Exchange plans.

We stated in the proposed rule (90 FR 12980) that while we previously concluded that the benefits of increased access outweighed the risk of premium increases, new information suggests the expanded availability of fully-subsidized plans (referred to as zero-dollar plans in previous rulemaking),\152\ combined with easier access to these fully-subsidized plans through the 150 percent FPL SEP, led to a substantial increase in improper enrollments. We stated that the existence of fully-subsidized plans by itself creates an opportunity for some agents, brokers, and web-brokers to conduct improper enrollments of consumers in Exchange coverage without them knowing, because without a premium, there is no ongoing need for consumer engagement following completed enrollment in an Exchange plan. We noted that based on our own analysis, we have identified various mechanisms that some agents, brokers, and web-brokers have exploited to conduct unauthorized enrollments to improperly enroll consumers in Exchange coverage without their consent. For example, an agent, broker, or web- broker can enroll a consumer without the consumer's knowledge and earn a commission for each consumer enrolled. An agent, broker, or web- broker can also change the agent of record for an existing enrollee and take the commission from the existing agent, broker, or web-broker. An agent, broker, or web-broker can switch an enrollee to a new health plan without the consumer's consent to capture the new commission. An agent, broker, or web-broker can also split up a household and enroll them in multiple plans to capture multiple commissions.

\152\ In previous rulemaking, we referred to fully-subsidized plans as zero-dollar plans. This former characterization suggested there is no premium. But health issuers do receive a full premium for every plan they sell. For people with incomes between 100 and 150 percent of the FPL, this premium is fully subsidized by the Federal taxpayer.

We noted that this pattern of agents, brokers, and web-brokers targeting low-income individuals with deceptive practices to entice enrollment in fully-subsidized plans is illustrated in multiple indictments recently pursued by the Department of Justice (DOJ). In one case, an insurance brokerage firm allegedly schemed to maximize commission payments by preying on vulnerable, low-income individuals, using deceptive practices to improperly inflate the incomes of consumers projected to earn no income.\153\ In another case, a different insurance brokerage executive pleaded guilty to deceptive marketing practices and fraudulently enrolling ineligible consumers into fully-subsidized ACA plans by inflating their incomes.\154\

\153\ Press Release, Department of Justice https:// www.justice.gov/opa/pr/president-insurance-brokerage-firm-and-ceo- marketing-company-charged-161m-affordable- care#:~:text=The%20indictment%20alleges%20that%20Lloyd,initially%20pr ojected%20having%20no%20income.

\154\ Press Release, Department of Justice, https://www.justice.gov/opa/pr/executive-vice-president-insurance-brokerage-pleads-guilty-133m-affordable-care-act-fraud.

Because of these practices, in 2024, we implemented various system and logic changes to prevent some improper agent, broker, and web- broker behavior and we have observed some improvements. However, we stated in the proposed rule (90 FR 12980) that we believe that so long as there is no premium cost for the consumer, these enrollments can continue to go unnoticed until an enrollee tries to use a health plan that has been improperly cancelled by an agent, broker, or web-broker, or eventually learns they must reconcile APTC when they file their Federal income tax return.

In December 2024 the FFE received 7,134 consumer complaints of improper enrollments, an increase from the 5,032 complaints received in December 2023. Although these numbers represent a decrease from the high of 39,985 complaints received in February 2024, the fact that the number of complaints for 2024 remains substantially higher than for 2023 demonstrates that previous program integrity measures have not resulted in a decrease in potential improper enrollments such that additional measures are not necessary. We stated in the proposed rule (90 FR 12980) that this has caused us to reconsider the 150 percent FPL SEP, as it continues to serve as a mechanism for some agents, brokers, and web-brokers to circumvent the protections that we have put into place, and even reverse some of the gains we have made in mitigating agent, broker, and web-broker improper enrollments.

On April 12, 2024, a class of plaintiffs, including Exchange consumers and insurance agents, filed a complaint against certain agents and marketing companies alleging a conspiracy to conduct unauthorized enrollments and change enrollments to improperly capture commissions.\155\ The complaint alleges that the false ads created by the defendants “resulted in hundreds of thousands of enrollments by class members.” \156\ We noted in the proposed rule (90 FR 126980) that enrollment data for the 2024 OEP suggest improper enrollments may be significantly more widespread than the parties involved in this case. A comparison of plan selections during the 2024 OEP and U.S. Census Bureau population estimates show the number of plan selections among people reporting household incomes between 100 and 150 percent of the FPL exceeded the number of potential enrollees within this FPL range in nine States.\157\ This analysis estimates between 4 to 5 million improper enrollments in 2024 at a cost of $15 to $26 billion in improper PTC payments.\158\

\155\ Complaint, Turner v. Enhance Health, LLC, No. 24-cv-60591- MD. (S.D. Fla. Apr. 12, 2024).

\156\ Id. at 56.

\157\ Blase, B.; Gonshorowski, D. (2024, June). The Great Obamacare Enrollment Fraud. Paragon Health Institute. https://paragoninstitute.org/private-health/the-great-obamacare-enrollment-fraud.

\158\ Ibid.

We stated in the proposed rule (90 FR 12980) that our own analysis confirms the number of plan selections for people with household incomes between 100 and 150 percent of the FPL exceeds the population of people at that income level based on U.S. Census Bureau surveys. At the extreme, 2.7 million Floridians claimed a household income between 100 and 150 percent of the FPL and selected plans through

HealthCare.gov during the 2024 OEP. Yet, 2022 Census surveys estimated that only 1.5 million people who live in Florida fell within that income level.\159\ We stated that this disparity between the number of plan selections and Census population estimates suggests there were likely over 1 million improper enrollments in Florida alone. We noted that several other States have similar patterns of more enrollees reporting household income between 100 and 150 percent of the FPL than people who would be eligible in the State for Exchange coverage with income in that category.\160\ A detailed discussion of the limitations of this data analysis can be found in section V.C.18 of this final rule. In the proposed rule, we encouraged commenters and other interested parties to share their experiences in their respective States, including the extent of improper enrollments and other data disparities.

\159\ U.S. Census Bureau (2022). American Community Survey. Dep't of Commerce. https://www.census.gov/programs-surveys/acs/data.html.

\160\ Ibid.

We stated in the proposed rule (90 FR 12981) that the 150 percent FPL SEP expands the opportunities for some agents, brokers, and web- brokers to conduct unauthorized enrollments for people in fully- subsidized plans at any time during the year. We noted that by design, anyone who reports a projected household income at or below 150 percent of the FPL on their application can enroll in a QHP or change from one QHP to another at any time during the year. We stated that this allows agents, brokers, and web-brokers to conduct unauthorized enrollments or enrollment changes any time during the year when they gain access to the personally identifiable information that allows them to falsely represent someone. Before the implementation of the 150 percent FPL SEP, we received a handful of complaints from consumers about improper enrollments or plan switching. In contrast, in the first 3 months of 2024, we received 50,000 complaints of improper enrollments and 40,000 complaints of unauthorized plan switches attributed due to agent or broker noncompliant conduct and improper enrollments. For these reasons, in the proposed rule (90 FR 12981) we stated that by immediately ending this SEP as of the effective date of the final rule, Exchanges would be protecting consumers by preventing improper enrollments in addition to working to mitigate the negative effects of adverse selection on the risk pool, thus moving towards a more stable individual market risk pool.

In addition to concerns over improper enrollments, we stated in the proposed rule (90 FR 12981) that we remain concerned over the ability of consumers at or below 150 percent of the FPL to wait to enroll until they need health care services, resulting in adverse selection. We stated that additional research is necessary to accurately quantify the negative impacts of this behavior to the risk pool, and we sought comment on this issue from the public. With respect to improper enrollments, we recognized the need to revise the Federal platform process for pre-enrollment verification for SEPs and to reinforce that process so that SEPs are not being misused. In the proposed rule, we stated that this reinforcement of pre-enrollment verification for SEPs would strengthen program integrity measures, deter agents, brokers, and web-brokers from engaging in improper enrollments and enrolling unsuspecting consumers in QHP coverage through the Exchanges without their knowledge or consent, and stabilize the individual market risk pool. We proposed changes to pre-enrollment verification for SEPs at Sec. 155.420(g).

In the proposed rule (90 FR 12981), we stated our concern that the risk of people waiting to enroll until sick is substantially heightened by the flexibility consumers, as well as agents, brokers, and web- brokers acting on behalf of consumers, receive when estimating their annual household income on their application, along with the limits on how much low-income individuals must pay to reconcile any misestimate on their taxes. We noted that while a tax filer would need to reconcile a poor income estimate on their taxes, under statute, some tax filers need only repay a small portion of excess APTC. This is referred to as the excess APTC repayment limit. For single filers with household incomes less than 200 percent of the FPL, the amount they must pay back was limited to $375 in 2024.\161\ The limit is $950 for single filers with household incomes from 200 to less than 300 percent of the FPL and $1,575 for single filers with household incomes from 300 to less than 400 percent of the FPL. We stated in the proposed rule that with wide flexibility in estimating household income and minimal penalties for misestimates, the 150 percent FPL SEP is an ideal enrollment loophole for some agents, brokers, and web-brokers seeking to increase enrollment commissions. Additionally, we noted that it can result in a large portion of people who fail to enroll in coverage until they incur significant health care expenses, introducing high adverse selection risks for issuers, which are then reflected in higher premiums and associated Federal spending on premium subsidies. We further noted that this SEP has certainly been abused by some agents, brokers, and web- brokers, who are aware of the excess APTC repayment limits and who have inappropriately marketed “free” plans to enrollees.162 163

\161\ IRS (n.d.) Rev. Proc. 2023-34. Dep't of Treasury. https://www.irs.gov/pub/irs-drop/rp-23-34.pdf.

\162\ Appleby, J. (2024, April 8). Rising Complaints of Unauthorized Obamacare Plan-Switching and Sign-Ups Trigger Concern. KFF Health News. https://kffhealthnews.org/news/article/aca-unauthorized-obamacare-plan-switching-concern/.

\163\ Chang, D. (2023, June 12). Florida Homeless People Duped into Affordable Care Act Plans They Can't Afford. Tampa Bay Times. https://www.tampabay.com/news/florida-politics/2023/06/12/florida-homeless-people-duped-into-affordable-care-act-plans-they-cant-afford/.

We stated in the proposed rule (90 FR 12981) that this wide flexibility in estimating income may also be open to misuse by Navigators and Certified Application Counselors (CACs). We noted that while Navigators and CACs may not receive a direct financial incentive for improper enrollments, they may still have incentives to encourage or allow applicants to underestimate their income to take advantage of fully-subsidized plans outside of the OEP. Navigators and CACs, for example, still have incentives to hit and exceed enrollment targets. The number of consumers assisted with enrollment or re-enrollment in a QHP is one of the project goals we list in the Navigator grant application.\164\ Navigators must provide progress reports to CMS and future grant funding levels are based in part on progress toward this goal.\165\ Navigators and CACs may even believe it is appropriate to encourage applicants to understate their income to gain more affordable coverage. We sought comment on this issue and the proposal generally.

\164\ Centers for Medicaid and Medicare Services, Cooperative Agreement to Support Navigators in Federally Facilitated Exchanges, CMS NAV 001, June 7, 2024, at 33. OMB 0938-1215.

\165\ Id. at 32.

We stated in the proposed rule (90 FR 12981) that we are working hard to address the increase in improper enrollments to ensure only eligible people enroll in all plans, but especially fully-subsidized plans. While we stated that we believe stronger enforcement measures can substantially reduce improper enrollments, we also stated that we believe improper enrollments would continue to be a problem so long as there is access to fully-subsidized

plans combined with even easier access through the 150 percent FPL SEP. We noted that even if we were able to reduce the problem of some agents, brokers, and web-brokers enrolling consumers in Exchange coverage without their knowledge or consent, substantial issues remain with consumers taking advantage of the 150 percent FPL SEP by falsely representing their household income on their Exchange applications. Because of this, we stated that we believe that ending the 150 percent FPL SEP remains one of the most critical ways to mitigate this risk of improper enrollments and protect the individual risk pool. We also stated that we believe that the loopholes and incentives created by the 150 percent FPL SEP are too large to simply police retrospectively.

In the 2025 Payment Notice (89 FR 26321), we reviewed the enrollment experience and found that the percent of Exchange enrollees on the Federal platform who had projected annual household income of less than 150 percent of the FPL increased from 41.8 percent in 2022 to 46.9 percent in 2023, after the implementation of the 150 percent FPL SEP. At the time, we concluded this suggested the policy was successful. We also analyzed the availability of fully-subsidized plans in 2020 before enhanced subsidies became temporarily available under the ARP and IRA. We found 77 percent of the consumer population at or below 150 percent of the FPL had access to fully-subsidized bronze plans and 16 percent had access to fully-subsidized silver plans. Based on this finding, we concluded the risk of adverse selection was mitigated by the broad access to fully-subsidized plans because consumers with fully-subsidized plans would not have a financial incentive to drop their Exchange plan when healthy and resume coverage when sick. Nevertheless, we still projected the 150 percent FPL SEP would increase premiums by 3 to 4 percent (89 FR 26405).

In the proposed rule (90 FR 12982), we stated that these conclusions no longer seem valid considering the recent Turner v. Enhance Health, LLC litigation, higher numbers of consumer complaints about unauthorized plan switching and improper enrollments, and a sharp increase in enrollment relative to the population with household income under 150 percent of the FPL in PY 2024. We noted that this new information suggests the increase in the proportion of Exchange enrollees who report household incomes under 150 percent of the FPL is driven by improper enrollments. In addition, we explained that it highlights how the adverse selection issue for the 150 percent FPL SEP does not primarily involve concerns over consumers dropping coverage when healthy and resuming coverage when sick. We stated that people already enrolled in fully-subsidized plans clearly have little incentive to drop their plan. We further stated that the adverse selection issue surfaces from people who do not enroll in a fully- subsidized plan during the OEP and, instead, wait to enroll when sick. We noted that people who wait can avoid enrollment if they never become sick and, therefore, avoid contributing when healthy. We further noted that many consumers can also wait and know, if they do become sick, they would qualify for the 150 percent FPL SEP, due to the widespread evidence that millions of people have enrolled at this income level who do not have such household income and are subject to limitations on repayments of excess tax credits.

Based on this analysis, we stated in the proposed rule (90 FR 12982) that we believe the impact of the 150 percent FPL SEP on premiums absent IRA subsidies is less than the 3 to 4 percent we previously projected in the 2025 Payment Notice. We stated in the proposed rule that after fully accounting for the impact of people not enrolling during the OEP and waiting to enroll until sick, we projected the premium impact of the current policy would be between 0.5 to 3.6 percent. In this final rule, we have revised this estimate. We now estimate that removing the current monthly SEP for people with incomes below 150 percent of the FPL will result in premiums being 3 to 4 percent lower than they would be if the SEP were to remain in place.\166\ A point estimate of 3.4 percent is used in the RIA, and an explanation of this estimate can be found in section V.C.12 of this rule.

\166\ Based on internal CMS Office of the Actuary analysis, removing this provision is expected to reduce premiums within the range of 3 to 4 percent, and we use the point estimate of 3.4 percent to estimate expected claims impact and the shift in average months of enrollment.

Based on the premium increase and the increase in improper enrollments which was exacerbated by our previous SEP policy, we also stated that we do not believe that the benefits of increased access to coverage for low-income consumers outweighs the risk of higher premiums and improper enrollments. In fact, we stated that we believe that the costs may exceed the benefits and we encouraged commenters and other interested parties to provide comments on the cost impact of the 150 percent FPL SEP.

In the proposed rule (90 FR 12982), we noted that improper enrollments resulting from the 150 percent FPL SEP may mitigate premium increases caused by adverse selection from this SEP. Individuals who are unknowingly enrolled through the 150 percent FPL SEP would not file insurance claims and, therefore, would improve the risk pool. We stated that while these negative impacts from the 150 percent FPL SEP are related, we account for them separately in our consideration. We explained that the ACA authorizes the Secretary only to require an Exchange to provide for the SEPs listed at sections 1311(c)(6)(C) and (D) of the ACA, and nothing more. We also explained that where a statute such as sections 1311(c)(6)(C) and (D) of the ACA provides a list, the “specific and comprehensive statutory list necessarily controls over the [Secretary's] general authorization,” \167\ such as the one in in sections 1321(a)(1)(A), (B), and (C) of the ACA, which authorizes the Secretary to “issue regulations setting standards for meeting the requirements . . . with respect to” the establishment and operation of Exchanges, the offering of qualified health plans through Exchanges, and “such other requirements as the Secretary determines appropriate.”

\167\ Texas Med. Ass'n v. U.S. Dep't of Health & Hum. Servs., 110 F.4th 762, 775 (5th Cir. 2024) (citing Nat'l Pork Producers Council v. EPA, 635 F.3d 738, 753 (5th Cir. 2011); Texas v. United States, 809 F.3d 134, 179, 186 (5th Cir. 2015), aff'd by an equally divided court, 579 U.S. 547 (2016)).

Section 1311(c)(6)(C) of the ACA mandates that the Secretary require an Exchange to provide for “special enrollment periods specified in section 9801 of the Code of 1986 and other special enrollment periods under circumstances similar to such periods under part D of title XVIII of the Act.” We noted in the proposed rule (90 FR 12982) that the circumstances underlying the 150 percent FPL SEP are dissimilar to the circumstances for Medicare Part D SEPs under section 1860D-1(b)(3) of the Act, which are: involuntary loss of creditable prescription drug coverage; errors in enrollment; exceptional conditions; Medicaid coverage; and discontinuance of a Medicare Advantage Prescription Drug (MA-PD) election during the first year of eligibility. We stated that the 150 percent FPL SEP is likewise not one of the SEPs specified in section 9801 of the Code, nor similar to such SEPs.

We stated in the proposed rule (90 FR 12982) that this interpretation aligns with our overall experience regarding the role that enrollment periods play in mitigating adverse selection within the

structure of the ACA. We stated that we have thoroughly considered our experience with the program before and after the implementation of the 150 percent FPL SEP and assessed the fit between the rationale for this SEP and the policy consequences that flow from it. Based on this expanded body of experience, we also stated that we believed that Congress was correct to provide the Secretary with a comprehensive statutory list of SEPs that omitted the 150 percent FPL SEP. We sought comments on this proposal.

We stated in the proposed rule (90 FR 12982) that a commenter on the 2025 Payment Notice (89 FR 26323) also questioned whether it was lawful for HHS to implement the 150 percent FPL SEP. We noted that the statute requires a specific set of SEPs that focus on giving people an opportunity to enroll mid-year if they experience a change in their life circumstances, such as a move or the loss of job. We further noted that, in contrast, the 150 percent FPL SEP allows people to enroll at any time during the year based on their existing income, not a change in their income. We requested further comment on this proposal.

After careful consideration of comments and for the reasons outlined in this final rule, we are finalizing this policy with a modification under which the policy and related requirements will sunset for all Exchanges at the end of PY 2026. Thereafter, the 150 percent FPL SEP that was available at the option of the Exchange prior to the finalization of this rule will become available again. As mentioned throughout this proposed rule, there are currently high levels of improper enrollment in the 100 to 150 percent of the FPL cohort as a result of the fully-subsidized benchmark plans available to them. Despite the expiration of the fully-subsidized benchmark plans, we expect there to be significant numbers of improperly enrolled individuals in this income cohort that remain enrolled and receiving APTC for which they are ineligible for some time before markets normalize. That said, we received significant comments in opposition to our proposal to end the 150 percent FPL SEP with commenters raising significant concerns over its impacts on low-income Americans that properly utilize this pathway to receive coverage.

While we agree that low-income Americans properly seeking coverage should not be locked out of it, the 150 percent FPL SEP for individuals with fully-subsidized premiums--as a result of the expanded subsidies-- has enabled significant improper enrollment. That said, once the expanded subsidies expire and individuals are exposed to greater premium costs, the ability of individuals or actors on behalf of individuals to improperly enroll in plans that the 100 to 150 percent of the FPL cohort are eligible for is significantly diminished. In order to address the currently high rate of improper enrollments, we believe it to be necessary to pause the 150 percent FPL SEP temporarily. Coupled with the other temporary policies in this rule and the expiration of fully-subsidized plans, we expect the level of improper enrollments to come down drastically in PY 2026, diminishing the need for ongoing crisis-level program integrity policies. This dynamic, combined with the significant concerns raised by commenters on our proposal, has led us to finalize a pause on the 150 percent FPL SEP thorough PY 2026, with a reversion to the previous policy for PY 2027 and beyond.

We summarize and respond to public comments received on the proposed repeal of the 150 percent FPL SEP below.

Comment: Some commenters supported the proposed repeal of the 150 percent FPL SEP, including issuers and advocacy groups. Commenters acknowledged that the 150 percent FPL SEP was created to accommodate individuals losing Medicaid while States worked to “unwind” from the Families First Coronavirus Response Act (FFCRA) continuous enrollment condition and to return to regular eligibility and enrollment processes in Medicaid and CHIP. However, now that State Medicaid Agencies have generally completed unwinding activities, commenters stated that consumers should utilize other SEPs based on qualifying life events to enroll into coverage outside of the OEP. Commenters expressed that with numerous existing pathways to coverage, income level alone is not a compelling reason to offer a SEP, and that the 150 percent FPL SEP departed from the ACA's structure to reserve SEPs for those experiencing life events necessitating a coverage change.

Response: We appreciate the commenters' support for our proposal. That said, given the substantial uncertainty over the future of the Exchanges and individual health insurance market, we don't believe a permanent repeal is appropriate, and as explained previously, we are finalizing a pause to best balance the urgent need for program integrity with the long-term desire for enrollment efficiencies.

Comment: Some actuaries, community advocacy organizations, and issuers supported the repeal of the 150 percent FPL SEP, as the SEP contributes to adverse selection. Commenters wrote that the SEP introduces volatility, making it challenging for issuers to distribute enrollee risk and gauge the market, resulting in higher premiums. Commenters cited CMS data showing that five million enrollees have utilized the SEP since it was implemented. They further noted that, in PY 2024, nearly half of Exchange enrollees had incomes below 150 percent of the FPL, and the sheer volume of the SEP contributed to the challenges issuers faced gauging the market. Commenters also noted that they expect the risk of adverse selection through this SEP to significantly increase once the enhanced IRA subsidies expire. One commenter indicated that they expected the removal of the 150 percent FPL SEP, in concert with the other policies listed in the rule, would improve the risk pool and reduce premiums.

Response: We appreciate the commenters sharing their insights on how they believe this SEP affected the market. That said, once the enhanced IRA subsidies expire, fewer consumers with income below 150 percent FPL will have fully-subsidized QHPs available to them, making it less likely that the SEP can be abused for inappropriate enrollment. We believe the pause best balances the need for urgent program integrity measures with the long-term desire to promote enrollment efficiencies.

Comment: Some issuers and advocacy groups agreed that removing the 150 percent FPL SEP would reduce opportunities for noncompliant agents, brokers, web-brokers to perform improper enrollments. Commenters stated that removing this SEP would reduce taxpayer costs in the form of improper APTC outlays and would protect low-income individuals from unauthorized enrollments and plan switching. Commenters noted the many ways in which unauthorized enrollments and plan switches harm consumers, who may face disruptions in care, inability to fill needed prescriptions, or tax liabilities as a result. One commenter estimated that this SEP led to billions of dollars in fraudulent subsidy expenditures, based on analysis of HHS reports of 50,000 complaints of unauthorized enrollment and 40,000 complaints of unauthorized plan switches in the first three months of 2024.

Response: We appreciate these comments highlighting that this policy will have the desired effect of increasing program integrity and addressing fraud in Exchanges on the Federal platform. We believe the pause best balances the

urgent program integrity concerns with the long-term desire to promote enrollment efficiencies.

Comment: One commenter said they supported repealing the 150 percent FPL SEP because it allows individuals with income below 100 percent of the FPL, who would not otherwise be eligible for APTC, to gain access to APTC.

Response: We clarify that the 150 percent FPL SEP does not have any bearing on whether an individual is eligible for APTC. Individuals with income below 100 percent of the FPL who are not otherwise eligible for APTC are not made eligible for APTC by the 150 percent FPL SEP.

Comment: Some individuals, local and national advocacy groups, and healthcare providers opposed the repeal of the 150 percent FPL SEP. Commenters stated that the 150 percent FPL SEP provides an important pathway into coverage, acting as a safety net for uninsured individuals who may face barriers enrolling during the annual OEP or other SEPs. Commenters noted many populations to whom this SEP is particularly valuable, including individuals who experience income fluctuations throughout the year, individuals who move in-and-out of Medicaid coverage frequently, and individuals who reside in States that have not expanded Medicaid coverage to adults. Commenters further expressed that this SEP is helpful for individuals who may face barriers to navigating enrollment during the annual OEP or other SEPs, including individuals with low health literacy, limited English proficiency, disabilities, or high health care needs. Commenters expressed concern that more individuals may face administrative challenges related to enrollment during the annual OEP or other SEPs due to recent cuts to Navigator funding, as well as the proposals in this rule to instate new SEP verification requirements and to shorten the annual OEP.

Response: We acknowledge commenters' concerns. However, pausing the 150 percent FPL SEP simply provides a year to allow the market to shed excess levels of improper enrollments while allowing the market to adjust to the expiration of the expanded subsidies that enabled such high levels in the first place. After PY 2026, the SEP will return to a market without fully-subsidized premiums and exposure to premium costs should mitigate the fraud that previously proliferated under the expanded subsidies. We believe that the pause best balances the need to address urgent program integrity concern with the long-term desire to promote enrollment efficiencies.

We acknowledge commenters' concerns about the number of consumers that may be served by Navigators due to changes in funding, but do not believe that that is a compelling reason not to pursue this proposal.

Comment: Some issuers and advocacy groups agreed that removing the 150 percent FPL SEP would reduce opportunities for noncompliant agents, brokers, and web-brokers to perform improper enrollments. Commenters stated that removing this SEP would reduce taxpayer costs in the form of improper APTC outlays and would protect low-income individuals from unauthorized enrollments and plan switching. Commenters noted the many ways in which unauthorized enrollments and plan switches harm consumers, who may face disruptions in care, inability to fill needed prescriptions, or tax liabilities as a result. One commenter estimated that this SEP led to billions of dollars in fraudulent subsidy expenditures, based on analysis of HHS reports of 50,000 complaints of unauthorized enrollment and 40,000 complaints of unauthorized plan switches in the first three months of 2024.

Response: We appreciate these comments highlighting that this policy will have the desired effect of increasing program integrity and addressing fraud in Exchanges on the Federal platform. While noncompliant agents, brokers, and web-brokers contributed to these issues, we want to acknowledge that most comply with CMS rules and regulations and act in good faith. The expiration of the enhanced subsidies will diminish the incentive and opportunity for improper enrollments.

Comment: Commenters anticipated that this policy change could result in more individuals having longer periods of uninsurance, resulting in decreased access to care, worse health outcomes, and increased financial instability for impacted individuals. Commenters noted that in addition to impacting individual health outcomes, increased uninsurance would also have a negative impact on community and public health, and on businesses that rely on a healthy workforce. Commenters expressed concerns that care would shift from primary and preventive care settings to more costly urgent and emergency care settings, and that increased uncompensated care costs would negatively impact hospitals, community health centers, issuers, municipalities, and States. Commenters anticipated that increased risks of uninsurance would disproportionately impact vulnerable populations, including individuals with substance use disorders, individuals at risk of or living with HIV, individuals with cancer, individuals with multiple sclerosis, and individuals recently released from incarceration. One commenter noted that repealing this SEP without modifying existing limits on Short-Term Limited Duration Insurance (STLDI) would result in coverage gaps for low-income individuals. One commenter raised concerns that consumers who become uninsured due to the proposed the repeal of this SEP would instead need to utilize Medicaid if they have a medical emergency.

Response: We acknowledge commenters' concerns and note that we are simply finalizing a 1-year pause to the 150 percent FPL SEP to address urgent program integrity concerns. At the beginning of PY 2027, the 150 percent FPL SEP will begin again.

We appreciate the commenter's analysis of the intersection between STLDI and the repeal of this SEP and acknowledge the commenter's suggestions for future changes to STLDI policy. We agree that STLDI coverage may be a valuable option for uninsured individuals who are not able to enroll in Exchange coverage through an SEP, given that STLDI policies generally offer year-round enrollment.\168\

\168\ https://www.cato.org/policy-analysis/biden-short-term-health-plans-rule-creates-gaps-coverage#short-term-limited-duration-insurance.

We disagree with the commenter who expressed concerns about individuals who would have otherwise used this SEP during the pause needing to rely on Medicaid instead. The 150 percent FPL SEP is only available to individuals who are eligible for APTC, meaning that they are not eligible for Medicaid. Therefore, individuals who would have otherwise used the 150 percent FPL SEP during the pause are generally not otherwise eligible for Medicaid. Individuals who are eligible for Medicaid can and should continue to utilize Medicaid's year-round enrollment.

Comment: Comments from States, individuals, and advocacy groups opposed the repeal of the 150 percent FPL SEP and expressed their view that it is not a major driver of adverse selection, as claimed in the proposed rule. Commenters asserted that people do not wait until they are sick to enroll in coverage as they have no incentive to wait when their monthly premiums are zero or nearly zero dollars. Commenters further noted that it is not prudent for individuals to wait until they are sick to

enroll in coverage through this SEP because their plan effective date and their access to care are not instantaneous.

Some commenters stated that even if individuals wait until sick to enroll into coverage, the opportunity to enroll via the 150 percent FPL SEP should be made available as it could result in a net positive impact because it promotes continuous coverage in the future. One commenter cited a study showing that even if there is some evidence of adverse selection amongst SEP enrollees, most care that was sought was “nondiscretionary”. One State Exchange cited data showing that 85 percent of the 150 percent FPL SEP enrollees remained enrolled throughout the rest of the plan year, claiming that this shows the SEP supports continuous coverage. One organization noted that in 2024, only half of Coloradans who qualified for subsidized coverage enrolled in coverage, demonstrating that not everyone who is eligible enrolls into coverage regardless of their health needs. The organization also stated that in prior rulemaking we found that the risk of adverse selection associated with this SEP was lower than anticipated.

Response: We appreciate commenters' analysis of the extent to which the 150 percent FPL SEP may contribute to adverse selection and we acknowledge commenters' concerns. While we are not able to quantify the extent to which the 150 percent FPL SEP may drive adverse selection, we still believe it is reasonable to conclude that this SEP creates a risk of adverse selection.

We are committed to ensuring that consumers have continuous coverage, however, and we believe that finalizing the pause of the 150 percent FPL best balances the need to address urgent program integrity concerns with the long-term desire to promote enrollment efficiencies. We will continue to evaluate adverse selection in the marketplace after the enhanced subsidies expire.

Comment: Commenters from States, individuals, and advocacy groups opposed the repeal of the 150 percent FPL SEP by stating that removing the 150 percent FPL SEP could deter young and healthy people from enrolling in coverage and destabilize the risk pool, given that healthy individuals may be more easily deterred by administrative hurdles to coverage. State Exchanges cited their own research and researchers cited State Exchange data showing that the per member per month claims costs associated with SEP enrollees were lower than costs for non-SEP enrollments. One commenter referenced actuarial research specific to the State of New York suggesting that lower-income APTC enrollees had better risk than their higher income counterparts. Commenters additionally cited studies demonstrating that States that offered broad, continuous SEPs during the COVID-19 PHE saw greater decreases in consumers' prospective risk scores, indicating a healthier enrollee population, than States that did not. One commenter shared an analysis conducted by industry pricing actuaries showing that premiums could increase after the repeal of 150 percent FPL SEP, based on data demonstrating that loss ratios for SEP enrollees as compared to OEP enrollees have improved since the 150 percent FPL SEP was introduced. Commenters encouraged HHS to include data in this rulemaking regarding the claims costs, loss ratios, or risk profiles of individuals who utilized the 150 percent FPL SEP to enroll in coverage through the FFM, and one commenter suggested that failing to do so constituted a violation of the APA.

Response: We appreciate commenters' narrative on how repealing the 150 percent FPL SEP along with the administrative barriers to enrollment may disproportionately deter individuals who are healthy from enrolling in coverage. As explained in this rule, we are not repealing the 150 percent FPL SEP, we are pausing it through PY 2026 to address the surge in improper enrollments for ineligible consumers as the expanded subsidies expire.

Comment: Commenters also disagreed with the agency's claim that the 150 percent FPL SEP is a major driver of fraud and stated that efforts to address improper enrollments, while laudable, should be more focused on preventing abuses by agents and brokers instead of limiting enrollment pathways. Many commenters expressed their belief that HHS' estimate of improper enrollments was flawed and noted that HHS' analysis of Census data in Florida to Exchange data was an “apples-to- oranges” comparison and was not generalizable nationwide. One State Exchange highlighted that they performed a similar analysis of Census data in their State and found that they had fewer enrollees with incomes at or below 150 percent of the FPL than were reported in Census data. Some asserted that increased enrollment among low-income enrollees could be explained by Medicaid Unwinding, improved messaging and outreach, enhanced premiums subsidies. and other factors.

Many commenters responded to our concerns that, in addition to well-documented instances of improper agent and broker behavior, Navigators and Certified Application Counselor (CACs) may encourage individuals to underreport their income so that they qualify for the 150 percent FPL SEP. Commenters noted that enrollment assisters are subject to strict integrity guardrails and that, if anything, assisters tend to encourage consumers to overestimate their income to reduce risk of tax liability. One commenter pointed out that Navigators and CACs were instrumental in sounding the alarm about increases in fraudulent agent and broker behavior in 2023 and 2024, including by participating in meetings with CMS to relay the experiences of their clients. They noted that Navigators and CACs often spend significant time working to resolve issues for clients who have experienced unauthorized enrollments or plan switches performed by agents and brokers, and that there have been no media reports or Department of Justice investigations related to Navigators or CAC misconduct.

Response: Our conclusion that the 150 percent FPL SEP was a source of improper enrollments and plan switches for fully-subsidized enrollees was informed by our work responding to the influx of consumer complaints; these complaints included detailed narratives that often implicated the 150 percent FPL SEP as a pathway for unauthorized behavior. The Department of Justice (DOJ) has recently initiated action against several brokers alleging that they have inflated consumers' income levels to make them appear eligible and enroll in coverage they do not qualify for, resulting in improper payments of APTC and improper commissions for agents, brokers, and web-brokers.

We acknowledge that with the expiration of the expanded subsidies there is diminished incentive and opportunity for fraud and improper enrollment. That said, the current rates of such improper enrollment are exceedingly high and necessitate some action as the subsidy environment normalizes. Pausing the 150 percent FPL SEP will help the Exchanges shed the excess levels of improper enrollments they are currently experiencing in PY 2026 before reverting back to current policy in PY 2027.

We further acknowledge commenters' appreciation for navigators and CACs. However, we also note that commenters did not provide any data supporting the assertion that navigators and CACs are not contributing to improper enrollments.

Comment: Commenters offered other policy and operational solutions to curb the adverse selection and program

integrity concerns that we expressed in the rule, including limiting the SEP to new enrollments, limiting consumers to one enrollment or plan change through the SEP every three months, limiting consumers to one enrollment or plan change through the SEP per year, and requiring that consumers' income be verified in order to utilize the SEP. Some commenters proposed alternative approaches to protecting consumers from unauthorized enrollments and plan switches, including requiring two- factor authentication, requiring verbal authorization from a consumer before certain changes can be made, better monitoring of DE/EDE pathways, additional monitoring requirements for agents and brokers with fully-subsidized clients, new penalties for agents and brokers, and more resources for State Departments of Insurance to investigate fraud.

Response: We appreciate the suggestions to focus on alternative methods to enhance program integrity and to explore other solutions to curb fraudulent activities. We agree that these issues require a multi- faceted approach, and we have already been taking actions to address fraud, safeguard the consumers from fraud and harm, and reduce improper payments of APTC. This rule takes a holistic approach to improving integrity and affordability in the individual market through a series of temporary policies designed to address urgent integrity issues and permanent policies designed to improve affordability. We are continuing to explore additional operational solutions to further curb improper enrollments, including two-factor verification. We believe that at least temporarily pausing the 150 percent FPL SEP is an important step to curb improper enrollments while the subsidy environment normalizes. This policy will sunset after the end of PY 2026 and Exchanges will again be permitted to offer 150 percent FPL SEPs.

Comment: Some commenters pointed out that the ACA directs HHS to establish SEPs in circumstances similar to those in Medicare Part D and that Part D has a similar low-income SEP that allows individuals with low incomes to change plans once per month. Commenters also expressed that HHS has a broad legal authority under section 1321(a) and that 1311(c)(6)(C) of the ACA to offer Exceptional Circumstances SEPs as it sees fit.

Response: Section 1311(c)(6)(C) of the ACA states that the HHS Secretary shall require Exchanges to provide SEPs “under circumstances similar to such periods under part D of title XVIII of the Social Security Act,” which prescribes SEPs for Medicare Part D coverage. The Medicare Part D SEPs enumerated in title XVIII of the Act primarily include changes in circumstance that necessitate a change in coverage, such as involuntary coverage loss. While we acknowledge that Medicare Part D offers a low-income SEP in regulation at 42 CFR 423.38(c)(4),\169\ section 1311 of the ACA only requires that Exchanges provide SEPs similar to those established in title XVIII of the Act, and title XVIII of the Act does not include income-based SEPs. Therefore, the Department is of the view that the best reading of section 1311 of the ACA is that it does not require CMS to allow Exchanges to offer income-based SEPs. That said, after evaluating comments we have decided that pausing the income-based SEP is the best course of action to balance urgent program integrity needs with long- term desires to promote enrollment efficiencies. The pause will honor commenter concerns that additional data is necessary to discern the causes of improper enrollments.

\169\ Social Security Act Sec. 1860D-01(b)(3)(A).

We further agree with commenters that, since SEPs for exceptional circumstances are allowed under title XVIII of the Act, that Exchanges are required by statute to offer exceptional circumstance SEPs. This requirement is also reflected in Exchange regulations at Sec. 155.420(d)(9). While both the statute and Exchange regulations do not define what constitutes an exceptional circumstance, we believe that a plain understanding of the term compels the conclusion that simply having a low income is not an exceptional circumstance. This interpretation is further supported by longstanding FFE sub-regulatory guidance, which notes that exceptional circumstance SEPs are generally granted on a case-by-case basis.\170\

\170\ See Section 5.8 of the FFE Enrollment Manual: https://regtap.cms.gov/reg_librarye.php?i=5507.

Comment: Commenters stated that nearly all State Exchanges currently offer the 150 percent FPL SEP or income-based SEPs with higher income thresholds. Many State Exchanges that offer income-based SEPs indicate that they are aware of zero reports of unauthorized plan switching or enrollments in their Exchanges, due to factors including more stringent security measures as compared to the FFM's DE and EDE pathways. One State Exchange noted it has an integrated eligibility and enrollment system that prevents Medicaid-eligible consumers from utilizing this SEP and experiences limited utilization of the SEP, along with no program integrity issues. As such, commenters pointed out that State Exchanges should be able to maintain the flexibility to design their Exchanges to meet local needs. Commenters also stated that Federal law specifies required SEPs, but does not preclude States from establishing additional SEPs. One State Exchange expressed concerns that the proposal reverses standing deference to State authority regarding the establishment of SEPs. They also stated that the effective date to repeal the 150 percent FPL SEP imposes major costs on State Exchanges which were not accounted for in the proposed rule.

Response: While we appreciate commenters' concerns, we feel it is critical to pause this SEP pathway as soon as possible and for all Exchanges, due to its potential to drive improper enrollments in the fully-subsidized QHP policy environment. We also believe that there will be residual improper enrollments extending into PY 2026, necessitating a pause through the end of PY 2026, at which time the 150 percent FPL SEP will resume. We acknowledge that State Exchanges, unlike the FFE, have not experienced high rates of unauthorized enrollments or unauthorized plan switches driven by noncompliant agents, brokers, and web-brokers. However, as discussed in detail in section V.C.18. of this final rule, improper enrollments also include individuals with incomes below 100 percent of the FPL who intentionally overstate their incomes in order to qualify for subsidized Exchange coverage, as well as for the 150 percent FPL SEP. We believe that pausing the 150 percent FPL SEP best balances the need to address urgent program integrity concerns with the long-term desire to promote enrollment efficiencies. This modification is intended to be responsive to State Exchange comments noting that this measure may not be necessary to ensure program integrity in these State Exchanges in the long term. We further note that Exchange regulations at Sec. 155.410(a)(2) require that all Exchanges, including State Exchanges, only permit individuals to enroll in or change their QHP during OEP or during a special enrollment period described in Sec. 155.420.

We acknowledge that we did not fully account for State Exchanges' implementation costs in the proposed rule and have updated section V.C.12. of this final rule to include an estimate of such costs.

Comment: Some commenters expressed concerns with the proposal's effective date and asked that the effective date be delayed until PY 2026 or PY 2027 to give State Exchanges more

time to make IT changes and to give consumer-facing organizations time to update education and outreach strategies.

Response: Because of concerns regarding improper enrollment and in order to protect the integrity of all Exchanges, we are maintaining our proposed effective date. Due to the primary concerns of fraudulent enrollments, unauthorized plan switching, and the 150 percent FPL SEP's overall impact on the risk pool, the provisions in this section will be effective 60 days following the effective date of this rule. In response to concerns, however, we are simply pausing the 150 percent FPL SEP through PY 2026, at which time Exchanges will be permitted to begin offering the SEP again.

Comment: Some commenters expressed concerns related to the proposed change at Sec. 147.104(b)(2), stating that they opposed changes to eliminate the 150 percent FPL SEP for all group and individual market coverage.

Response: We clarify that the conforming amendment to Sec. 147.104(b)(2) does not substantively impact group or individual market SEP availability. Rather, the change to Sec. 147.104(b)(2) pauses the 150 percent FPL SEP from a list of SEPs that issuers are not required to provide for individual market coverage offered outside of the Exchange through PY 2026.

Comment: One commenter expressed concern about the impact of the proposed removal of the 150 percent FPL SEP on the monthly SEP available to members of a Federally recognized Tribe.

Response: We clarify that the proposal to pause the 150 percent FPL SEP does not impact the monthly SEP for members of Federally recognized Tribes under 45 CFR 155.420(d)(8).

Comment: One commenter, a State Insurance Commissioner, noted that they opposed the proposed repeal of the 150 percent FPL SEP but did not have adequate time to fully analyze the impact of the proposed change due to the limited comment window and requested that interested parties be granted additional time.

Response: We acknowledge the commenter's concerns and have accounted for them by finalizing a pause to the 150 percent FPL SEP to best balance urgent program integrity concerns with a long-term desire to promote enrollment efficiencies. 9. Pre-Enrollment Verification for Special Enrollment Period (Sec. 155.420(g))

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12982 through 12985), we proposed to amend Sec. 155.420(g) to reinstate (with modifications) the requirement that Exchanges on the Federal platform must conduct pre-enrollment verification of eligibility of applicants for other categories of individual market SEPs in line with operations prior to the implementation of the 2023 Payment Notice and to eliminate the provision that states that Exchanges on the Federal platform will conduct pre-enrollment special enrollment verification of eligibility only for SEPs under paragraph (d)(1) of this section.\171\ We proposed to further amend 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.

\171\ Currently, Sec. 155.420(g) provides that Exchanges on the Federal platform will conduct pre-enrollment special enrollment verification of eligibility only for SEPs for loss of minimum essential coverage. Prior to the implementation of the 2023 Payment Notice, Exchanges on the Federal platform conducted manual verification for five SEPs: marriage, adoption, moving to a new coverage area, loss of minimum essential coverage, and Medicaid/CHIP Denial.

In the 2018 Payment Notice proposed rule (81 FR 61456, 61502), we expressed a commitment to making sure that SEPs are available to those who are eligible for them and equally committed to avoiding any misuse or abuse of SEPs. To avoid misuse and abuse, we implemented verification processes for SEPs in the Market Stabilization Rule (82 FR 18357 through 18358). In setting these processes, we acknowledged in the Market Stabilization Rule (82 FR 18357 through 18358) competing concerns over how verification can impact the individual market risk pool and, in turn, impact premium affordability.

Verification protects the risk pool from ineligible individuals enrolling only after they become sick or otherwise need expensive health care services or medical products/equipment. However, verification can also undermine the risk pool by imposing a barrier to eligible enrollees, which may deter healthier, less motivated individuals from enrolling. After analyzing enrollment and risk pool data against these competing concerns, we stated in the proposed rule (90 FR 12983) that we believe the current SEP verification requirements do not provide enough protection against misuse and abuse. This negatively impacts both the risk pool and program integrity around determining eligibility for APTC and CSR subsidies. We stated that we believe the positive impact of verification on the risk pool far exceeds the potential negative impact on the risk pool. Therefore, we proposed to amend Sec. 155.420(g) to remove the provision that limits Exchanges on the Federal platform from conducting pre-enrollment verification for only the loss of minimum essential coverage SEP, which would allow us to reinstate pre-enrollment verification for other SEPs on Exchanges on the Federal platform. We further proposed to amend Sec. 155.420(g) to require all Exchanges to conduct pre-enrollment eligibility verification for SEPs.

Section 1311(c)(6) of the ACA requires that Exchanges establish enrollment periods, including SEPs for qualified individuals, for enrollment in QHPs. Section 1311(c)(6)(C) of the ACA directs the Secretary to require Exchanges to provide for the 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 2702(b)(2) of the PHS Act also directs issuers in the individual and group market to establish SEPs for qualifying events under section 603 of the Employee Retirement Income Security Act of 1974. Section 1321(a)(1)(A) of the ACA and section 2792(b)(3) of the PHS Act directs the Secretary to issue regulations with respect to these requirements.

Prior to June 2016, we largely permitted individuals seeking coverage through the Exchanges to self-attest to their eligibility for most SEPs and to enroll in coverage without further verification of their eligibility or without submitting proof of prior coverage. After a GAO undercover testing study of SEPs observed that self-attestation could allow applicants to obtain subsidized coverage they would otherwise not qualify for and then found 9 of 12 of GAO's fictitious applicants were approved for coverage on the Federal and selected State Exchanges, we began implementing policies to curb potential abuses of SEPs.\172\ In 2016 we added warnings on HealthCare.gov regarding inappropriate use of SEPs. We also eliminated several SEPs and tightened certain eligibility rules.\173\ Also in 2016, we announced retrospective audits of a random

sampling of enrollments through SEPs for loss of minimum essential coverage and permanent move, two commonly used SEPs. Additionally, we created the Special Enrollment Confirmation Process under which consumers enrolling through common SEPs were directed to provide documentation to confirm their eligibility.\174\ Finally, we proposed to implement (beginning in June 2017) a pilot program for conducting pre-enrollment verification of eligibility for certain SEPs.\175\

\172\ GAO. (2016 Nov.). Patient Protection and Affordable Care Act: Results of Enrollment Testing for the 2016 Special Enrollment Period, GAO-17-78. https://www.gao.gov/products/gao-17-78.

\173\ CMS. (2016, Feb. 24). Fact Sheet: Special Enrollment Confirmation Process. https://www.cms.gov/newsroom/fact-sheets/fact-sheet-special-enrollment-confirmation-process.

\174\ Ibid.

\175\ CMS. (n.d.). Pre-Enrollment Verification for Special Enrollment Periods. https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/downloads/pre-enrollment-sep-fact-sheet-final.pdf.

In response to the deteriorating stability of the individual health insurance market leading into PY 2017, we implemented the Market Stabilization Rule (82 FR 18355 through 18356) in 2017 which sidestepped the pilot program and, instead, took quick action to require pre-enrollment verification for most SEPs. Understanding the potential for verifications to deter eligible people from enrolling, we studied the initial consumer experience with this pre-enrollment verification process and published our findings in 2018.\176\ For PY 2017, this report showed that we averaged a response time of 1-to-3 days to review consumer-submitted documents. In addition, the vast majority (over 90 percent) of SEP applicants who made a plan selection and were required to submit documents to complete enrollment were able to successfully verify their eligibility for the SEP. We conducted additional research for the following plan years through 2021. Based on data from PY 2019, the last year prior to the PHE which greatly impacted SEPV processing, the majority of consumers (73 percent) were able to submit documents within 14 days of their SEP verification issue (SVI) being generated. Also, we found that the majority of consumers (63 percent) were able to fully resolve their SVI within 14 days of it being generated. That resolution percentage increases to 86 percent by 30 days.\177\ We also found that for PY 2019, only approximately 14 percent or 75,500 individuals were unable to resolve their SVI out of the total population of SEP consumers who received an SVI.

\176\ CMS. (2018, July 2). The Exchanges Trends Report. https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Marketplaces/Downloads/2018-07-02-Trends-Report-3.pdf.

\177\ Consumers who resolve an SVI in more than 30 days are able to do so through extensions they are eligible to receive.

In the 2023 Payment Notice (87 FR 27278), we noted that pre- enrollment verification can also negatively impact the risk pool. At that time, we did not analyze the experience of people applying for SEPs to assess the impact on the risk pool. Rather, it was our perception that the extra step required by verification can deter eligible consumers from enrolling in coverage through an SEP, which in turn, can negatively impact the risk pool because younger, often healthier, consumers submit acceptable documentation to verify their SEP eligibility at much lower rates than older consumers. To mitigate this potential negative impact on the risk pool and streamline the consumer experience, we then scaled back pre-enrollment verification for every SEP type, with the exception of the SEP for new consumers who attest to losing minimum essential coverage.

Since the implementation of pre-enrollment verification for SEPs in the Market Stabilization Rule, we continue to monitor pre-enrollment verification to determine its impact, including on enrollments by different groups of individuals affected by the process. After 3 years of experience applying pre-enrollment verification to only the SEP for losing minimum essential coverage, we reviewed whether this policy achieves the right balance between reducing enrollment barriers and protecting against abuse and misuse of SEPs. This review shows the prior use of pre-enrollment verification for all SEPs achieved the better balance. As noted previously in this section, our initial review of pre-enrollment verification during PY 2017 did not find any substantial enrollment barrier. We applied this same analysis to PY 2018 and PY 2019 before the COVID-19 PHE changed patterns of SEP use and found pre-enrollment verification continued to not present any substantial enrollment barrier. We also compared the use of SEPs before and after the implementation of pre-enrollment verification for PY 2017. This comparison revealed a substantial shift to SEPs that were not subject to pre-enrollment verification that required consumers to submit documentation, suggesting agents, brokers, and people had been previously abusing SEPs and shifted to special enrollment that did not require document submissions to continue this potential abuse of SEPs.

When we sought feedback on the proposal to reduce pre-enrollment verification for SEPs in PY 2023 in the 2023 Payment Notice (88 FR 27278 through 27279), one commenter pointed out that data from the HHS- operated risk adjustment model, specifically the factors related to partial-year enrollments, showed a significant decrease in the negative impact of these enrollments on the overall risk pool from 2017 to 2022.\178\ This suggests that individuals who enroll for only part of the year--who are more likely to use SEPs--now pose a smaller risk to the insurance pool than they did in the past. The commenter concluded that a likely factor is that fewer people are abusing SEPs to wait to get coverage until they need care due to pre-enrollment SEP verification. Another commenter noted how loss ratios for SEP enrollments, as compared to OEP enrollments, increased after pre- enrollment verifications were relaxed during the COVID-19 public health emergency.\179\ We reviewed enrollment patterns and found there was a substantial increase in the enrollment duration after the implementation of pre-enrollment verification for all SEPs, which adds another data point suggesting pre-enrollment verification helped encourage continuous enrollment by making it more difficult to engage in strategic enrollment and disenrollment. Consistent with the comment to the 2023 Payment Notice, partial year enrollment factors did improve after PY 2017. Issuer-level enrollment data similarly shows a decline in the percent of disenrollments as a percent of total enrollments from about 20 percent in PY 2017 to about 12 percent in PY 2019.\180\ After we reduced pre-enrollment verification for SEPs for PY 2023, the average number of months enrolled per consumer declined from 4.5 months in PY 2022 to 4.3 months in PY 2023.\181\ While this decline may be due, in part, to an increase in mid-year enrollments from people being disenrolled from Medicaid after the Medicaid continuous enrollment condition ended on April 1, 2023, it may also be linked to the reduction in pre-enrollment verification for SEPs.

\178\ Comment ID CMS-2021-0196-0196, 01/27/2022 available at https://www.regulations.gov/comment/CMS-2021-0196-0196.

\179\ Comment ID CMS-2021-0196-0222, 01/27/2022 available at https://www.regulations.gov/comment/CMS-2021-0196-0222.

\180\ Derived from issuer enrollment data, CMS. (2024, Sept. 10). Issuer Enrollment Data. https://www.cms.gov/marketplace/resources/data/issuer-level-enrollment-data.

\181\ Ibid.

In the proposed rule (90 FR 12984), we stated that we acknowledge pre-enrollment verification can deter eligible consumers from enrolling in coverage through an SEP because of the burden of document verification. However, as noted previously, our prior analyses show the verification process does not impose a substantial burden and therefore should not be a barrier to

enrollment. We also stated that documentation to verify SEPs is generally easy for applicants to access and provide to Exchanges. Applicants should have ready access to official documents acknowledging employer separations, loss of minimum essential coverage, marriage, divorce, births, adoptions, death, gaining lawful presence or citizenship certificates, a new address, or a release from incarceration. Pre-Enrollment SEP verification takes place simultaneously with the consumer's SEP timeline on the Federal platform currently. This means that Pre-Enrollment SEP verification takes place while the consumer's SEP timeline is running.\182\ Typically, the SEP window on the Exchanges on the Federal platform is 60 days from when a consumer experiences a qualifying event, and a Special Enrollment Period Verification Issue (SVI) is triggered when a consumer selects a plan during that timeframe.

\182\ Descriptions and information on the length of SEPs can be found at Sec. 155.420(c).

In addition, we previously found younger people submit acceptable documentation to verify their SEP eligibility at lower rates than older consumers, which can negatively impact the risk pool as younger consumers use less health care on average.\183\ While successful submission rates might be lower for younger people, the overall effect on the risk pool is minimal because it is a very small number of younger enrollees relative to older enrollees. This small impact on the total enrollment among younger people from SEPs would not lead to a meaningful increase in the proportion of young people enrolled and, as a result, not lead to a meaningful improvement to the risk pool. Therefore, in the proposed rule (90 FR 12984), we stated that we expect any negative impact on the risk pool would be minimal and substantially outweighed by the reductions in people misusing and abusing SEPs.

\183\ This statistic is based on SEPV resolution data from PY 2019.

The weight of the data analysis presented here shows how the implementation of pre-enrollment verification for applicable SEPs reduced misuse and abuse of SEPs without deterring eligible people from enrolling in coverage in a measurable way. This improves the risk pool by restricting people from gaming SEPs to wait to enroll until they need health care services. An improved risk pool lowers premiums which, in turn, makes health coverage more affordable for unsubsidized enrollees and lowers the average APTC by lowering the average premium for the benchmark plan used to set APTC. Moreover, pre-enrollment verification for SEPs strengthens program integrity by denying ineligible enrollments and discouraging ineligible enrollees who know they cannot meet verification standards from attempting to enroll which, in turn, reduces Federal subsidies to ineligible consumers who would otherwise enroll and receive APTC and CSR subsidies. Consequently, we stated in the proposed rule (90 FR 12984) that this proposal would reduce Federal expenditures by both lowering the average APTC paid due to a reduction in the benchmark plan premium used to calculate APTC and reducing the number of ineligible people who would otherwise improperly enroll in APTC- and CSR-subsidized coverage. Therefore, we proposed to amend Sec. 155.420(g) to remove the limitation on Exchanges on the Federal platform to conduct pre- enrollment verification for only the loss of minimum essential coverage special enrollment and also reinstate (with modifications) pre- enrollment verification requirement for other categories of SEPs.

In implementing pre-enrollment verifications for SEPs in the Market Stabilization Rule (82 FR at 18356), HHS did not require that all Exchanges conduct SEP verifications, to allow State Exchanges to determine the most appropriate way to ensure the integrity of the SEPs. Currently, all State Exchanges have flexibility under Sec. 155.420(g) to conduct pre-enrollment verification of SEPs. Based on our analysis of the data showing how SEP verifications successfully encouraged continuous enrollment on Exchanges on the Federal platform, we stated in the proposed rule (90 FR 12985) that we believe State Exchange enrollments would benefit from implementing a similar policy.

In the proposed rule (90 FR 12985), we stated that we also believe State Exchanges now have more experience with conducting SEP verifications, which would make broader implementation less burdensome than before. We sought comments regarding this proposal including State Exchanges' expectations regarding the time and expense needed to comply. Currently, all but four State Exchanges conduct either pre- or post-enrollment verification of at least one special enrollment type, and most State Exchanges had previously implemented a process to verify the vast majority of SEPs requested by consumers. Therefore, we proposed to amend Sec. 155.420(g) to require all Exchanges to conduct eligibility verification for SEPs.

We also proposed to require that Exchanges, including all State Exchanges, conduct SEP verification for at least 75 percent of new enrollments through SEPs for consumers not already enrolled in coverage through the applicable Exchange. We proposed that Exchanges must verify at least 75 percent of such new enrollments based on the current volume of SEP verification by Exchanges. In the proposed rule (90 FR 12985), we stated that the 75 percent threshold was chosen since we believe that most States would be able to meet this threshold by verifying at least their two or three largest SEP types based on current SEP volumes. If the Exchange is unable to verify the consumer's eligibility for enrollment through the SEP, then we stated that the consumer is not eligible for enrollment through the Exchange under that SEP, and any plan selection under that SEP would have to be canceled. Should an enrollment under an SEP for which eligibility cannot be verified become effectuated, the enrollment through the Exchange may be terminated in accordance with Sec. 155.430(b)(2)(i). If an Exchange chooses to pend a plan selection prior to enrollment, and the Exchange cannot verify eligibility for the SEP, then the consumer would be found ineligible for the SEP, and the plan selection would not result in an enrollment. We stated in the proposed rule that the determination of how many enrollments would constitute 75 percent would be required to be based on enrollment through all SEPs. We stated that this would provide Exchanges with implementation flexibility so they can continue to decide which special enrollment types to verify and the best way to conduct that verification. Exchanges would not be required to verify eligibility for all SEPs, since the cost to verify eligibility for SEP triggering events with very low volumes could be greater than the benefit of verifying eligibility for them.

While we proposed to eliminate the current flexibility Exchanges have under Sec. 155.420(g) to provide exceptions to SEP verification processes, we stated in the proposed rule (90 FR 12985) that we are continuing certain flexibilities that State Exchanges currently have to design eligibility verification processes that are appropriate for their market and Exchange consumers, such that State Exchanges may have such flexibility in their approaches for meeting the requirement proposed at Sec. 155.420(g) to verify eligibility for an SEP. Specifically, under Sec. 155.315(h), State

Exchanges have the flexibility to propose alternative methods for conducting required verifications to determine eligibility for enrollment in a QHP under subpart D, such that the alternative methods proposed reduce the administrative costs and burdens on individuals while maintaining accuracy and minimizing delay. We proposed to use the existing authority at Sec. 155.315(h) to allow State Exchanges to request HHS approval for use of alternative processes for verifying eligibility for SEPs as part of determining eligibility for SEPs under Sec. 155.305(b).\184\ We stated that this would allow, for instance, the State Exchanges that have administrative burden and cost concerns the option to coordinate with HHS to devise and agree upon the best approach for SEP verification for their specific population. We also stated that we recognize that State Exchanges may vary in their approach and technical capabilities relating to verification of SEPs and may need additional time to implement this requirement. Therefore, we proposed to allow Exchanges until PY 2026 to implement SEP verification. We sought comment on this topic and suggestions to alleviate this concern.

\184\ Such requests would be made through the State-based Marketplace Annual Reporting Tool (SMART; OMB Control Number 0938- 1244).

We sought comment on these proposals. With respect to SEP verification, we sought comment from States about the 75 percent verification threshold and whether it should be based on past year SEP enrollments or some other appropriate metric such as future year projections understanding that unforeseen events may occur that may drive up or down enrollments from year-to-year. In the proposed rule (90 FR 12985), we stated that we also understand that State Exchanges have matured and that even smaller State Exchanges may find applying pre-verification to all new enrollments through SEPs less burdensome than the first time we proposed this policy. Therefore, we also invited comment on whether State Exchanges believe it to be feasible to apply pre-enrollment verification to enrollments through SEPs beyond the stated 75 percent in alignment with our proposed goal for Exchanges on the Federal platform.

After careful consideration of public comments, we have decided to finalize and implement these policies with a significant modification-- for Exchanges on the Federal platform, each of the rules outlined in this section will automatically sunset at the end of PY 2026, on December 31, 2026. As with other policies in this rule and as discussed in the Executive Summary and section III.B. earlier in this final rule, we recognize that the imminent program integrity concerns are being driven by the existence of fully-subsidized plans. The expiration of the enhanced subsidies coupled with the temporary program integrity requirements enacted by this rule will right-size marketplace enrollment in PY 2026 and should obviate the need for ongoing higher levels of program integrity policies. As the excess levels of improper enrollments are taken down in 2026, we expect the lower subsidy levels to appropriately deter future levels of improper enrollments from ever growing so high again, diminishing the returns of the temporary policies we are enacting in this rule. In other words, the burden of continuing such policies will reach a point at which they outweigh any benefits. For these reasons, we are finalizing this policy for PY 2026 only, with a reversion to the previous policy for PY 2027 and beyond.

Further, we are declining to finalize these provisions for State Exchanges. As discussed in great detail in this rule, the program integrity issues are largely concentrated in Exchanges utilizing the Federal platform. Given the lower levels of improper enrollment in States, we don't believe the burden that would be imposed by implementing these requirements for PY 2026 would be worth the benefits.

We summarize and respond to public comments received on the proposed adjustments to pre-enrollment SEP verification below.

Comment: The majority of commenters, including general advocacy groups, disease advocacy groups, providers, State agencies, State Exchanges, agents and brokers, and one health insurance issuer, noted that the increased SEP verification requirements would pose an additional burden to consumers and increase barriers to coverage for qualified individuals. These commenters also noted that these increased burdens and barriers would result in decreased enrollment and worse health outcomes for those impacted.

Response: We acknowledge commenters' concerns. However, we believe that the additional burden is not significant enough to outweigh the merits of SEP verification and the increases in program integrity that it provides, especially since we are only finalizing the requirement for a single year. We also note that the SEP verification policy we are proposing for the Exchanges on the Federal platform is not wholly new and is partially a return to the previous policy. When SEP verification was active for most SEP types prior to the changes implemented in the 2023 Payment Notice, most consumers who received SEP Verification Issues were able to resolve them in a timely manner as noted previously in this preamble.

Comment: Many commenters, particularly advocacy groups, individuals, labor groups, and State Exchanges, noted concerns that SEP verification negatively impacts younger consumers in particular who have lower resolution rates than other generations of consumers. These commenters noted that younger individuals improve the risk pool and help to lower premiums. On average, increased verification tends to deter younger individuals from enrolling, which could have the effect of raising enrollee premiums.

Response: We appreciate the concerns raised. As noted previously in this preamble, we acknowledge that younger consumers do resolve their SEP verification issues at a lower rate than older consumers. While we acknowledge that this policy can have the effect of deterring some young people from enrolling in coverage, we do not think that it outweighs the benefits of preventing improper enrollments in Exchanges on the Federal platform. Further, finalizing the policy for a single year is unlikely to have demonstrable effects on the risk pool over any longer term. This policy balances the need to address urgent program integrity concerns with the long-term desire to promote enrollment efficiencies.

Comment: Several commenters, which included health insurance issuers, providers, advocacy groups, and individuals, expressed support for this proposal. These comments cited concerns around fraud in the marketplace and how they believe that increased SEP verification would reduce or eliminate fraud related to SEPs. Several commenters, in particular, noted that increased verification would help to prevent agent, broker, and web-broker fraud. Overall, these commenters agreed that the SEP verification provision would have the desired effect of increasing program integrity on the Exchanges.

Response: We appreciate these comments highlighting that this policy will have the desired effect of increasing program integrity and addressing improper enrollments in the marketplace during its temporary implementation in PY 2026. While we do acknowledge that most agents, brokers, and web-brokers seek to comply with HHS rules in good bad

faith, we also believe that increased verification requirements for SEPs will deter agents, brokers, web-brokers, and consumers from completing enrollments when a consumer is not eligible. We believe that implementing SEP verification policy will ensure only qualified consumers are enrolling through SEPs and, as expressed previously, we anticipate benefits similar to those we experienced when SEP verification was first implemented as a result of the 2017 Market Stabilization Rule. This temporary policy will help stabilize the marketplace in PY 2026 as the subsidy environment normalizes and the high levels of improper enrollments are reduced before reverting back in PY 2027.

Comment: Many commenters, particularly State Exchanges, advocacy groups, providers, and individuals, noted concerns around the increased financial and administrative burdens the rule would have on State Exchanges and the Exchanges on the Federal platform. They also noted concern around a decrease in flexibility for State Exchanges to determine what verification methods work best for their States. Many State Exchanges expressed that they do not see any indications of SEPs being used fraudulently on their Exchange and believe that the proposed rule would place additional costs and burdens on them with no real benefit. Other State Exchanges did note that they were not concerned because they are already in compliance with this proposal.

Response: We appreciate commenters' concerns. We recognize that there is a great deal of variance between States in terms of levels of SEP verification and whether it is conducted pre or post enrollment. After careful consideration of public comments, we have decided we will not be finalizing these proposals for State Exchanges in an effort to address concerns around increased burdens and costs. Additionally, we have decided to finalize and implement the proposed policy with a significant modification--for Exchanges on the Federal platform, each of the rules outlined in this section will sunset by their terms after the completion of one new coverage year, PY 2026, on December 31, 2026. Sunsetting these rules after PY 2026 will allow the policy to achieve its desired effect of program integrity.

Comment: Several commenters, which included providers, advocacy groups, one State Exchange, one EDE partner, one health insurance issuer, and individuals, expressed that Exchanges should pursue alternate verification methods or focus on improving the current system as opposed to increasing SEP verifications for consumers. Some of these commenters noted that HHS should focus more on regulating agents and brokers and less on increasing consumer verifications.

Response: We appreciate the suggestions related to alternate methods of verification and system improvements to improve program integrity. While we will continue to identify and consider effective methods of verifying eligibility, we believe that solely focusing on agents, brokers, and web-brokers to the exclusion of adopting effective verification processes is not the best policy because it ignores identified weaknesses in Exchange verification processes as well as our responsibility to comply with the ACA. We acknowledge that improper enrollments are not conducted solely by agents, brokers, and web- brokers, and that most are compliant with HHS rules, and operate in good faith. We have already taken action to address improper enrollments by agents, brokers, and web-brokers as outlined elsewhere in this rule. We are committed to continuing to address those issues. We believe the temporary policies in this rule, including SEP verification, will help to directly address improper enrollments committed by agents, brokers, and web-brokers, while promoting flexibility and efficiencies in enrollment processes over the long- term.