Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability

We calculate the required contribution percentage for each plan year using the most recent projections and estimates of premium growth and income growth over the period from 2013 to the preceding calendar year (that is, the 2025 calendar year, in the case of PY 2026 required contribution percentage). Accordingly, in the proposed rule (90 FR 12995), we proposed the required contribution percentage for PY 2026, calculated using income and premium growth data for the 2013 and 2025 calendar years.

Section 5000A of the Code imposes an individual shared responsibility payment on non-exempt individuals who do not have MEC for each month. Under Sec. 155.605(d)(2), an individual is allowed a coverage exemption (the affordability exemption) for months in which the amount the individual would pay for MEC exceeds a percentage, called the required contribution percentage, of the individual's household income. Although the Tax Cuts and Jobs Act \229\ reduced the individual shared responsibility payment to $0 for months beginning after December 31, 2018, the required contribution percentage is still used to determine whether individuals ages 30 and above qualify for an affordability exemption that would enable them to enroll in catastrophic coverage under Sec. 155.305(h).

\229\ Public Law 115-97, 131 Stat, 2054.

The initial 2014 required contribution percentage under section 5000A of the Code was 8 percent. For plan years after 2014, section 5000A(e)(1)(D) of the Code and Treasury regulations at 26 CFR 1.5000A- 3(e)(2)(ii) provide that the required contribution percentage is the percentage determined by the Secretary that reflects the excess of the rate of premium growth between the preceding calendar year and 2013, over the rate of income growth for that period.

As the measure of income growth for a calendar year, we established in the 2017 Payment Notice (81 FR 12281 through 12282) that we would use NHEA projections of per capita personal income (PI). The rate of income growth for PY 2026 is the percentage (if any) by which the NHEA Projections 2023-2032 value for per capita PI for the preceding calendar year ($74,083 for 2025) exceeds the NHEA Projections 2023-2032 value for per capita PI for 2013 ($44,559), carried out to ten significant digits. The rate of income growth from 2013 to 2025 is therefore 1.6625821944 ($74,083/$44,559). Using the proposed PY 2026 premium adjustment percentage, we stated in the proposed rule (90 FR 12995) that the excess of the rate of premium growth over the rate of income growth for 2013 to 2025 would be 1.6726771319 / 1.6625821944, or 1.0060718427. We determined that this results in the proposed PY 2026 required contribution percentage under section 5000A of the Code of 8.00 x 1.0060718427 or 8.05 percent, when rounded to the nearest one- hundredth of 1 percent, an increase of approximately 0.77 percentage points above the 2025 value (7.28 percent) and an increase of approximately 0.35 percentage points above the previously published PY 2026 value \230\ (7.70 percent).

\230\ See CMS. (2024, Oct. 8). Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2026 Benefit Year. https://www.cms.gov/files/document/2026-papi-parameters-guidance-2024-10-08.pdf.

We noted that these proposals do not alter the policy established in the 2022 Payment Notice (86 FR 24237 through 24238) that we will publish the premium adjustment percentage, along with the maximum annual limitation on cost sharing, the reduced maximum annual limitation on cost sharing, and the required contribution percentage, in guidance by January of the year preceding the applicable plan year, unless we are amending the methodology to calculate these parameters, in which case we would amend the methodology and publish the parameters through notice-and-comment rulemaking.

We stated in the proposed rule that if finalized as proposed, the values for the PY 2026 premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage proposed in the proposed rule would supersede the values published in the October 2024 PAPI Guidance.\231\

\231\ Ibid.

We sought comment on the proposal to revert to the premium adjustment percentage methodology finalized in the 2020 Payment Notice (84 FR 17537 through 17541) using private health insurance premiums (excluding Medigap and property and casualty insurance premiums) to estimate the growth in premiums for PY 2026 and beyond. We also sought comment on the resulting proposed values for the PY 2026 premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage.

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 the use of private health insurance premiums (excluding Medigap and property and casualty insurance premiums) to estimate the growth in premiums for PY 2026 and beyond. We are also finalizing the values for the PY 2026 premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitations

on cost sharing, and required contribution percentage as proposed. Table 6 provides the final premium adjustment percentage index and related payment parameters for PY 2026:

Table 6--Final Premium Adjustment Percentage Index and Related Payment

Parameters for the PY 2026

Area Metric Value

Premium Adjustment Percentage. NHEA Projections 2023- $4,714

2032 value \a\ for

per enrollee Private

Health Insurance

premiums (excluding

Medigap and property

and casualty

insurance) for 2013.

NHEA Projections 2023- $7,885

2032 value \a\ for

per enrollee Private

Health Insurance

premiums (excluding

Medigap and property

and casualty

insurance) for 2025.

2026 Premium 1.6726771319

Adjustment Percentage. Required Contribution......... NHEA Projections 2023- $44,559

2032 value \(a)\ for

of per capita

personal income for

2013.

NHEA Projections 2023- $74,083

2032 value \(a)\ for

of per capita

personal income for

2025.

Income Growth......... 1.6625821944

Premium Growth over 1.0060718427

Income Growth Index. 8.05%

2026 Required

Contribution

Percentage. Maximum Annual Limitation on 2026 Maximum Annual $10,600

Cost Sharing--Self Only \b\. Limitation on Cost $3,500

Sharing.

2026 Reduced Maximum

Annual Limitation on

Cost Sharing--

household income

greater than or equal

to 100 percent and

less than or equal to

150 percent of the

FPL.

2026 Reduced Maximum $3,500

Annual Limitation on

Cost Sharing--

household income

greater than 150

percent and less than

or equal to 200

percent of the FPL.

2026 Reduced Maximum $8,450

Annual Limitation on

Cost Sharing--

household income

greater than 200

percent and less than

or equal to 250

percent of the FPL.

\a\ For the calculation of the PY 2026 premium adjustment percentage,

maximum annual limitation on cost sharing, reduced maximum annual

limitation on cost sharing, and required contribution percentage, we

are using the NHEA Projections 2023-2032 (published June 12, 2024),

which were the most recent projections that had been released as of

the publication of the proposed rule.\232\ \b\ The maximum annual limitation on cost sharing and reduced maximum

annual limitations on cost sharing for other than self-only coverage

is twice the dollar limit for self-only coverage. See 45 CFR

156.130(a)(2)(ii). For example, for the PY 2026, the maximum annual

limitation on cost sharing for other than self-only coverage is

$21,200.

We summarize and respond below to public comments received on the proposed premium adjustment percentage methodology for the 2026 benefit year and beyond and the resulting proposed values for the PY 2026 premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage.

\232\ In the 2021 Payment Notice (85 FR 29228), we finalized a policy that we would calculate final payment parameters that depend on NHEA data based on the data that are available as of the publication of the proposed rule for that benefit year to increase the predictability of benefit design.

Comment: A few commenters supported the proposed change to the premium adjustment percentage methodology, stating that the proposed methodology would better align with the plain language of section 1302(c)(4) of the ACA, which directs the Secretary to determine the premium adjustment percentage for any calendar year based on the “average per capita premium for health insurance in the United States.” \233\ These commenters also noted that basing the premium adjustment percentage on a more comprehensive measure of premiums in the market would provide issuers with more flexibility to design innovative plans that better meet consumer needs.

\233\ See Section 1302(c)(4) of the ACA.

However, many other commenters expressed opposition to or concerns about the proposed change to the premium adjustment percentage methodology and the related proposed PY 2026 parameters. Many of these commenters indicated HHS should continue to use the current measure, ESI premiums, to measure premium growth because ESI premiums presently result in a lower premium adjustment percentage, maximum annual limitation on cost sharing, and reduced annual limitations on cost sharing than the proposed values using all private health insurance premiums (excluding Medigap and property and casualty insurance).

Additionally, several of these commenters noted that, because the IRS has historically adopted the same measure of premium growth as HHS for indexing under Section 36B(b) and (c) of the Code, the proposed change to the premium adjustment percentage methodology will likely impact the coverage “affordability” percentages that IRS releases annually, which are used by applicable employers to determine the affordability of their offers of coverage for purposes of the employer shared responsibility provisions, resulting in increased net premiums for enrollees who receive health insurance coverage through their employers.

Many commenters also expressed concerns about the impact of the proposal on the health insurance market and individuals and families, citing HHS' estimates of the impacts in the Regulatory Impact Analysis section of the proposed rule, including a decrease in enrollment and increase in net premiums, under the assumption that the IRS will adopt HHS' premium indexing methodology for the applicable percentage table, as it has historically done.

Among commenters who expressed concern that the increase in net premiums would lead to a decrease in health insurance enrollment, a few commenters noted that an increase in individuals without health insurance coverage would also lead to an increase in medical debt. Furthermore, many commenters expressed concerns about the impact of the higher proposed premium adjustment percentage on the maximum annual limitation on cost sharing and reduced maximum annual limitations on cost sharing, which they noted would increase out-of-pocket costs for consumers. Many of these commenters expressed concerns that the increased limits on cost sharing would disproportionately impact older enrollees, individuals with chronic health conditions, and other individuals who have a higher likelihood of incurring high medical costs. These commenters expressed concerns that the higher costs would lead to these enrollees choosing to forgo care to manage their conditions, leading to

higher rates of complications and lower levels of overall health in the population. A few of these commenters noted that many people with chronic or serious health conditions have non-covered or out-of-network costs that are not subject to their plans' annual limitation on cost sharing and that the increase in the maximum annual limitation on cost sharing would compound the financial burden of these enrollees.

Several commenters also noted that the increase in net premiums is likely to have a disproportionate impact on enrollment in rural and low-income communities. Many of these commenters expressed concern that hospitals, community health clinics, and other providers that serve these low-income communities would see an increase in patients without insurance or who cannot afford the out-of-pocket costs of care, causing providers to be unable to cover their expenses and to close, increasing burdens on the health system and decreasing health care access. Additionally, several commenters expressed concern that the impact of the increase in net premiums would be further compounded when the expanded PTC subsidies made available under the American Rescue Plan Act of 2021 (ARPA) (and extended under the Inflation Reduction Act of 2022 (IRA) until the end of 2025) expire. One commenter requested more detailed modelling of the impact of the proposed change to the premium adjustment percentage methodology before implementation, stating that projections of the impacts on various income and demographic groups are necessary to ensure that interested parties can offer thoroughly informed feedback.

Regarding the impact on low-income consumers, some commenters stated the justification provided by HHS for this proposed change is inadequate and contrary to the legislative intent of the financial assistance structure of the ACA. A few commenters noted that the primary purpose of providing PTC to Exchange enrollees is so the Federal Government, rather than low-income individuals and families, bears the burden of any premium increases in the individual market.

Additionally, several commenters expressed concern that healthier enrollees are more likely to choose not to enroll in health insurance plans in response to higher net premiums than sicker enrollees, therefore increasing the average risk in the risk pool, prompting issuers to increase premiums across the entire risk pool.

Response: We appreciate the comments in support of the proposed change to the premium adjustment percentage methodology and are finalizing the change, as proposed, to use per enrollee private health insurance premiums (excluding Medigap and property and casualty insurance) as the premium growth measure for purposes of calculating the premium adjustment percentage because we agree that this approach allows us to better achieve the statutory and regulatory goals of adopting a more comprehensive and accurate measure of premium costs across the private health insurance market. Specifically, section 1302(c)(4) of the ACA and Sec. 156.130(e) provide that the premium adjustment percentage is the percentage (if any) by which the average per capita premium for health insurance coverage for the preceding calendar year exceeds such average per capita premium for health insurance for 2013. As the purpose of this index is to measure growth in premiums, we believe it is appropriate to use a premium measure that comprehensively reflects the actual growth in premiums in the related insurance markets. We also agree that a measure of premium that more comprehensively includes plans from both the individual and employer- sponsored market is better aligned with the language of the ACA and that the resulting higher maximum annual limitation on cost sharing will provide issuers with more flexibility to set other cost sharing parameters to better meet consumer needs.

We acknowledge commenters' concerns about the assumption noted in the proposed rule (90 FR 13018) that the IRS will adopt the same premium growth indexing methodology as HHS, as it has historically done. IRS utilizes HHS' methodology for indexing the applicable percentage table that determines PTC payments and “affordability percentages” used by applicable employers to determine the affordability of their coverage offerings for the employer shared responsibility provisions. As we did in the proposed rule, we also acknowledge that these changes will increase net premiums for enrollees under 400 percent of the FPL, consistent with section 36B(b)(3) of the Code, potentially decreasing enrollment through the Exchange as noted in the Regulatory Impact Analysis section of this final rule and that the change may also lead to enrollees in ESI being required to pay more of their income towards their health insurance premiums, consistent with section 36B(c)(2)(C) of the Code.

Because the projected decrease in Exchange enrollment is driven by decreased PTC resulting in increased net premiums for lower income enrollees, we do not disagree with the commenters' statement that low- income enrollees are more likely to be impacted by this policy change. It is also reasonable to assume that providers who serve a disproportionate number of low-income patients, which may include providers in rural communities, may experience downstream impacts of the policy change and its impact on low-income consumers in the form of increased provision of unpaid care and reduced utilization by consumers. Specifically, we stated in the proposed rule (90 FR 13019) that the proposal may increase the number of uninsured, and that this may increase Federal and State uncompensated care costs and contribute to negative public health outcomes.\234\

\234\ See, for example, Goldin, J., Lurie, I.Z., & McCubbin, J. (2021). Health Insurance and Mortality: Experimental Evidence from Taxpayer Outreach. The Quarterly Journal of Economics, 136(1), 1-49.

Furthermore, we recognize commenters' concerns about the burden that an increase in the maximum annual limitation on cost sharing places on consumers who meet the annual limit for the plan in which they have enrolled. The proposed change will raise the cap on the dollar value an issuer may set for a plan's annual limitation on cost sharing, leading to higher out-of-pocket costs for enrollees who use enough medical services to reach the limit for their plan.

With the impacts on premiums, enrollment, and out-of-pocket costs in mind, to the extent that lack of coverage or higher out-of-pocket costs are correlated to medical debt, it is also reasonable to believe that rates of medical debt may increase for those enrollees who choose not to enroll due to higher net premiums or who cannot afford out-of- pocket costs associated with medical care. Likewise, it is reasonable to believe that some individuals, including those with chronic conditions, may choose to forgo care due to higher-out-of-pocket costs or lack of coverage, which may in turn worsen the state of overall health for those individuals.

Although we recognize commenters' concerns on these matters, we believe that the scope of the impacts on enrollee cost sharing and medical debt will be relatively limited. As we noted in the proposed rule (90 FR 13019), those plans that are required to comply with the maximum annual limitation on cost sharing are generally required to comply with AV (or with minimum value) requirements, constraining the range of cost-sharing parameter values that

issuers can offer for those plans, regardless of the maximum annual limitation on cost sharing. This proposal allows issuers to set higher annual limitations on cost sharing for their plans, but higher annual limitations on cost sharing would generally also require lower deductibles, coinsurance, or copayment parameters for a plan to be able to meet AV requirements. As such, this proposal gives issuers additional flexibility to set cost-sharing parameters that meet their populations' needs without impacting the overall value of coverage.

Furthermore, we continue to believe the definition of the premium adjustment percentage in section 1302(c)(4) of the ACA as growth in the “average per capita premium for health insurance coverage in the United States” suggests that the measure of growth was intended to be comprehensive. Therefore, a premium growth measure should reflect premium growth in all affected markets and should not be limited to ESI premium growth. In effect, this change is a correction for measuring premium growth, as the previous exclusion of individual market data was not the most comprehensive method of premium growth measurement, but was deemed necessary as a result of the premium instability in the individual market immediately following implementation of the ACA market reforms (79 FR 13801 through 13804) and then again as a result of anticipated premium instability in the individual market during the COVID-19 PHE (86 FR 24233 through 24237). In both of these cases, our decision to exclude individual market premiums from the measure of premium growth was primarily intended to account for short-term market distortions and the impact of those potential distortions on various parameters, rather than to provide relief for specific groups of consumers or other interested parties. Moreover, as described in the proposed rule (90 FR 12988 through 12991), the COVID-19 PHE did not impact the individual market as we originally anticipated and conversely appears to have increased premiums in the employer-sponsored market more than in the individual market during this period, suggesting in hindsight that the primary justification for reverting to using only employer-sponsored premiums to calculate the premium adjustment percentage was unfounded.

Although the ACA does contain financial assistance provisions that shift costs from consumers to the Federal Government as noted by some commenters, increasing access to health insurance coverage and care for low-income communities, the indexing methodology of the premium adjustment percentage is not in itself one of those provisions. Instead, the premium adjustment percentage reflects the intent of Congress to appropriately index financial assistance provision related- parameters which were initially determined at the time of passage of the ACA. Because the role of the premium adjustment percentage is to appropriately index various parameters defined in the ACA, the primary consideration for setting the value of the premium adjustment percentage should be whether it accurately and comprehensively captures the rate of premium growth in the United States rather than the impact of the indexing methodology on net premiums, enrollment, access to health care, health outcomes, or out-of-pocket costs for those who receive non-covered or out-of-network care. Considering these other impacts when setting the premium adjustment percentage may result in a measure of premium growth that does not accurately reflect actual premium growth in the United States, artificially inflating the generosity of provisions of the ACA beyond the intent of Congress. Likewise, in response to the comments expressing concern that the impact of the change in the premium adjustment percentage methodology on net premiums would be further compounded when the expanded PTC subsidies made available under the ARPA and extended by the IRA expire, it would be beyond the intent of Congress as expressed in the ACA, ARPA, or IRA to take into account the expiring enhanced subsidies in setting the premium adjustment percentage indexing methodology.

As such, we believe that the measure of premium growth should aim to be comprehensive and accurate to best satisfy the statutory requirement that the premium adjustment percentage reflect growth in the “average per capita premium for health insurance coverage in the United States,” regardless of the impacts of a given premium adjustment methodology on specific groups of consumers, including rural and low-income consumers and consumers with chronic or severe conditions. Again, we note that we shifted away from utilization of a more comprehensive measure in Part 2 of the 2022 Payment Notice (86 FR 24233 through 24237) primarily due to concern that anticipated market distortions related to the COVID-19 PHE would distort the indexing set by the premium adjustment percentage. Because evidence appears to demonstrate that this anticipated distortion among private health insurance (excluding Medigap and property and casualty insurance) did not occur, we do not consider the continued exclusion of these premiums from the index to be appropriate. With these considerations, we do not think the premium adjustment percentage methodology in this rulemaking is contrary to the legislative intent of the financial assistance structure of the ACA because the Federal Government will continue to provide appropriately indexed premium assistance for enrollees with incomes less than 400 percent of the FPL and will continue to set appropriately indexed limitations on cost sharing and employer responsibility requirements. We also believe the premium adjustment percentage finalized in this rule is more consistent with the intent of the indexing provisions of the ACA than the previous premium adjustment percentage methodology. Because appropriately aligning with the intent of Congress is our primary consideration in setting the premium adjustment percentage methodology to include all private health insurance premiums (excluding Medigap and property and casualty insurance), we do not see the need to delay this change for the purposes of analyzing impacts on various income and demographic groups, as suggested by one commenter. Furthermore, we believe that section 1302(c)(4) of the ACA provides the Secretary with the authority to update and modify the premium adjustment percentage and premium growth rate measure as appropriate, and that our policy is within this authority.

Finally, we acknowledge commenters' concern that healthy enrollees may be less likely to enroll due to the higher net premiums that result from the change in the premium adjustment methodology, to the extent that consumers consider the costs and benefits of enrolling in health insurance coverage. However, as with the other concerns discussed above, we believe the consideration of the impact of this proposal on the risk pool to be outside the scope of the indexing provisions of the ACA because the purpose of the premium adjustment percentage is to accurately index program parameters against the growth in premiums, not to control the growth of those premiums. Nevertheless, we believe the impact of the change in the premium adjustment percentage methodology on enrollment, and likewise, the impact on the risk pool and overall premiums, will be relatively limited. As noted in the Regulatory

Impact Analysis sections of the proposed rule and this final rule, the decrease in enrollment for PY 2026 due to the premium adjustment percentage change is estimated to be 80,000 Exchange enrollees, approximately 0.3 percent of the number of individuals who selected coverage in the Exchange during the PY 2025 OEP.\235\ Also, we estimated the impact of this proposal on gross premiums to be negligible, reflecting the limited impact of the change in the premium adjustment percentage methodology on the average risk in the risk pool.

\235\ See the CMS press release “Over 24 Million Consumers Selected Affordable Health Coverage in ACA Marketplace for 2025” (January 17, 2025), available at: https://www.cms.gov/newsroom/press-releases/over-24-million-consumers-selected-affordable-health-coverage-aca-marketplace-2025.

Based on these considerations, we are finalizing the premium adjustment percentage, maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage as proposed, effective for PY 2026, and these values will supersede the PY 2026 values published in the October 2024 PAPI Guidance.\236\

\236\ See CMS. (2024, Oct. 8). Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2026 Benefit Year. https://www.cms.gov/files/document/2026-papi-parameters-guidance-2024-10-08.pdf.

Comment: A few commenters noted that because the premium adjustment percentage is a cumulative measure, including individual market premiums in the definition of premium growth implicitly incorporates the impact on premiums of the significant enhancement of benefits in the individual market as a result of the ACA's market reforms. As such, the commenters stated that individual market premiums should not be used to measure premium growth since 2013 because premiums in the early years of ACA were volatile, even in comparison to the growth in employer-sponsored premiums during the COVID-19 PHE that we cited in the proposed rule. Due to the cumulative nature of the premium adjustment percentage, these commenters stated that the early years of ACA implementation will continue to impact the premium adjustment percentage if individual market premiums are included in the measure. One of these commenters recommended HHS use a benchmark year no earlier than 2018 (rather than 2013) to avoid inclusion of premium increases resulting from the ACA market reforms and other Federal policy and legislative decisions such as the cessation of Federal funding for CSRs and the elimination of the individual mandate penalty. This commenter also suggested that individual market premiums may be impacted by the expansion of section 1332 waivers since the implementation of the ACA.

Response: As stated in the 2015 Payment Notice (79 FR 13801 through 13804), we previously excluded premiums from the individual market because they were most affected by the significant changes in benefit design and market composition in the early years of implementation of the ACA market rules and were most likely to be subject to risk premium pricing. Likewise, in part 2 of the 2022 Payment Notice (86 FR 24233 through 24237), we excluded premiums from the individual market because, at the time, we anticipated that these premiums would be more volatile in response to the COVID-19 PHE than employer-sponsored premiums. As noted in the 2020 Payment Notice (84 FR 17537 through 17541), the rule in which we first adopted a premium adjustment percentage methodology that incorporated all private health insurance (excluding Medigap and property and casualty insurance), the ACA is now past the initial years of implementation and issuers have had the opportunity to collect data on the risk composition of the individual market and adjust pricing accordingly. Additionally, as noted in the proposed rule (90 FR 12990 through 12991), premiums in the employer- sponsored market increased more rapidly than premiums in the individual market during the COVID-19 PHE, the impact of which has led to a decreasing gap in premium growth between the individual market and employer-sponsored market. As such, we believe that a comprehensive measure incorporating both individual market and employer-sponsored premiums will more accurately reflect true premium growth going forward. Therefore, we are finalizing our proposal to measure growth of premiums issuers charged enrollees more comprehensively by once more including individual market premiums. We acknowledge that the premium adjustment percentage is a cumulative measure and, as such, the market fluctuations in the early years of ACA implementation are included in the calculation when using private health insurance premiums (excluding Medigap and property and casualty insurance) as the data source for indexing. However, because it is a cumulative measure, the impact of these early years decreases as more time elapses between the applicable plan year and the benchmark year (2013). For example, for PY 2018, PY 2014 was 1 of 4 years of growth included in the premium adjustment percentage measure and therefore the weight of PY 2014 premium growth was approximately one quarter of the overall measure. For PY 2026, PY 2014 is 1 of 12 years of growth included in the measure. Therefore, for PY 2026, the weight of PY 2014 is only one twelfth of the overall measure. As such, the greater time between the benchmark year and the applicable plan year reduces the impacts of any individual year, even if the premium growth in that year is unusual.

Furthermore, as we have said in response to other comments on this proposal, the premium adjustment percentage reflects the intent of the Congress to appropriately index parameters which were initially determined at the time of passage of the ACA. Because the role of the premium adjustment percentage is to appropriately index various parameters defined in the ACA, the primary consideration for setting the value of the premium adjustment percentage should be whether it accurately and comprehensively captures the rate of premium growth in the United States. With the reduced impact over time of any individual year of premium growth, continuing to exclude individual market premiums from this measure because they may be impacted by States' approved section 1332 waivers or other policy actions could result in parameters that are indexed inaccurately relative to the actual rate of premium growth in the United States, contrary to the intent of Congress.

With respect to the comment requesting we use a different benchmark year, we did not propose and are not finalizing the use of a different benchmark year for individual market premiums. Moreover, the applicable statute, section 1302(c)(4) of the ACA, requires the Secretary to establish a premium adjustment percentage that measures premium growth between the preceding calendar year (2025, in this case) and 2013. Without legislative action, it is not permissible to change the benchmark year to any year other than 2013.

Comment: One commenter expressed concern about the evidence we presented in the proposed rule to support the assertion that individual market premiums remained stable during the COVID-19 PHE due to the commenter's perception that the predictions regarding the anticipated

impacts of the COVID-19 PHE premiums were inaccurate.

Response: The analysis of the trends in premium growth during the COVID-19 PHE that we presented in the proposed rule were not based on predicted values but were based on the CMS Office of the Actuary's NHEA historical data,\237\ which included data through the 2023 calendar year, encompassing the entirety of the COVID-19 PHE.\238\ As described in the methodology documents for the NHEA historical data,\239\ major data sources for the historical data include annual and quarterly Census Bureau surveys and annual American Hospital Association surveys. As such, these data represent point-in-time estimates (rather than projections) from calendar years impacted by the COVID-19 PHE. Given this, we are confident that the NHEA historical data accurately reflect the growth in premiums in the individual and employer-sponsored markets during the COVID-19 PHE and that employer-sponsored market premiums grew more rapidly than individual market premiums during this period.

\237\ Available at: https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/historical.

\238\ See “National Health Expenditure Accounts: Methodology Paper, 2023: Definitions, Sources, and Methods” available at https://www.hhs.gov/coronavirus/covid-19-public-health-emergency/index.html.

\239\ See https://www.cms.gov/files/document/definitions-sources-and-methods.pdf.

Comment: A few commenters suggested that HHS delay adoption of this change to the premium adjustment percentage methodology until PY 2027 due to issuer and various States' timing constraints for rate setting. A few commenters recommended that HHS consider a more delayed or gradual phase-in of individual market premiums over several years.

Response: In finalizing these values for PY 2026, we recognize that some States have rate filing deadlines in April and May and that this rule may not be finalized in time for issuers in these States to adjust plan parameters and rates to take advantage of the additional flexibility afforded by the increased maximum annual limitation on cost sharing and reduced maximum annual limitations on cost sharing. However, because the values finalized in this final rule resulted in a higher maximum annual limitation on cost sharing than was previously released in guidance,\240\ the vast majority of plans that met maximum annual limitation on cost sharing requirements under the previously released PY 2026 premium adjustment percentage methodology will also meet the maximum annual limitation on cost sharing requirements under the premium adjustment percentage methodology for PY 2026 as finalized in this rule. Therefore, issuers would not be required to modify all of their plans as a result of the methodology finalized in this final rule if those plans were already compliant with the values previously released in guidance.\241\ Additionally, to aid in rate setting for issuers, CMS released an updated version of the AV calculator in March 2025 that reflected the proposed higher maximum annual limitation on cost sharing.\242\

\240\ See CMS. (2024, Oct. 8). Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2026 Benefit Year. https://www.cms.gov/files/document/2026-papi-parameters-guidance-2024-10-08.pdf.

\241\ Id.

\242\ Available at https://www.cms.gov/files/document/revised-final-2026-av-calculator.xlsm.

Lastly, we note that we did not propose, and are not finalizing, a phased-in approach to using private health insurance premiums (excluding Medigap and property and casualty insurance) in defining the premium adjustment methodology for PY 2026. We do not believe that further delay meets the statutory and regulatory goals of using a comprehensive measure of premium growth. Additionally, as stated in the proposed rule (90 FR 12987 through 12991), we believe that the individual market is now sufficiently stable to justify the immediate inclusion of individual market premium growth in the indexing measure going forward. As such, we believe it is appropriate to prioritize better achieving the goals of comprehensiveness and accuracy of the premium adjustment percentage methodology over the limited effect on mitigating impacts that implementing our proposal using a phased-in approach would be likely to have. This also aligns with our previous approaches to implementing changes to the premium adjustment percentage methodology where we have not implemented a phased-in approach regardless of the premium adjustment percentage amount and whether the rate was increasing or decreasing.\243\

\243\ See the 2020 Payment Notice (84 FR 17537 through 17541) and part 2 of the 2022 Payment Notice (86 FR 24233 through 24237).

3. Levels of Coverage (Actuarial Value) (Sec. Sec. 156.140, 156.200, 156.400)

In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12995 through 12997), we proposed to change the de minimis ranges at Sec. 156.140(c) beginning in PY 2026 to +2/-4 percentage points for all individual and small group market plans subject to the actuarial value (AV) requirements under the EHB package, other than for expanded bronze plans, for which we proposed a de minimis range of +5/- 4 percentage points. We also proposed to revise Sec. 156.200(b)(3) to remove from the conditions of QHP certification the de minimis range of +2/0 percentage points for individual market silver QHPs. We also proposed to amend the definition of “de minimis variation for a silver plan variation” in Sec. 156.400 to specify a de minimis range of +1/- 1 percentage points for income-based silver CSR plan variations.

Section 2707(a) of the PHS Act and section 1302 of the ACA direct issuers of non-grandfathered individual and small group health insurance plans (including QHPs) to ensure that these plans adhere to the levels of coverage specified in section 1302(d)(1) of the ACA. Section 1302(d)(2) of the ACA provides that a level of coverage of a plan, or its AV, is determined based on its coverage of the EHB for a standard population. Section 1302(d)(1)(A)-(D) of the ACA requires a bronze plan to have an AV of 60 percent, a silver plan to have an AV of 70 percent, a gold plan to have an AV of 80 percent, and a platinum plan to have an AV of 90 percent. Section 1302(d)(2) of the ACA directs the Secretary to issue regulations on the calculation of AV and its application to the levels of coverage. Section 1302(d)(3) of the ACA authorizes the Secretary to develop guidelines to provide for a de minimis variation in the AVs used in determining the level of coverage of a plan to account for differences in actuarial estimates.

In the EHB Rule (78 FR 12834), we established at Sec. 156.140(c) that the allowable de minimis variation in the AV of a health plan that does not result in a material difference in the true dollar value of the health plan was +2/-2 percentage points. In the 2018 Payment Notice, we revised Sec. 156.140(c) to permit a de minimis variation of +5/-2 percentage points for bronze plans that either cover and pay for at least one major service other than preventive services before the deductible or meet the requirements to be a high deductible health plan within the meaning of section 223(c)(2) of the Code.

In the 2017 Market Stabilization Rule, effective beginning in PY 2018, we expanded the de minimis range for standard bronze, silver, gold, and platinum plans to +2/-4 percentage points.\244\ In that final rule (82 FR

18368), we stated that we believed that flexibility was needed for the AV de minimis range for metal levels to help issuers design new plans for future plan years, thereby promoting competition in the market. In addition, we noted that changing the de minimis range would allow more plans to keep their cost sharing the same as well as provide additional flexibility for issuers to make adjustments to their plans within the same metal level. We stated our view that a de minimis range of +2/-4 percentage points would provide the flexibility necessary for issuers to design new plans while ensuring comparability of plans within each metal level.

\244\ We did not in that rule modify the de minimis range for the income-based silver CSR plan variations (the plans with an AV of 73, 87 and 94 percent) under Sec. Sec. 156.400 and 156.420. The de minimis variation for an income-based silver CSR plan variation is a single percentage point. In the Actuarial Value and Cost-Sharing Reductions Bulletin (2012 Bulletin) issued on February 24, 2012, available at: https://www.cms.gov/cciio/resources/files/downloads/av-csr-bulletin.pdf, we explained why we did not intend to require issuers to offer a silver CSR plan variation with an AV of 70 percent; to align with this change, we also modified the de minimis range for expanded bronze plans from +5/-2 to +5/-4.

In the 2023 Payment Notice (87 FR 27306 through 27308), effective beginning in PY 2023, we narrowed the de minimis range for standard bronze, silver, gold, and platinum plans to +2/-2 percentage points, narrowed the de minimis range for expanded bronze plans to +5/-2 percentage points, and narrowed the de minimis range for income-based silver CSR plan variations to +1/0 percentage points. We also established, as a condition of QHP certification, that individual market silver QHPs must have an AV of 70 percent with a de minimis allowable AV variation of +2/0 percentage points. As discussed in the 2023 Payment Notice (87 FR 27307), we made these changes due to concerns that a wider de minimis range jeopardized the meaningful comparison of plans between the silver and bronze levels of coverage. In that rule (87 FR 27307), we also narrowed the de minimis range for individual market silver QHPs in order to maximize PTC and APTC for subsidized enrollees, noting that narrowing the de minimis range of individual market silver QHPs would influence the generosity of the second lowest cost silver plan (SLCSP), the benchmark plan for calculating PTC and APTC.

In the proposed rule (90 FR 12996), we explained that since we finalized these de minimis ranges in the 2023 Payment Notice, we have received considerable feedback from issuers that indicates narrower de minimis ranges substantially reduce issuer flexibility in establishing plan cost sharing. We noted that these issuers have expressed that any benefit to consumers that result from improvements to the comparability between the levels of coverage is outweighed by the harm to consumers caused by reduced issuer flexibility in setting non-standardized cost- sharing parameters, and as a result, harm to the health of the overall risk pool. We further noted that due to these effects, issuers have also voiced concern about their ability to continue to participate in the market generally. We stated that sustained, robust issuer participation in the market is key to ensuring overall market stability and keeping costs down.

Based on this feedback, we proposed to change the de minimis ranges at Sec. 156.140(c) beginning in PY 2026 to +2/-4 percentage points for all individual and small group market plans subject to the AV requirement, other than for expanded bronze plans,\245\ for which we proposed a de minimis range of +5/-4 percentage points. We stated that we believe reverting to the de minimis ranges in effect from PYs 2018 to 2022 offers the best balance between comparability between the levels of coverage and issuer flexibility in establishing competitive cost-sharing designs that appeal to wide segments of the population. With this proposal, we noted that an expansion of the universe of permissible plan AVs would not preclude issuers from continuing to design plans with an AV that is closer to the middle of the applicable de minimis ranges instead of plans at the outer limits. We stated that to the extent that issuers believe that plan designs that have a higher AV would attract enrollment, they would remain free to do so under this proposal.

\245\ Expanded bronze plans are bronze plans currently referenced in Sec. 156.140(c) that cover and pay for at least one major service, other than preventive services, before the deductible or meet the requirements to be a high deductible health plan within the meaning of section 223(c)(2) of the Code.

We also proposed, through the authority granted to HHS in sections 1311(c) and 1321(a) of the ACA to establish minimum requirements for QHP certification, to revise Sec. 156.200(b)(3) to remove from the conditions of QHP certification the de minimis range of +2/0 percentage points for individual market silver QHPs. We stated that under this proposal, we would amend Sec. 156.200(b)(3) to revert to the original regulatory text finalized in the 2012 Exchange Establishment rule (77 FR 18469), which stated that, as a condition of QHP certification, issuers must “[e]nsure that each QHP complies with benefit design standards, as defined in Sec. 156.20.” We stated that we believe the removal of this QHP certification requirement is justified because we are no longer of the view that this certification requirement, which was finalized in the 2023 Payment Notice, is in the best interests of the overall risk pool.

In the 2012 Exchange Establishment rule, we explained narrowing the de minimis range of individual market silver QHPs would influence the generosity of the SLCSP, the benchmark plan for calculating PTC and APTC for subsidized consumers. We noted in the proposed rule (90 FR 12996 through 12997) that while narrowing the de minimis range in this way has such an effect on PTC and APTC to improve affordability for subsidized consumers, it comes at the expense of affordability for unsubsidized consumers. We stated that we believe attracting these unsubsidized consumers to participate in the risk pool may help to drive down overall costs by expanding the risk pool. In turn, we stated that we believe premiums for all consumers in the risk pool may be lower.

As explained in the proposed rule (90 FR 12997), maximizing PTC with a +2/0 percentage point de minimis range for individual market silver QHPs created imbalance between access and affordability for all consumers, particularly for unsubsidized ones. We stated that we believe this certification requirement can have the effect of damaging the overall health of the risk pool, which in turn may make coverage less affordable overall than it could have been as healthier, unsubsidized enrollees are priced out of the market. We explained that while pushing for increased subsidies may make coverage more affordable for certain consumers in the very short term, this is a short-sighted approach to regulating the AV de minimis ranges. We stated that we believe that lower AVs would lead to lower premiums, and in turn potentially improve the risk pool as coverage becomes more affordable for generally healthy people who currently may opt to forgo coverage altogether. We noted that although this may mean that those eligible for APTCs receive less money in tax credits, we believe that in the long term there would be a sufficient choice of affordable plans. We stated that we also believe reverting the de minimis range of individual market silver QHPs back to +2/-4 percentage points is the best method for balancing the affordability of health plans for all segments of the population enrolled in non-grandfathered individual and small group market plans with the long-term viability of the overall risk pool.

Finally, we proposed to revise the definition of “de minimis variation for a silver plan variation” at Sec. 156.400 to change the de minimis variation for individual market income-based silver CSR plan variations from +1/0 percentage points to +1/-1 percentage points. We explained that similar to the removal of the de minimis certification requirement for individual market silver QHPs, this proposal would deliver further balance between affordability and market stabilization. We did not propose edits to the minimum AV differential in Sec. 156.420(f) for silver QHPs and 73 percent income-based plan variations, where the AVs must differ by at least 2 percentage points. We noted for issuers that, similar to the current de minimis ranges, standard silver QHPs with plan AVs between 71 and 72 percent would require the corresponding 73 percent income-based plan variation AV to be at least 2 percentage points above the standard plan's AV.

We sought comment on these proposals.

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 these policies as proposed. We summarize and respond to public comments received on the proposed changes to the de minimis ranges below.

Comment: Many commenters supported the proposal, noting that they agreed with the rationale provided in the proposed rule that wider de minimis ranges would improve issuer flexibility in plan design. These commenters explained that increased flexibility would allow issuers to better design plans that meet the needs of their enrollees.

Response: We agree that wider de minimis ranges will significantly improve issuer flexibility in plan design and are finalizing this proposal as proposed. As we noted in the proposed rule, issuers have indicated that narrower de minimis ranges substantially reduce issuer flexibility in establishing plan cost sharing, and that any benefits from improved comparability between coverage levels due to wider variation in metal levels are outweighed by the reduced flexibility in setting non-standardized cost-sharing parameters.

The wider de minimis ranges of +2/-4 percentage points (and +5/-4 percentage points for expanded bronze plans) offer several important benefits to the market.

First, these expanded ranges allow issuers to design plans that better promote competition in the market. With greater flexibility in adjusting actuarial values, issuers can create more differentiated combinations of premiums and cost-sharing structures. This enables issuers to develop innovative plan designs targeting specific consumer needs and respond more dynamically to competitor offerings without being constrained by overly narrow AV requirements.

Second, the wider ranges provide flexibility for issuers to make adjustments to their plans within the same metal level. This practical benefit allows issuers to implement year-to-year modifications based on changing healthcare costs, utilization patterns, and claims experience while maintaining their metal tier classification. Issuers can respond to provider network changes or drug formulary updates without disrupting their established metal level offerings, ensuring greater continuity for consumers.

Third, these expanded ranges help maintain robust issuer participation, which is important for overall market stability. By reducing compliance burdens that might otherwise drive issuers to exit markets, particularly those with challenging risk profiles, the wider ranges make market participation more attractive to a broader range of issuers. This helps prevent overly restrictive pricing and ensures consumers have multiple options to choose from, which is fundamental to a healthy, competitive marketplace. This is a particularly important considering that several issuers have publicly announced their intent to end participation in the Exchange in PY 2026.

We note that this increased flexibility does not prevent issuers from designing plans with AVs closer to the middle of the applicable de minimis ranges. Issuers will retain the ability to offer plans with higher AVs if they believe such designs would better attract enrollment.

Comment: Some commenters supported the proposal because it would maintain uniform AV standards for plans on- and off-Exchange.

Response: We agree that standardizing the de minimis ranges for plans on- and off-Exchange is important. As we stated in the proposed rule (90 FR 12997), while specifying different de minimis ranges for individual market silver QHPs pushed for increased subsidies in the very short term, it was a short-sighted approach to regulating the AV de minimis ranges that damaged the overall health of the risk pool long-term. Subjecting on- and off-Exchange plans to the same de minimis ranges will correct this short-sighted approach because it will help to ensure better balance between access and affordability for all consumers, particularly for those enrolling in off-Exchange plans.

Comment: Many commenters, both those in support of and in opposition to the proposal, recommended that, if the proposed de minimis variations are finalized, implementation of the proposal be delayed until PY 2027 instead of PY 2026. These commenters noted that it may be difficult for some issuers to take advantage of wider de minimis ranges for PY 2026 given the timing of the proposal and State rate submission deadlines.

Response: We decline to delay implementation of these wider de minimis ranges until PY 2027. By definition, wider de minimis ranges do not require issuers or States to take any additional action to revise existing plan designs. Issuers may choose not to take any action to revise their existing plan designs for PY 2026 and will still be compliant with these wider de minimis ranges. We recognize that some issuers in some States will not be able to modify plan designs in time to meet State-specific filing deadlines. However, making these wider de minimis ranges available as soon as possible will maximize the extent to which issuers are able to take advantage of them to create a wider array of benefit designs that appeal to a wider array of consumers. We therefore believe that finalizing these wider de minimis ranges beginning in PY 2026 is justified.

Comment: Many commenters did not support the proposal. These commenters primarily expressed concern that wider de minimis ranges would result in lower overall plan AVs. These commenters explained that this would lead to increased out-of-pocket consumer costs as plan cost- sharing generosity decreases and higher overall premiums for some consumers given a potential impact on the generosity of the SLCSP, the benchmark plan used to determine an individual's PTC.

Response: We acknowledge commenters' concerns regarding a decrease in plan cost-sharing generosity to the extent that plans utilize the lower end of the wider de minimis ranges, the impact on PTCs if the AV of the applicable SLCSP is lower than in previous years, and the burden that increased cost-sharing and decreased PTCs may have on enrollees in the short-term. However, this change is essential to restoring greater balance between access and affordability in the long term. As we explained in the proposed rule (90 FR 12997), we believe

that the overall benefits to the risk pool as a result of this change will better incentivize unsubsidized enrollees to enroll in coverage, which we expect to lower overall costs and further drive down premiums as the risk pool improves.

Comment: Other commenters opposing the proposal expressed concern that wider de minimis ranges would undermine the ability of consumers to meaningfully compare plans. These commenters were concerned that a silver plan at the lower end of the de minimis range (with a 66 percent AV) could be closer in AV to a bronze plan at the higher end of the expanded de minimis range (with a 65 percent AV) than it would be to another silver plan at the higher end of the de minimis range (with a 72 percent AV).

Response: We do not agree with the premise that consumers currently typically rely on material differences in AV percentages to compare plans. Communicating material differences between plan cost-sharing for plans of the same metal tier and plans of different metal tiers has always been essential to ensure that consumers make informed decisions about their plan selections, which includes deprioritizing AV as a comparison tool. This was the case with narrower de minimis ranges as well, when a bronze plan could have an AV at the higher end of the expanded de minimis range (with a 65 percent AV) and a silver plan could have an AV at the lower end of a -2 percentage point de minimis range (with a 68 percent AV). To consumers comparing plans, the difference in cost sharing is immaterial for a 3-percentage point separation between a 65 percent AV bronze plan and a 68 percent AV silver plan or a 1 percentage point separation between a 65 percent AV bronze plan and a 66 percent AV silver plan. Exchanges use an array of strategies to effectively communicate the meaningful differences between plans in terms that consumers--in addition to agents, brokers, web-brokers, Navigators, and other assisters--can understand and appreciate. Therefore, we are not concerned about material changes in the comparability between plan AVs with this change.

Comment: A few commenters noted the proposal's impact on silver loading. These commenters explained that if the relativity between the standard QHP silver plan and the CSR plan variations expands, there is potential for the “silver load” to increase. Commenters stated that where the “silver load” is applied only to silver QHPs, this would offset some portion of the potential silver premium decrease. Commenters also stated that where the “silver load” is applied to all plans, it would similarly offset premium decreases for other metal tiers as well.

Response: We acknowledge the commenters' observations regarding the potential impact of wider de minimis ranges on silver loading. The relationship between standard silver QHP AVs and CSR plan variation AVs could affect the magnitude of silver loading. The wider de minimis range (+2/-4 percentage points) for standard silver QHPs, combined with the +1/-1 percentage point range for CSR variations, could increase the relative difference between standard silver plans and CSR variations. This increased differential could result in higher silver loading amounts to account for the cost of CSR benefits.

We expect any impact on premiums would manifest differently depending on how issuers implement their loading strategy. In markets where silver loading is applied exclusively to silver QHPs, any potential premium decreases from lower AVs in silver plans may be partially offset by the increased loading amount. In markets where broad loading is implemented across all metal levels, the loading effects could moderate premium decreases throughout the entire market.

Despite these potential effects, we maintain that the wider de minimis ranges represent a necessary rebalancing of market dynamics. While silver loading may partially counteract some premium reductions, the broader benefits of this policy--including enhanced issuer flexibility, improved market stability, and potential risk pool improvements--remain compelling factors in our decision-making process.

Comment: A few commenters asserted that the proposal could weaken the risk pool because healthier people are more likely to drop coverage when net premiums rise. Other commenters asserted the proposal can help bring more stability to the risk pool by attracting more unsubsidized individuals who otherwise might choose to go uninsured.

Response: We acknowledge the differing viewpoints regarding the proposal's potential impacts on the risk pool. As explained above, after careful consideration of the evidence and interested parties' feedback, we believe that while there may be some initial weakening of the risk pool as some commenters note, the long-term benefits of wider de minimis ranges are likely to strengthen overall market stability.

Comment: A few commenters requested clarification on the applicability of uniform modification standards under Sec. 147.106(e) to the proposal to widen the de minimis ranges.

Response: Under the exceptions to guaranteed renewability for uniform modification of coverage under Sec. 147.106(e), an issuer may, only at the time of coverage renewal, modify the health insurance coverage for a product offered in the individual market or small group market if the modification is consistent with State law and is effective uniformly for all individuals or group health plans with that product. To be considered a uniform modification of coverage, among other things, each plan within the product that has been modified must have the same cost-sharing structure as before the modification, except for any variation in cost sharing solely related to changes in cost and utilization of medical care or to maintain the same metal tier level described in sections 1302(d) and (e) of the ACA. States have flexibility to broaden what cost-sharing changes are considered within the scope of a uniform modification of coverage and may, for example, consider uniform cost-sharing changes that result in plans having the same metal level based on the expanded de minimis range to be uniform modifications.

We note that under Sec. 147.106(e)(2), modifications made uniformly and solely pursuant to applicable Federal or State requirements are considered uniform modifications if such modification is directly related to the imposition or modification of the Federal or State requirement and made within a reasonable time period after the imposition or modification of the Federal or State requirement. However, given that the de minimis ranges are being widened, an issuer is not required to modify a plan's cost-sharing structure as a result of this provision of the final rule. Therefore, changes to cost-sharing to take advantage of the wider de minimis ranges under this final rule would not be considered to have been “made solely pursuant to a Federal requirement.” Such a modification would have to meet the other criteria in Sec. 147.106(e)(3) to be considered a uniform modification of coverage.\246\

\246\ See Patient Protection and Affordable Care Act; Exchange and Insurance Market Standards for 2015 and Beyond, Final rule (79 FR 30240, 30249) (“For example, if State legislation newly requires a minimum level of benefits (for example, imposing a new minimum visit limit on specific benefits) reducing covered benefits to meet the minimum requirement would not be directly related to the new requirement because the lesser coverage of the benefit coverage was previously permissible, and the modification did not have to be made in order for the issuer to comply with the State law. Accordingly, the modification would not be considered to have been `made solely pursuant to' the new requirement.”).

Comment: Some commenters asserted that lower overall AVs could result in a reduction in the quality of provider networks.

Response: We disagree with this claim. In the proposed rule, we recognized that wider de minimis ranges may lower the generosity of plan cost sharing, and that this would result in lower premiums. However, plan cost sharing is only one of many factors involved with plan rate setting. Provider network quality can also be reflected in plan rate setting, and by allowing for lower AVs, plans can reallocate funds to improving network quality.

Comment: Some commenters requested clarification on whether the proposal would impact the standardized plan options finalized in the 2026 Payment Notice and whether issuers are required to offer these plans for PY 2026.

Response: For PY 2024 and beyond, Sec. 156.201(b) requires QHP issuers in a FFE or SBE-FP to offer at least one standardized QHP option at every product network type, at every metal level (except the non-expanded bronze metal level), and throughout every service area that it also offers non-standardized QHP options (including, for silver plans, for the income-based cost-sharing reduction plan variations, as provided for at Sec. 156.420(a)). We finalized the standardized QHP options required under Sec. 156.201(b) for PY 2026 in the 2026 Payment Notice (90 FR 4493). We confirm that the widening of the de minimis ranges finalized in this final rule does not impact the plan designs for the standardized plan options finalized in the 2026 Payment Notice, nor does it impact the broader requirement for issuers to offer these plans for PY 2026 under Sec. 156.201(b).

For PY 2025 and beyond, Sec. 156.202(b) allows QHP issuers in an FFE or SBE-FP to offer two non-standardized plan options per product network type, metal level (excluding catastrophic plans), and inclusion of adult dental benefit coverage, pediatric dental benefit coverage, and adult vision benefit coverage (as defined in paragraphs Sec. 156.202(c)(1) through (3)), in any service area. We confirm that QHP issuers in a FFE or SBE-FP may utilize the wider de minimis ranges finalized in this final rule to adjust the cost sharing of their non- standardized plan options under Sec. 156.202(b), subject to uniform modification requirements at Sec. 147.106(e) and the requirements under the definition of “plan” at Sec. 144.103.

In the 2025 Marketplace Integrity and Affordability proposed rule, we proposed that some policies, if finalized, would become applicable for plan years beginning on or after January 1, 2026. We noted that these policies would include the proposed provisions requiring Exchanges on the Federal platform to conduct pre-enrollment verification of eligibility for individual market SEPs and to verify at least 75 percent of new enrollments through SEPs, as well as the proposed prohibition on issuers of coverage subject to EHB requirements from covering sex-trait modification as EHB. We also noted that for State Exchanges, the provisions requiring all Exchanges to conduct pre- enrollment verification of eligibility for Exchange SEPs and to verify at least 75 percent of new enrollments through SEPs would be applicable starting PY 2027. Also, the policies to update the premium adjustment percentage methodology and AV de minimis ranges would apply beginning with PY 2026. We noted that the policy to prevent re-enrollees from receiving APTC that fully covers their premium without taking an action to confirm their eligibility information would be applicable for Exchanges on the Federal platform starting with annual redeterminations for PY 2026, and State Exchanges would be required to implement the same policy or a comparable policy starting with annual redeterminations for PY 2027. We noted in the proposed rule that we believe these applicability dates provide issuers and Exchanges ample time to prepare for these changes. However, we noted that we understand that different States and issuers face different resource issues and implementation hurdles. We therefore sought comment on whether regulated entities would require additional time to comply with these proposals. We also sought comment on any operational considerations or other issues that may impede compliance with the proposed applicability dates.

In the proposed rule, we discussed that the remaining policies in that proposed rule would become applicable upon the effective date of the final rule. We stated that these proposals included, among others, the provision to pause the monthly SEP for APTC-eligible qualified individuals with a projected annual household income at or below 150 percent of the FPL. We noted that our experience with this SEP suggests it has substantially increased the level of improper enrollments, as well as increased the risk for adverse selection. We further stated that the remaining proposals in the proposed rule aimed to increase the program integrity of the Exchange and protect Federal tax dollars. We therefore stated in the proposed rule that we believed it would be appropriate for these policies to become applicable immediately upon the effective date of the final rule.

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 the applicability dates with the following modifications as provided in Table 7. We note that all rules are effective 60 days after publication in the Federal Register, and we provide further specificity where applicability dates of certain provisions may vary.

Table 7--Applicability Dates of Finalized Provisions

Proposed Finalized

Provision applicability date applicability date Sunset at the end of PY 2026?

Coverage Denials for Failure to Pay Effective date of Effective date of No.

Premiums for Prior Coverage (Sec. this rule. this rule.

147.104(i)). Deferred Action for Childhood Effective date of Effective date of No.

Arrivals (DACA) (Sec. 155.20). this rule. this rule. Standards for Termination of an Effective date of Effective date of No.

Agent's, Broker's, or Web-broker's this rule. this rule.

Exchange Agreements for Cause (Sec.

155.220(g)(2)). Failure to File Taxes and Reconcile PY 2026.............. PY 2026............. Yes.

APTC Process (Sec. 155.305(f)(4)). 60-Day Extension to Resolve Income Effective date of Effective date of No.

Inconsistency (Sec. 155.315). this rule. this rule.

Income Verification When Data Effective date of Effective date of Yes.

Sources Indicate Income Less Than this rule. this rule.

100 Percent Federal Poverty Level

(Sec. 155.320(c)(3)(iii)). Income Verification When Tax Data is Effective date of Effective date of Yes.

Unavailable (Sec. 155.320(c)(5)). this rule. this rule. Annual Eligibility Redetermination Exchanges on Federal Exchanges on Federal Yes.

(Sec. 155.335(a), (n)). Platform: PY 2026. Platform: PY 2026.

State Exchanges: PY State Exchanges:

2027. Not Finalized. Annual Eligibility Redetermination PY 2026.............. PY 2026............. No.

(Automatic Re-enrollment Hierarchy)

(Sec. 155.335(j)). Gross Premium Percentage-based and Effective date of Effective date of Yes.

Fixed-dollar Premium Payment this rule. this rule.

Thresholds (Sec. 155.400(g)). Annual Open Enrollment Period (OEP) PY 2026 OEP.......... PY 2027 OEP......... No.

(Sec. 155.410). Monthly Special Enrollment Period Effective date of Effective date of Yes.

for APTC-Eligible Qualified this rule. this rule.

Individuals with a Household Income

at or Below 150 Percent of the

Federal Poverty Level (Sec.

155.420). All Exchanges Conducting Eligibility PY 2026.............. Exchanges on Federal Yes.

Verification for SEPs (Sec. Platform: PY 2026.

155.420(g)). State Exchanges:

Not finalized. All Exchanges Conducting Eligibility PY 2026.............. Exchanges on Federal Yes.

Verification for 75 Percent of New Platform: PY 2026.

Enrollments through SEPs (Sec. State Exchanges:

155.420(g)). Not finalized. Prohibition on Coverage of Specified PY 2026.............. PY 2026............. No.

Sex-Trait Modification Procedures

as an EHB (Sec. Sec. 156.115(d)

and 156.400). Premium Adjustment Percentage Index PY 2026.............. PY 2026............. No.

(PAPI) (Sec. 156.130(e)). Levels of Coverage (Actuarial Value) PY 2026.............. PY 2026............. No.

(Sec. Sec. 156.140, 156.200,

156.400).

We summarize and respond to public comments received on the proposed applicability dates below. Public comments regarding the applicability date of individual provisions as well as our responses to these comments can be found in the respective provisions' sections of this final rule.

Comment: Many commenters expressed concerns about the proposed implementation timeline for the rule holistically. Some commenters noted their concern about the proposed rule's immediate and near-term changes adding to existing Exchange uncertainty in PY 2026, which includes the scheduled expiration of expanded PTC under the ARPA and IRA at the end of 2025 and possible Congressional action related to health programs like Medicaid. Several commenters noted several proposed policies (such as those that impact rates and plan designs like the premium adjustment percentage methodology) may not be compatible with existing processes and timelines, which creates financial and operational burdens for regulators, State Exchanges, issuers, agents, brokers, web-brokers and consumers. These commenters specifically cited needing time to analyze impact, implement, and test changes including administrative and IT operations, consumer education and assistance, marketing and outreach, staffing, and other mitigation strategies that address operational challenges, coverage loss, and consumer confusion. One commenter cited that there could be a disproportionate impact of uncertainty on safety-net or other smaller plans that are unable to make sweeping changes in short order. Moreover, these commenters noted that the implementation changes may not have been budgeted for in calendar year 2025. Many commenters recommended delaying implementation with the earliest applicability date being PY 2027 to allow States to fully adopt and be compliant with these changes. One commenter suggested effective dates should begin with the following plan year, at minimum, instead of the effective date of the final rule or mid-year. In consideration of provisions that impact PY 2026 plan design or rates, many commenters supported delaying implementation while a few recommended the final rule be published as soon as possible (including within a few weeks of the public comment deadline) to minimize regulatory uncertainty and timely finalize products.

Response: While we acknowledge the commenters' feedback regarding the general implementation timeline of the final rule and the issues associated with meeting the applicability dates of various provisions finalized as part of this final rule, we are generally finalizing the applicability dates as proposed. Specifically, the provisions in this rulemaking are intended to promote program integrity and prevent improper Exchange enrollments and given the pervasiveness of this issue,\247\ we do not believe that a delay in implementation of these provisions is appropriate. That said, we acknowledge the concerns raised by commenters about the need to consider the effects of the expiring expanded subsidies. As such, we are finalizing a number of the policies associated with the improper enrollments associated with fully-subsidized plans through PY 2026, which provides the policies with enough time to work to shed improper enrollments without burdening the Exchanges over the long term. Further, where appropriate in this final rule, we are changing the implementation dates of certain provisions, as described in Table 7 in this section.

\247\ As documented in a CMS press release from 2024, we received and resolved over 180,000 unauthorized enrollment complaints from January to August 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.

Many commenters expressed concerns about the 2025 Marketplace Integrity and Affordability proposed rule's 30-day public comment period. We summarize and respond to the public comments received regarding the length of the public comment period below.

Comment: Several commenters expressed concerns about the comment period being shorter than 30 days given that the rule was issued in the Federal Register on March 19, 2025 (90 FR 12942) and the comment period closed on April 11, 2025. These commenters suggested that such a window limits public comment and prevents interested parties from fully engaging with the proposed rule's reasoning in violation of the APA. Several commenters also expressed concerns about the scope and complexity of the proposed rule and requested the comment period be extended to 60 or 90 days to allow interested parties (including issuers, State Exchanges, providers, and consumers) additional time to analyze and respond to the impact of the proposed rule. These commenters cited the ruling in National Lifeline Ass'n v. FCC, 921 F.3d 1102, 1117-18 (D.C. Cir. 2019), which noted that a 30-day comment period is generally considered the shortest time period for interested persons to “meaningfully review a proposed rule and provide informed comment.”

A commenter cited that HHS historically has provided substantially more time for public comments, stating that the comment periods for the 2025 and 2024 Payment Notice proposed rules were 45 and 41 days, respectively.

Response: We disagree with commenters that stated that we did not provide a 30-day comment period on the proposed rule, in violation of the APA. The proposed rule was displayed for public inspection at the Federal Register on March 12, 2025, with an opportunity to submit public comment electronically on https://www.regulations.gov or by regular, express, or overnight mail. Under 44 U.S.C. 1507, unless otherwise specifically provided by statute, filing of a document required or authorized to be published by 44 U.S.C. 1505,\248\ except in cases where notice by publication is insufficient in law, is sufficient to give notice of the contents of the document to a person subject to or affected by it. Thus, consistent with 44 U.S.C. 1507, display of the proposed rule at the Federal Register on March 12, 2025 constituted public notice of the proposed rule on that date, and the 30-day comment period was held between March 12, 2025 and April 11, 2025. We note that we did in fact receive public comments between March 12, 2025 and March 19, 2025 (the date the proposed rule appeared in the Federal Register), demonstrating that the public had notice of the proposed rule on March 12, 2025.

\248\ See 44 U.S.C. 1505(a) (providing that there shall be published in the Federal Register--(1) Presidential proclamations and Executive orders, except those not having general applicability and legal effect or effective only against Federal agencies or persons in their capacity as officers, agents, or employees thereof; (2) documents or classes of documents that the President may determine from time to time have general applicability and legal effect; and (3) documents or classes of documents that may be required so to be published by Act of Congress) and 44 U.S.C. 1505(b) (providing that, in addition to the foregoing there shall also be published in the Federal Register other documents or classes of documents authorized to be published by regulations prescribed under this chapter with the approval of the President, but comments or news items of any character may not be published in the Federal Register).

We also disagree with the comments requesting that we extend the comment period to 60 or 90 days. If we were to do this, the publication of the final rule would be delayed, which would impact rate setting and plan finalization for PY 2026 that depend on the finalization of the policies set forth in this final rule (such as the changes to the premium adjustment percentage and the AV de minimis ranges). To provide individual and small group market issuers sufficient time to develop and price plan offerings for PY 2026, we will not be extending the comment period to 60 or 90 days.

As demonstrated by the number of distinct programs addressed in this rulemaking and the structure of this final rule in addressing them independently, HHS generally intends the rule's provisions as finalized to be severable from each other. For example, the final rule refines the interpretation of “lawfully present” for purposes of determining eligibility to enroll in a QHP offered on an Exchange or a BHP in States that elect to operate a BHP and eligibility for PTC, APTC, and CSRs. It also outlines the discontinuation of the SEP for individuals with an income less than 150 percent of the FPL and makes a change in the calculation of the premium adjustment percentage. It also updates the Exchange automatic re-enrollment hierarchy and changes the process of income verification where tax return data is unavailable. We believe that these provisions are generally capable of functioning sensibly on an independent basis. It is our intent that if any provision of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, the other provisions in the final rule shall be construed so as to continue to give maximum effect as permitted by law, unless the holding shall be one of utter invalidity or unenforceability. In the event a provision is found to be utterly invalid or unenforceable, we intend that provision to be severable.

We sought comment on the severability of these provisions in the proposed rule.

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 the severability provision as proposed. We summarize and respond to public comments received on this provision below.

Comment: A few commenters supported the severability approach discussed in the proposed rule.

Response: We thank commenters for their support and are finalizing this approach as proposed such that it is HHS' position if any provision of this final rule is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, the other provisions in the final rule shall be construed so as to continue to give maximum effect as permitted by law, unless the holding shall be one of utter invalidity or unenforceability. In the event a provision is found to be utterly invalid or unenforceable, that provision is severable.

To derive wage estimates, we generally use data from the Bureau of Labor Statistics to derive labor costs (including a 100 percent increase for the cost of fringe benefits and overhead) for estimating the burden associated with the ICRs.\249\ Table 8 presents the median hourly wage, the cost of fringe benefits and overhead, and the adjusted hourly wage. These estimates were updated from the estimates used in the 2025 Marketplace Integrity and Affordability proposed rule due to the availability of more recent data between the publication of the proposed and final rules. The proposed rule estimates may be found at 90 FR 12998.

\249\ See U.S. Bureau of Labor Statistics (n.d.). Occupational Employment and Wage Statistics, May 2024 Occupation Profiles. Dep't. of Labor. https://www.bls.gov/oes/current/oes_stru.htm.

As indicated, employee hourly wage estimates have been adjusted by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly across employers, and because methods of estimating these costs vary widely across studies. Nonetheless, there is no practical alternative, and we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.

Table 8--Adjusted Hourly Wages Used in Burden Estimates

Fringe benefits Adjusted

Occupation title Occupational Median hourly and overhead ($/ hourly wage

code wage ($/hr.) hr.) ($/hr.)

Database and Network Administrators and 15-1240 51.67 51.67 103.34

Architects................................... Computer Programmers.......................... 15-1251 47.44 47.44 94.88 Eligibility Interviewers, Government Programs. 43-4061 24.76 24.76 49.52

We adopt an hourly value of time based on after-tax wages to quantify the opportunity cost of changes in time use for unpaid activities. This approach matches the default assumptions for valuing changes in time use for individuals undertaking administrative and other tasks on their own time, which are outlined in an Assistant Secretary for Planning and Evaluation (ASPE) report on “Valuing Time in U.S. Department of Health and Human Services Regulatory Impact Analyses: Conceptual Framework and Best Practices.” \250\ We started with a measurement of the usual weekly earnings of wage and salary workers of $1,159.\251\ We divided this weekly rate by 40 hours to calculate an hourly pre-tax wage rate of approximately $28.98. We adjusted this hourly rate downwards by an estimate of the effective tax rate for median income households of about 17 percent, resulting in a post-tax hourly wage rate of approximately $24.05. We adopt this as our estimate of the hourly value of time for changes in time use for unpaid activities.

\250\ Office of the Assistant Secretary for Planning and Evaluation. (2017, Sept. 17). Valuing Time in U.S. Department of Health and Human Services Regulatory Impact Analyses: Conceptual Framework and Best Practices. Dep't of HHS. https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.

\251\ U.S. Bureau of Labor Statistics. Employed full time: Median usual weekly nominal earnings (second quartile): Wage and salary workers: 16 years and over [LEU0252881500A], retrieved from FRED, Federal Reserve Bank of St. Louis. https://fred.stlouisfed.org/series/LES1252881500Q. Annual Estimate, 2024.

We sought comment on the estimates and assumptions in the proposed rule.

We did not receive any comments in response to the proposed rule estimates and assumptions. We are using revised estimates as presented above as a result of more recent data being available at the time of this final rule.

The following changes will be submitted for review under OMB Control Number 0938-1218 (CMS-10510).

The changes in this final rule to 42 CFR 600.5 will again exclude DACA recipients from the definition of “lawfully present” used to determine eligibility for a BHP in those States that elect to operate the program, if otherwise eligible. A discussion of the proposed ICRs for this policy may be found in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12998). We are updating the ICRs for this policy in this final rule to account for updated wage rates available after the publication of the proposed rule.

The impact of this change will be with regards to the two States that currently operate a BHP--Minnesota and Oregon. We assume for the purposes of this estimate that both States have completed the updates from the 2024 DACA Rule. We estimate that it will take each State 100 hours to develop and code the changes to its BHP eligibility and verification system to correctly evaluate eligibility under the revised definition of “lawfully present” to once again exclude DACA recipients as outlined in section III.B.1. of this final rule. To be conservative in our estimates, we are assuming 100 hours per State, but it is important to note that it may take each State less than 100 hours given that the work required to implement this rule for Minnesota's and Oregon's State Exchange systems may also be able to be leveraged for its BHPs.

Of those 100 hours, we estimate it will take a database and network administrator and architect 25 hours at $103.34 per hour and a computer programmer 75 hours at $94.88 per hour.\252\ In the aggregate, we estimate a one-time burden of 200 hours (2 States x 100 hours) at a cost of $19,399 (2 States x [(25 hours x $103.34 per hour) + (75 hours x $94.88 per hour)]) for completing the necessary system updates to the application for BHP coverage, including any associated terminations for DACA recipients currently enrolled in BHP coverage.

\252\ See U.S. Bureau of Labor Statistics (n.d.). Occupational Employment and Wage Statistics, May 2024 Occupation Profiles. Dep't. of Labor. https://www.bls.gov/oes/current/oes_stru.htm.

These changes will reduce costs on States related to the decrease in applications for individuals who would have applied for coverage if not for this change. Those impacts are accounted for under OMB Control Number 0938-1191 (Data Collection to Support Eligibility Determinations for Insurance Affordability Programs and Enrollment through Health Insurance Marketplaces, Medicaid and Children's Health Insurance Program Agencies (CMS-10440)), discussed in section IV.B.3. of this final rule, which pertains to the streamlined application.

We sought comment on the estimates and assumptions in the proposed rule.

We did not receive any comments in response to the proposed burden estimates for this policy. For the reasons outlined in this final rule, we are finalizing these estimates, with updated wage rates, as proposed. 2. Exchanges and Processing Streamlined Applications (Sec. 155.20)

The following changes will be submitted for review under OMB Control Number 0938-1191 (CMS-10440).

As discussed previously, we are finalizing modifications to the definition of “lawfully present” at Sec. 155.20 to exclude DACA recipients from the definition of “lawfully present” that is used to determine eligibility to enroll in a QHP through an Exchange, for PTC, APTC, and CSRs, and to enroll in a BHP in States that elect to operate a BHP. This change will apply to the 20 State Exchanges, as well as Exchanges on the Federal platform. A discussion of the proposed ICRs for this policy may be found in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12999 through 13000). We are updating the ICRs for this policy in this final rule to account for updated wage rates available after the publication of the proposed rule.

On December 9, 2024, the United States District Court for the District of North Dakota issued a preliminary injunction in Kansas v. United States, Case No. 1:24-cv-00150, 2024 WL 5220178 (D.N.D. Dec. 9, 2024). Per the district court's ruling, the 2024 DACA Rule is enjoined in three States that operate State Exchanges--Kentucky, Idaho, and Virginia. Even though DACA recipients are not currently eligible for Exchange coverage in these three States, we are still estimating that these State Exchanges may still need to make eligibility system changes in order to correctly implement this rule. This is because these State Exchanges may need to make changes in order to correctly re-implement the clarifying and technical changes to the definition of “lawfully present” that were included in the 2024 DACA Rule, and that are not altered by this final rule, but that are currently blocked in these three State Exchanges due to the court's injunction. We estimate that it will take the Federal Government and each of the State Exchanges 1,000 hours in 2025 to develop and code changes to their eligibility systems to correctly evaluate and verify eligibility under the revised definition of “lawfully present,” such that DACA recipients are no longer considered lawfully present for purposes of enrolling in a QHP offered through an Exchange, APTC, PTC, CSRs, or BHP coverage in States that elect to operate a BHP, as outlined in section III.B.1. of this final rule. This estimate is informed by the FFE's prior experience implementing similar system changes. Of those 1,000 hours, we estimate it will take a database and network administrator and architect 250 hours at $103.34 per hour and a computer programmer 750 hours at $94.88 per hour. In aggregate for the States, we estimate a one-time burden in 2025 of 20,000 hours (20 State Exchanges x 1,000 hours) at a cost of $1,939,900 (20 States x [(250 hours x $103.34 per hour) + (750 hours x $94.88 per hour)]) for completing the necessary updates to State Exchange eligibility systems.\253\ For the Federal Government, we estimate a one-time burden in 2025 of 1,000 hours at a cost of $96,995 ([250 hours x $103.34 per hour] + [750 hours x $94.88 per hour]). In total, the burden associated with all system updates will be 21,000 hours at a cost of $2,036,895.

\253\ On December 9, 2024, the United States District Court for the District of North Dakota issued a preliminary injunction in Kansas v. United States, Case No. 1:24-cv-00150, 2024 WL 5220178 (D.N.D. Dec. 9, 2024). Per the district court's ruling, DACA recipients in three State Exchanges--Kentucky, Idaho, and Virginia-- are not eligible to enroll in Exchange coverage. As a result, these three States may have already incorporated the necessary changes to their eligibility system and mailed any required notices to impacted consumers.

Next, we estimate costs associated with termination operations to end Exchange coverage for any DACA recipients who are already enrolled. This work will need to be done by the Federal Government, which will take steps to end coverage for DACA recipients enrolled in States with FFEs and SBE-FPs and ensure that DACA recipients are not renewed for future coverage years. Additionally, we anticipate that termination operations will occur in the 17 States that operate State Exchanges where the 2024 DACA Rule is not currently enjoined. We assume that in the three States that operate State Exchanges where the 2024 DACA Rule is enjoined, the States have already undertaken the work necessary to end coverage for DACA recipients and therefore will not need to perform additional work as a result of this rule.

We estimate that it will take the Federal Government and each of the 17 State Exchanges 1,000 hours in 2025 to terminate Exchange coverage for DACA recipients.\254\ \255\ This estimate is informed by the FFE's prior experience implementing similar system changes. Of those 1,000 hours, we estimate it will take a database and network administrator and architect 250 hours at $103.34 per hour and a computer programmer 750 hours at $94.88 per hour. In aggregate for the States, we estimate a one-time burden in 2025 of 17,000 hours at a cost of $1,648,915 (17 States x [(250 hours x $103.34 per hour) + (750 hours x $94.88 per hour)]) in 2025 for all termination operations. For the Federal Government, we estimate a one-time burden in 2025 of 1,000 hours at a cost of $96,995 ([250 hours x $103.34 per hour] + [750 hours x $94.88 per hour]). Collectively, we estimate that it will take the Federal Government and each of the State Exchanges 18,000 hours at an associated cost of $1,745,910 to end coverage for DACA recipients. We sought comments on these burden estimates, including regarding additional costs and benefits anticipated as a result of this proposal.

\254\ Section 155.310(g).

\255\ On December 9, 2024, the United States District Court for the District of North Dakota issued a preliminary injunction in Kansas v. United States, Case No. 1:24-cv-00150, 2024 WL 5220178 (D.N.D. Dec. 9, 2024). In compliance with the Court's order, CMS terminated enrollments for PY 2025 for DACA recipients in 16 States that are served by the Federal platform. All impacted consumers received notices regarding their ineligibility for Exchange coverage. These States are Alabama, Arkansas, Florida, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, and Texas.

“Data Collection to Support Eligibility Determinations for Insurance Affordability Programs and Enrollment through Health Benefits Exchanges, Medicaid and CHIP Agencies,” OMB Control Number 0938-1191 (CMS-10440) accounts for burdens associated with the streamlined application for enrollment in the programs impacted by this rule. As such, the following information collection addresses the burden of processing applications and assisting enrollees with BHP and Exchange QHP enrollment, and those impacts are not reflected in the ICRs for BHP, discussed in section IV.B.1. of this final rule.

For assisting eligible enrollees and processing their applications, we estimate this will take a government programs eligibility interviewer 10 minutes (0.17 hours) per application at a rate of $49.52 per hour, for a cost of approximately $8.42 per application. This estimate is based on past experience with similar application changes. As outlined further in section IV.B.3. of this final rule, we anticipate that approximately 11,000 fewer individuals impacted by this change will complete the application annually. Therefore, the total application processing burden associated with this policy will be reduced by 1,870 hours

(0.17 hours x 11,000 applications) for a total cost savings of $92,602 (1,870 hours x $49.52 per hour). As discussed further in this section, we anticipate an overall reduction in application processing burden for States and the Federal Government.

As outlined in section VI.C.1. of this final rule, we estimate that as a result of this policy, 10,000 fewer individuals will enroll in QHP coverage and 1,000 fewer individuals will enroll in a BHP on average each year, including redeterminations and re-enrollments.

The entire information collection savings associated with changes to BHPs falls on the two States that currently operate a BHP--Minnesota and Oregon.\256\ As such, we assume 100 percent of the BHP application processing savings will fall on these two States. Using the per- application processing burden of 10 minutes (0.17 hours) per application at a rate of $49.52 per hour, and the estimate that 1,000 fewer individuals will apply for BHP, we anticipate a burden reduction of 170 hours with an associated cost savings of $8,418, for States to process BHP applications.

\256\ Minnesota's BHP began January 1, 2015. Oregon's BHP began July 1, 2024. For more information, see CMS. (n.d.) Basic Health Program. https://www.medicaid.gov/basic-health-program/index.html.

For the Exchanges, we use data from the 2024 OEP to estimate the proportion of applications that are processed by States compared to the Federal Government, and we determined that 49 percent of Exchange applications were submitted to FFEs/SBE-FPs, and are therefore processed by the Federal Government, while 51 percent were submitted to and processed by the 20 State Exchanges.\257\ As such, we anticipate that 49 percent of Exchange application processing savings will be attributed to the Federal Government and 51 percent of Exchange application processing savings will be attributed to States using their own eligibility and enrollment platforms.

\257\ CMS. (2024, March 27). Health Insurance Markets 2024 Open Enrollment Report. https://www.cms.gov/files/document/health-insurance-exchanges-2024-open-enrollment-report-final.pdf.

For the Exchanges, if we estimate 10,000 fewer applications will be processed, 51 percent of those (5,100) will no longer be processed by State Exchanges and 49 percent (4,900) will no longer be processed by the Federal Government. Using the per-application processing burden of 10 minutes (0.17 hours) per application at a rate of $49.52 per hour, we anticipate cost savings of $42,934 or a reduction by 867 hours for State Exchanges to process applications. Additionally, we estimate cost savings of $41,250 or a reduction by 833 hours for the Federal Government to process applications at a rate of $49.52 per hour. Therefore, the total burden on State Exchanges to assist eligible beneficiaries and process their applications will be reduced by 1,037 hours annually beginning in 2025 (170 hours for BHP + 867 hours for State Exchanges) with a net cost reduction of $51,352. The total burden on the Federal Government will be reduced by 833 hours annually beginning in 2025 (entirely for Exchanges), with a net cost reduction of $41,250.

In addition, Exchanges would have required individuals completing the application to submit supporting documentation to confirm their lawful presence if it was unable to be verified electronically through a data match with DHS via the Hub using DHS' Systematic Alien Verification for Entitlements (SAVE) system.\258\ An applicant's lawful presence may not be able to be verified if, for example, the applicant opts to not include information about their immigration documentation such as their alien number or employment authorization document (EAD) number when they fill out the application. Therefore, we anticipate cost savings for Exchanges due to the reduction in lawful presence inconsistencies for DACA recipients who were not able to have their immigration status verified electronically during the application process.

\258\ 45 CFR 155.315(f).

Of the 10,000 fewer DACA recipients who will apply for Exchange coverage as a result of this rule, we estimate that 20 percent, or 2,000, will have generated an immigration status inconsistency.\259\ Of these 2,000 inconsistencies, we assume that 51 percent of those (1,020) will no longer be processed by State Exchanges and 49 percent (980) will no longer be processed by the Federal Government.\260\ To adjudicate an inconsistency, we estimate that it would have taken an eligibility support worker (BLS occupation code 43-4061) 12 minutes, or 0.2 hours, at an hourly rate of $49.52 to review submitted documentation. Therefore, for State Exchanges, we anticipate a net burden reduction of 204 hours (0.2 hours x 1,020 inconsistencies) with an equivalent cost savings of $10,102 (204 hours x $49.52 per hour). For the Federal Government, we anticipate a net burden reduction of 196 hours (0.2 hours x 980 inconsistencies), with an equivalent cost savings of $9,706 (196 hours x $49.52 per hour). In sum, we expect a burden reduction due to processing fewer immigration status inconsistencies of 400 hours (204 hours + 196 hours), with cost savings of $19,808 (400 hours x $49.52 per hour).

\259\ Estimates are based on internal CMS data comparing the number of immigration DMIs generated to the number of noncitizen enrollees during similar time periods during 2024, rounded to the nearest 5 percent.

\260\ CMS. (2024, March 27). Health Insurance Markets 2024 Open Enrollment Report. https://www.cms.gov/files/document/health-insurance-exchanges-2024-open-enrollment-report-final.pdf.

We sought comment on the estimates and the methodology and assumptions used to calculate them in the proposed rule. We are using revised estimates as presented above as a result of more recent data being available at the time of this final rule.

Comment: Many commenters are concerned that the finalization of this rule would require considerable burden on State Exchanges, States that operate a BHP, and FFE States, including requiring them to reverse current processes and change their systems in the middle of the year in order to terminate coverage for existing enrollees and halt future enrollment for DACA recipients. Commenters stated that estimates included in the proposed rule regarding the impact on all the States and Exchanges do not take into account expenditures related to customer outreach and education, changing call center scripts and website copy, and training for call center workers and consumer assisters.

Response: We appreciate these commenters' concerns. The burden estimates included in this section are informed by the FFE's past experience conducting similar systems changes. We believe these estimates should allow Exchanges and States that operate a BHP to plan for any additional expenditures caused by the finalization of this rule. We note that due to differing State systems and processes, we cannot include estimates related to customer outreach, education, and website updates.

Comment: Many State Exchanges, BHP agencies, and SBE-FPs, and other commenters noted concerns about being able to implement these changes upon finalization of the rule. A few commenters requested a detailed implementation plan to assist impacted Exchanges.

Response: We understand that State Exchanges, States that elect to operate a BHP, SBE-FPs, and the FFE will need to make changes to their eligibility and enrollment systems to correctly determine eligibility for DACA recipients as of the applicability date. We are committed to providing all Exchanges and State agencies that

operate a BHP with technical assistance and any additional support needed to ensure that States are able to correctly determine eligibility for DACA recipients impacted by this final rule's effective date. We are also committed to working with all Exchanges and State agencies that operate a BHP to identify any potential manual workarounds that may be needed to correctly determine eligibility prior to full systems changes being in place. For the reasons outlined in this final rule, we are finalizing these estimates as they appear in this section. 3. Application Process for Applicants

The following proposed changes will be submitted for review under OMB Control Number 0938-1191 (CMS-10440).

As required by the ACA, there is one application through which individuals may apply for health coverage in a QHP through an Exchange and for other insurance affordability programs like Medicaid, CHIP, and a BHP in a State that chooses to operate a BHP.\261\ We note that we proposed no changes to the eligibility application for Medicaid and CHIP. Hence, this section only includes data on the burden associated with completing an application and submitting additional information to verify lawful presence, if necessary, for health coverage in a QHP through an Exchange and for BHP coverage.\262\ A discussion of the proposed ICRs for this policy may be found in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 13000 through 13001). We are updating the ICRs for this policy in this final rule and removing the potential cost savings associated with these ICRs upon further analysis and reflection in finalizing these provisions.

\261\ 42 U.S.C. 18083.

\262\ We assume that the burden of completing an application is essentially the same regardless of whether the individual applies directly with the State agency responsible for administering the BHP or with an Exchange.

We sought comment on the estimates and assumptions in the proposed rule.

We did not receive any comments in response to the burden estimates for this policy in the proposed rule. We are using revised assumptions as presented above as a result of additional analysis conducted at the time of this final rule. For the reasons outlined in the final rule, we are finalizing these assumptions as presented earlier in this section.

We are finalizing an amendment to the current regulation at Sec. 155.305(f)(4), under which an Exchange may not find an enrollee eligible for APTC where an enrollee or their tax filer has failed to file a Federal income tax return reconciling their APTC for 2 consecutive tax years, to increase the program integrity of the Exchange. We are finalizing the requirement for Exchanges to find enrollees ineligible for APTC after they or their tax filer has failed to file and reconcile their APTC for 1-tax year for coverage year 2026. However, the 1-year policy would sunset on December 31, 2026 and Exchanges would revert back to the current 2-year policy in coverage year 2027 that allows an Exchange to not find an enrollee eligible for APTC when an enrollee or their tax filer has failed to file a Federal income tax return reconciling their APTC for 2 consecutive tax years. This allows Exchanges to collect data on the 1-year policy. We will consider these data to determine whether to make permanent the 1-year FTR policy or to revert back to the 2-year FTR policy that was in place in coverage year 2025. For Exchanges on the Federal platform, the FTR process will otherwise be conducted similarly to the previous iterations of FTR prior to the 2024 Payment Notice, except that those identified as being in a 1-tax year FTR status will be at risk for removal of APTC and there will no longer be a 2-tax year FTR status population. Minimal changes to the language of the Exchange application questions will be necessary to obtain relevant information; as such, we anticipate that the amendment finalized in this rule will not impact the information collection burden for consumers. We anticipate that there will no longer be a 2 year FTR population for coverage year 2026, and thus the notices sent to the FTR population will be similar to the current 2-tax year FTR notices in inciting an urgency to act, but that all consumers with an FTR status will be in a 1-tax year FTR status for coverage year 2026. Due to this, we do not anticipate PRA impacts related to noticing requirements.

We sought comment on the proposed assumptions and any information collection burdens not identified in this section.

We did not receive any comments in response to the proposed assumptions for this policy. For the reasons outlined in the final rule, we are finalizing these assumptions as proposed.

The following changes will be submitted for review under OMB Control Number 0938-1191 (CMS-10440).

We are finalizing amendments to Sec. 155.320(c)(3)(iii) to specify that all Exchanges must generate annual income inconsistencies when a tax filer's attested projected annual income would qualify the taxpayer as an applicable taxpayer according to 26 CFR 1.36B-2(b) and trusted data sources indicate that projected income is under 100 percent of the FPL. This policy will be effective upon the effective date of this rule, but with a modification under which the policy and related requirements will be sunset for all Exchanges at the end of PY 2026. Thereafter, this policy will no longer be effective. A discussion of the proposed ICRs for this policy may be found in the proposed rule (90 FR 13001 through 13002). We are updating the ICRs for this policy in this final rule to account for updated wage rates available after the publication of the proposed rule.

We anticipate that adding this income verification requirement will result in approximately 1 hour of time spent by consumers to complete associated questions in the application, or to submit supporting documentation. Based on historical data from the FFE, we estimate that approximately 340,000 inconsistencies will be generated at the household level for the Exchanges on the Federal platform. On the State Exchanges, we estimate this figure to be 208,000 inconsistencies. Therefore, adding these inconsistencies will increase burden on consumers by approximately 548,000 hours across all Exchanges. Using the estimate of the hourly value of time for changes in time use for unpaid activities calculated at $24.05 per hour in section IV.A. of this final rule, we estimate that the increase in cost for each consumer in 2026 will be approximately $24.05, and the cost increase for all consumers who will generate this income inconsistency in 2026 will be approximately $13,179,400 (548,000 hours x $24.05 cost of unpaid activities).

Additionally, we estimate that adding this income verification requirement will result in an increase in burden on the Exchanges on the Federal platform. Based on historical FFE data, we anticipate that approximately 340,000 inconsistencies will be generated at the household level for Exchanges using the Federal platform, and 208,000 in State

Exchanges. Once households have submitted the required verification documents, we estimate that it will take approximately 1 hour and 12 minutes for an eligibility support staff person (Eligibility Interviewers, Government Programs--BLS occupation code 43-4061), at an hourly cost of $49.52, to receive, review, and verify submitted verification documents as well as conduct outreach and determine DMI outcomes. Therefore, adding these inconsistencies will result in an increase in burden on the Federal Government of 408,000 hours (340,000 verifications x 1.2 hours per verification) at a cost of $20,204,160 (408,000 hours x $49.52 per hour) in 2026, and an increase in burden on the State Exchanges of 249,600 hours (208,000 verifications x 1.2 hours per verification) at a cost of $12,360,192 in 2026.

Finally, we estimate that adding this income requirement will require costs related to updating the technical systems, including the eligibility system. We estimate that it will take the Exchanges on the Federal platform and each State Exchange 8,000 hours in 2025 to make these updates. Of those 8,000 hours, we estimate it will take a database and network administrator and architect 2,000 hours at $103.34 per hour and a computer programmer 6,000 hours at $94.88 per hour. Given this, we estimate that Exchanges on the Federal platform will incur a one-time burden in 2025 of $775,960 (2,000 x $103.34 + 6,000 x $94.88) to make these eligibility system updates. State Exchanges will incur a one-time burden of $14,743,240 (2,000 x $103.34 + 6,000 x $94.88 x 19). We also estimate that the Exchanges would incur the same burdens in 2026 in order to sunset the policy at the end of that year. Therefore, we estimate that Exchanges on the Federal platform will incur a one-time burden in 2026 of $775,960 (2,000 x $103.34 + 6,000 x $94.88) to make these eligibility system updates. State Exchanges will incur a one-time burden of $14,743,240 (2,000 x $103.34 + 6,000 x $94.88 x 19).

We sought comment on the proposed estimates and assumptions.

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 these burden estimates for this policy with modifications to account for updated general occupational cost estimations and the sunsetting of this policy following the completion of PY 2026. These updated estimates are reflected in the cost estimates already laid out in this section of the final rule. We summarize and respond to public comments received on the original proposed estimates below.

Comment: Some providers and 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 acknowledge commenters' concerns and emphasize that 1 hour is an average. These consumers will still have 90 days to submit documentation to verify their annual household income. We provide a robust list of acceptable documents that households can submit to resolve their Income DMIs, and this list is included in multiple consumer notices and on the CMS website. We recommend that consumers for whom more common documents like paystubs and tax forms are either not available or are inaccurate submit other suggested income documents that may be more available and accurate.

The following changes will be submitted for review under OMB Control Number 0938-1191 (CMS-10440).

We are finalizing amendments to remove Sec. 155.320(c)(5) which currently requires Exchanges to accept attestations, and not set an Income DMI, 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. We are finalizing this with a modification under Sec. 155.320(c)(5): this final provision removes this policy upon the effective date of this rule and will be reinstated for all Exchanges at the end of PY 2026. A discussion of the proposed ICRs for this policy may be found in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 13002). We are updating the ICRs for this policy in this final rule to account for updated wage rates available after the publication of the proposed rule.

Based on internal historical DMI data, we estimate that approximately 1,722,000 inconsistencies will be generated at the household level for Exchanges using the Federal platform, and 1,056,000 will be generated at the household level for State Exchanges due to this final policy. Once households have submitted the required verification documents, we estimate that it will take approximately 1 hour and 12 minutes for an eligibility support staff person (BLS occupation code 43-4061), at an hourly cost of $49.52, to receive, review, and verify submitted verification documents as well as conduct outreach and determine DMI outcomes. Therefore, the removal of Sec. 155.320(c)(5) will result in an increase in burden for the Federal Government of 2,066,400 hours (1,722,000 verifications x 1.2 hours per verification) at a cost of $102,328,128 (2,066,400 hours x $49.52 per hour) in 2026 and an increase in burden on State Exchanges of 1,267,200 hours (1,056,000 verifications x 1.2 hours per verification) at a cost of $62,751,744 (1,267,200 hours x $49.52 per hour) in 2026.

In addition to the increased administrative burden on Exchanges, this change will increase the number of consumers who are required to submit documentation to verify their income. We estimate that consumers will each spend 1 hour to answer the associated question, or to submit documentation. Based on historical data from the FFE, we estimate that approximately 2,777,000 inconsistencies will be generated at the household level across all Exchanges. Using the estimate of the hourly value of time for changes in time use for unpaid activities calculated at $24.05 per hour in section IV.A. of this final rule, we estimate that the increase in cost for each consumer in 2026 will be approximately $24.05 and that the proposed change will increase burden on consumers by 2,777,000 hours per year at an associated cost of $66,786,850 (2,777,000 hours x $24.05 per hour).

Finally, we estimate that removing the current process of verifying income attestations when IRS returns no data will require costs related to updating the eligibility system. We estimate that it will take Exchanges on the Federal platform and each State Exchange 9,000 hours in 2025 to make these updates. Of those 9,000 hours, we estimate it will take a database and network administrator and architect 2,250 hours at $103.34 per hour and a computer programmer 6,750 hours at $94.88 per hour. Given this, we estimate that the Federal Government will incur a one-time burden of $872,955 (2,250 x $103.34 + 6,750 x $94.88) to make these eligibility system updates. State Exchanges will incur a one-time burden total in 2025 of $16,586,145 ($872,955 x 19) associated with a total of 171,000 (9,000 x 19) burden hours. We also estimate that the Exchanges would incur the same burdens in 2026 in order to sunset the policy at the end of that year. Therefore, we estimate that Exchanges on the Federal platform will incur a one-time burden in 2026 of $872,955 (2,250 x $103.34 + 6,750 x $94.88) to make these eligibility system updates.

State Exchanges will incur a one-time burden total in 2026 of $16,586,145 ($872,955 x 19) associated with a total of 171,000 (9,000 x 19) burden hours.

We sought comment on the proposed impacts and assumptions.

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 these burden estimates for this policy with modifications to account for updated general occupational cost estimations. These updated estimates are reflected in the cost estimates already laid out in this section of the final rule. We summarize and respond to public comments received on the original proposed estimates below.

Comment: Some providers and 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 acknowledge commenters' concerns and emphasize that 1 hour is an average. These consumers will still have 90 days to submit documentation to verify their annual household income, and may be eligible for extensions granted by the Exchanges on the Federal platform or State Exchanges under Sec. 155.315(f)(3). In order to assist consumers in a wide variety of circumstances, we provide a robust list of acceptable documents that households can submit to resolve their Income DMIs, and this list is included in multiple consumer notices and on the CMS website. We recommend that consumers for whom more common documents like paystubs and tax forms are either not available or are inaccurate submit other suggested income documents that may be more available and accurate.

Under Sec. 147.106(c) and (f), health insurance issuers that discontinue or renew non-grandfathered coverage under a product in the individual market (including coverage offered through the Exchanges) (including a renewal with uniform modifications), or that non-renew or terminate coverage under a product in the individual market (including coverage offered through the Exchanges) based on movement of all enrollees in a plan or policy outside the product's service area, are required to provide written notices to enrollees, in a form and manner specified by the Secretary.\263\ Under Sec. 156.1255, QHP issuers in the individual market must include certain information in the applicable renewal and discontinuation notices.\264\ To satisfy these notice requirements, issuers in the individual market must use Federal standard notices, unless a State develops and requires the use of a different form consistent with CMS guidance.

\263\ The requirement to provide notices of renewal applies to issuers in the individual or small group market. The requirement to provide notices of product discontinuation and notices of non- renewal or termination based on enrollees' movement outside the service area applies to issuers in the individual or group market. See section 2703 of the PHS Act and 45 CFR 147.106. These requirements also apply with respect to grandfathered coverage pursuant to sections 2712 (former) and 2742 of the PHS Act and Sec. Sec. 146.152 and 148.122.

\264\ Section 156.1255(a) through (d).

This final rule amends the automatic re-enrollment hierarchy by removing Sec. 155.335(j)(4), which allowed Exchanges to direct re- enrollment for enrollees who are eligible for CSRs from a bronze QHP to a silver QHP in the same product if the silver QHP has a lower or equivalent net premium after the application of APTC, and if the silver QHP has the same provider network as the bronze plan into which the enrollee would otherwise have been re-enrolled. To align with this change, we remove language related to the bronze to silver crosswalk from the Federal standard notices.

This final rule also requires enrollees who would otherwise be automatically re-enrolled in a QHP with a zero-dollar premium after application of APTC (“fully-subsidized”) by the Exchanges on the Federal platform to instead be automatically re-enrolled with APTC applied to the policy reduced such that the enrollee owes a $5 premium in PY 2026. This policy sunsets after PY 2026 and reverts back to current policy. We updated the Federal standard notices to include language related to this requirement.

The burden to issuers related to sending the Federal standard notices is currently approved under OMB Control Number 0938-1254 (CMS- 10527).\265\ The information collection has been revised to incorporate the necessary language modifications in the Federal standard notices due to the changes in this final rule. However, we do not anticipate any change in burden to issuers.

\265\ OMB Control Number 0938-1254 (CMS-10527, Annual Eligibility Redetermination, Product Discontinuation and Renewal Notices).