Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program

As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/2025/08/CircularA-4.pdf), we have prepared an accounting statement in Table 22 showing the classification of the impact associated with the provisions of this final rule.

This final rule implements standards for programs that will have numerous effects, including providing consumers with access to more affordable health insurance coverage, reducing the impact of adverse selection, and stabilizing premiums in the individual and small group health insurance markets and in Exchanges. We are unable to quantify all the benefits and costs of this final rule. The effects in Table 22 reflect qualitative assessment of impacts and estimated direct monetary costs and transfers resulting from the provisions of this final rule for Exchanges, health insurance issuers and consumers. The annual monetized transfers described in Table 23 includes changes to costs associated with the risk adjustment user fee paid to HHS by issuers. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C 1. HHS-RADV Error Estimation Modification to Incorporate IVA Sampling Changes

\392\ Reinsurance collections ended in FY 2018 and outlays in subsequent years reflect remaining payments, refunds, and allowable activities.

In the 2026 Payment Notice, we finalized excluding enrollees with HCCs from IVA sampling beginning with benefit year 2025 HHS-RADV. As a consequence of this change to the IVA sampling methodology, we are now finalizing our proposal to add an additional scaling factor ai to the error estimation methodology to ensure that HCC-associated error rates continue to apply to only the proportion of total PLRSs that are associated with HCC components of EDGE risk scores. The additional scaling factor ai will serve to capture the proportion of an issuer's total population's risk that is associated with enrollees with HCCs.

In simulating the impact of the proposed additional scaling factor, we found that HHS-RADV adjustments to risk adjustment transfers decreased in magnitude by 11.7 percent in the individual market (going from $148 million to $139 million) and by 13.8 percent in the small group market (from $81 million to $69.8 million). Table 24 shows only the impact on positive HHS-RADV adjustments. Because HHS-operated risk adjustment, and HHS-RADV adjustments, are budget neutral, we anticipate the same impact on negative risk adjustment transfers (or risk adjustment charges), in that both will decrease in magnitude. When examining the impact of the additional finalized scaling factor on HHS- RADV adjustments over premium, we anticipate only a 0.01 percent change in positive HHS-RADV adjustments in both markets between results with no additional factor and results with the additional scaling factor. This corresponds with a percentage point (PP) change of - 0.02. This helps to contextualize the change in the magnitude of HHS-RADV adjustments. This finalized policy will more precisely assess the proportion of an issuer's population's risk that arises as a result of enrollees with HCCs.

We solicited comments on the estimated impacts of this proposal.

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We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in this final rule, we are finalizing these estimates as proposed. 2. HHS Risk Adjustment User Fee for 2027 Benefit Year (Sec. 153.610(f))

For the 2027 benefit year, HHS will operate risk adjustment in every State and the District of Columbia. As described in the 2014 Payment Notice (78 FR 15416 through 15417), HHS' operation of risk adjustment under section 1343 of the Affordable Care Act on behalf of States is funded through a risk adjustment user fee. For the 2027 benefit year, we are finalizing our proposal to use the same methodology to estimate our administrative expenses to operate the HHS risk adjustment program as was used in the 2026 Payment Notice. As discussed previously in this final rule, risk adjustment user fee costs for the 2027 benefit year are expected to be similar to the prior 2026 benefit year budget estimates.

However, expected enrollment has deviated from the proposed rule to the final rule. Specifically, we have more recently available interim risk adjustment data for benefit year 2025, resulting in an increase to some of our enrollment estimates. Therefore, we anticipate that our revised enrollment projections will somewhat impact expected HHS risk adjustment user fee collections. For these reasons, we are finalizing a risk adjustment user fee rate of $0.18 PMPM for the 2027 benefit year, which is lower than the $0.20 PMPM for the 2026 benefit year. We expect the finalized HHS risk adjustment user fee for the 2027 benefit year will decrease the amount transferred from issuers of risk adjustment covered plans to the Federal Government by approximately $4 million.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates. 3. Submission of Rate Filing Justification (Sec. 154.215)

This rule finalizes our proposal to collect information on adjustments to the index rate as part of the rate filing justification to account for unreimbursed CSRs. As detailed in section III.C of this preamble, issuers will be required to report on the URRT actual CSR amounts paid on behalf of eligible enrollees and additional revenue collected from the previously applied CSR load (using the most recent annual data that is available prior to the applicable filing year, generally two years prior, using the standard methodology set forth in Sec. 156.430(c)(2)), projected CSR amounts expected to be paid on behalf of enrollees in the upcoming plan year and the additional revenue expected to be collected from the applied CSR load factor for the upcoming plan year, and the CSR load factor for the upcoming plan year. This rule also finalizes our proposal to require issuers to provide an explanation in the Actuarial Memorandum of the methodology used to determine the load factor for the upcoming plan year and an explanation of how additional revenue expected to be collected from the applied CSR load factor compares to the amount of CSRs expected to be paid on behalf of enrollees for the same period.

The finalized provisions will primarily affect health insurance issuers offering qualified health plans in the individual market, Federal and State regulators in their review capacity, and indirectly, Marketplace enrollees who receive cost-sharing reductions. The enhanced CSR reporting will enable issuers to more accurately determine their CSR payment amounts and improve future projections for rate setting. This increase in accuracy and transparency may result in more appropriate premium levels if current CSR load factors are determined to be inaccurate or unreasonable, enabling issuers to better calibrate their load factors to adequately cover actual CSR costs, potentially leading to more stable and accurate premium pricing over time.

Issuers will incur a one-time cost, in 2026, of $418,790,376 to implement the standard methodology and generate the new URRT entries, followed by annual ongoing costs, beginning in 2027, of $209,395,188 to update their systems and recalculate the URRT values. Additionally, issuers will incur annual ongoing costs, beginning in 2026, of $157,222 to enter the finalized values in the URRT and $628,888 to provide an explanation in the Actuarial Memorandum of how the CSR load factor was determined. Costs might vary with issuer scale, data systems, and product complexity. These costs are expected to add approximately $2.00 PMPM or 0.25 percent of premium in administrative expenses for the 2027 plan year with that amount decreasing to approximately $1.00 PMPM or 0.13 percent of premium in later years. Additionally, the Federal Government will incur annual ongoing costs, beginning in 2026 (for PY 2027 rate filings), of $2,414,256 to review the additional information submitted. These costs are discussed in detail in the Collection of Information section IV.B of this final rule.

Enrollees can potentially experience changes in out-of-pocket costs as more accurate CSR reporting may lead issuers to adjust their load factors and premium pricing; the direction of these changes will depend on whether the current CSR load factors overestimate or underestimate actual CSR costs. If issuers have been overestimating actual CSR costs, they may decrease load factors and premiums, which could result in lower out-of-pocket costs for

enrollees through decreased premiums. Conversely, if issuers have been underestimating CSR costs, load factors and premiums could increase.

Changes in CSR load calculations could result in corresponding adjustments to PTCs, as more accurate CSR load factors may increase or decrease silver plan premiums. If CSR loads decrease, silver plan premiums should decrease with corresponding Federal PTC outlays decreasing and offsetting changes in consumer net premiums. To the extent that improved estimates change plan pricing, there may also be distributional enrollment shifts among enrollees across metal levels on-Exchange and in silver plans offered off-Exchange.

We sought comment on these 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 impact estimates for this policy as proposed. We summarize and respond to public comments received on the proposed estimates later.

Comment: A few commenters supported the proposed CSR data collection, stating that they are in favor of increased transparency and standardized reporting to better understand CSR loading practices and ensure CSR loads align with actual costs. Many other commenters stated concern that the proposed CSR data reporting requirements would impose significant operational and financial burdens on issuers and may lead to higher premiums.

Response: We acknowledge that issuers will incur operational and financial burdens because of these reporting requirements. However, as discussed in section III.C.1 of this preamble, collection of this information is an important program integrity measure that will help ensure that CSR loads are appropriate to recover lost CSR payments and are not inappropriately inflating Federal expenditures or undermining Federal rating rules. This information will also benefit State regulators by providing necessary data to determine if their issuers' CSR load amounts are actuarially justified plan-level adjustments to the index rate under Sec. 156.80.

Comment: Several commenters stated that implementation for PY 2027 is infeasible, noting that the final rule would arrive close to or after State filing deadlines and would require issuers to reconstruct 2025 claims data that was not consistently stored for this purpose. These commenters noted that the proposal compresses system design, vendor contracting, validation, and rate filing work into an unrealistically short window.

Response: We acknowledge that implementation timing can affect both the operational feasibility and quality of initial data submissions. We recognize the substantial one-time and annual costs associated with implementing the standard methodology and that some issuers may incur additional costs associated with vendor contracting, data and systems validation, and reporting to meet the required reporting date. As discussed in section III.C.1 of this preamble, we do not agree that a delayed implementation date is warranted. The data collection process is intended to leverage the existing rate filing process by using the existing URRT and currently required actuarial memorandum.

Comment: Many commenters stated that the standard methodology is especially burdensome because it effectively requires retrospective re- adjudication or double adjudication of claims, accumulator recalculation, pharmacy benefit manager (PBM) and vendor involvement, manual corrections, and ongoing audit work to produce credible data, and that the systems or staff needed to perform this work are no longer maintained in the form contemplated by the proposal.

Response: We acknowledge the operational concerns raised regarding the standard methodology but continue to be of the view that obtaining standardized annual information is important to improving the accuracy of future CSR projections and supporting review of whether applied load factors are appropriately calibrated to expected unreimbursed CSR obligations. As discussed in section III.C.1 of this preamble, issuers were required to use the standard methodology to calculate CSRs paid on behalf of enrollees for the 2017 plan year and we believe it remains the most accurate method for such calculation. While issuers may need to update their systems to generate the actual value of CSRs provided, the actuarial memorandum should already include an explanation of the methodology used to determine the load factor; therefore, while issuers may incur some additional costs for actuarial analysis, the impact on issuers' system is limited.

Comment: Several commenters stated that using recent experience to constrain or reshape CSR loading could reduce affordability for subsidized consumers by lowering benchmark silver premiums and therefore APTCs, shifting enrollment among metal levels, or increasing benchmark volatility. A few commenters emphasized that even modest premium or subsidy changes can have outsized effects in rural and limited-issuer markets where Tribal entities help finance coverage and depend on predictable APTC values.

Response: As discussed in more detail in section V.C.3 of this final rule, we acknowledge that more accurate CSR reporting could either decrease or increase load factors and hence premiums, depending on whether current values overstate or understate an issuer's expected CSR costs and revenues. We do not assume a single directional market effect and recognize that impacts may vary across geographies and populations. As discussed in section III.C.1 of this preamble, we appreciate commenters' concern that such shifts in enrollment could negatively affect American Indian/Alaska Native populations and Tribal health programs. CMS affirms that it undergoes tribal consultation for all rulemaking and has worked with the appropriate parties to ensure that any such potential impact is mitigated.

Comment: Several commenters stated that the RIA did not sufficiently explain why the new burden is warranted or quantify how the reporting requirement could affect premiums, premium tax credits (PTCs), or consumer affordability. A few requested HHS to analyze data already collected under the PY 2026 guidance before making the requirement recurring.

Response: We acknowledge these concerns. As described in the RIA, we have tried to quantify the administrative costs of the reporting and analysis, and we recognize that issuers may pass on these costs to consumers in the form of increased premiums, which could have significant impacts on PTCs, and enrollment or retention of enrollees. We recognize that the effects of the CSR load reporting are uncertain, as outcomes depend on whether current load factors overstate or understate actual CSR obligations. As discussed in section III.C.1. of this preamble, the purpose of this data collection is to allow the State or CMS, as applicable, to determine whether the CSR load factor is actuarially justified and not excessive in relation to the amount expected to be paid for unreimbursed CSRs. We are concerned that excessive CSR loads on silver plans might lead to inflated premiums for silver plans, further distorting pricing for bronze and gold plans relative to silver plans, limit consumer choice, increase premium costs for unsubsidized enrollees, and significantly increase the cost of the second lowest cost silver plan, which in

turn increases PTC amounts and Federal expenditures. The collection is intended to improve the evidentiary basis for future oversight and rate-review analysis.

Comment: A few commenters stated that documentation and review of CSR loading could improve pricing signals, detect over-collection, and reduce subsidy distortions or unwarranted benchmark premium inflation, and viewed the reporting burden as justified given the size of Federal PTC exposure. Many commenters contended that the RIA understates the likelihood that issuer compliance costs will be passed through into premiums or will crowd out resources otherwise available for member services or care management emphasizing that a market-wide administrative burden in the hundreds of millions of dollars can itself create material pricing pressure.

Response: As described in the RIA, the proposal aims to improve the alignment between pricing inputs and expected CSR obligations over time, not to predetermine a particular pricing outcome. We acknowledge that administrative costs may be passed on to consumers in the form of premium increases or potential changes in cost-sharing amounts. However, as discussed in section III.C.1.b. of this preamble, while we recognize that many issuers might have to update their systems to calculate the actual value of CSRs provided, we believe that issuers should already be calculating the actual CSRs paid for enrollees, as specified earlier in the PY26 Rate Filing Guidance. That guidance instructed issuers to report the actual CSRs paid for enrollees for PY 2024 in the actuarial memorandum submitted with the 2026 rate filing. Furthermore, as discussed in section III.C.1. of this preamble, the additional data collected will be used to ensure that CSR loads are actuarially justified to compensate for the amount of unreimbursed CSRs, which we believe serves the broader goal of protecting both consumers and Federal expenditures over time. 4. Approval of a State Exchange (Sec. 155.105)

We are finalizing our proposal to remove Sec. 155.105(b)(4) to rescind a requirement made in the 2025 Payment Notice,\393\ such that for a State seeking to operate a State Exchange, it must first operate for at least one plan year an SBE-FP. The original amendment was intended to give States sufficient time to create, staff, and structure a State Exchange. However, HHS recognizes that requiring States to first operate as an SBE-FP for at least one plan year could potentially create unnecessary barriers and delays for States that are well- prepared to implement a State Exchange more immediately. Ultimately, a State must demonstrate its ability to operationalize State Exchange functional requirements through a well-established and robust review process with HHS. Whether a State first operates an SBE-FP does not change our review process for determining whether a State is ultimately prepared to implement a State Exchange The finalized changes therefore do not impose any new requirements on States in operating State Exchanges or SBE-FPs and instead returns flexibility to States regarding implementation of either a SBE-FP or State Exchange.

\393\ See 89 FR 26259 through 26261.

We sought comments on the practical utility of this data collection from potential users of this CSR amount data (for example, State regulators).

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 5. Approval of a State Exchange (Sec. 155.106)

We are finalizing our proposal to amend Sec. 155.106(a)(2) to rescind a requirement made in the 2025 Payment Notice \394\ that, as part of a State's activities for its establishment of a State Exchange, the State must provide supporting documentation demonstrating progress toward meeting or implementing State Exchange Blueprint requirements. States recognize the need for HHS to request supplemental documentation in order for HHS to assess a State's readiness to operate a State Exchange, which assessment supports a State's successful State Exchange operation. States have provided such supplemental documentation upon HHS request similarly both before and after this requirement was originally finalized. The Blueprint Application already provides that we may require supporting documentation from a State as evidence of its progress toward meeting State Exchange Blueprint Application requirements, which is part of HHS' overall process for providing a State with approval to operate a State Exchange. The finalized changes do not impose any new requirements on States in establishing a State Exchange.

\394\ See 89 FR 26261 through 26263.

We sought comment on these impacts and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 6. Amending Requirements for State Exchanges To Operate a Centralized Eligibility and Enrollment Infrastructure (Sec. Sec. 155.205(b) and 155.221(k)) a. Amending the Requirement for State Exchanges To Operate a Centralized Eligibility and Enrollment Consumer Interface on the State Exchange's Website (Sec. 155.205(b))

We are not addressing in this final rule our proposal to amend Sec. 155.205(b) to specify that a State Exchange is not limited to operating a centralized eligibility and enrollment consumer interface on the State Exchange's website as the only model for supporting consumer eligibility application submission and QHP enrollment functionality. We stated in the proposed rule that we expected minimal, if any, financial impact to current State Exchanges and States in the process of establishing their own State Exchange.

For the reasons outlined earlier in section III.D.4. of this final rule, we will address this policy and related comments in the 2028 Payment Notice or another appropriate rulemaking. b. SBE-Enhanced Direct Enrollment Option (Sec. 155.221(k))

We are not finalizing our proposal to add Sec. 155.221(k) to establish a new State Exchange enhanced direct enrollment (SBE-EDE) option by which State Exchanges can leverage direct enrollment technology to transition primarily to private sector-focused enrollment pathways operated by QHP issuers, web-brokers, and agents and brokers, instead of or in addition to a centralized eligibility and enrollment website operated by an Exchange. In the proposed rule, we stated that State Exchanges can elect, subject to HHS approval, to implement the SBE-EDE option and that the impact of the new SBE-EDE option would depend on the number of States that take advantage of the new option. We also stated in the proposed rule that current State Exchanges that elect to implement the SBE-EDE option would be responsible for meeting certain requirements for approval, in particular revising their Exchange Blueprint under new Sec. 155.221(k) to describe precisely how the State proposes to implement the SBE-EDE option. We stated that we believe that any costs of revising the Exchange Blueprint would be nominal,

as this process involves logging into a CMS web interface that serves as the repository for all States' Exchange Blueprints to input additional information on the updated processes and controls the State would implement to manage its new Exchange EDE program. However, we sought comment on the burden associated with this activity, noting that the Exchange Blueprint is currently approved under the PRA under OMB Control Number 0938-1172.

We sought comment on the proposed impacts and assumptions, and did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the final rule, we are not finalizing these estimates as HHS is not finalizing this policy. 7. Additional Required Benefits (Sec. 155.170)

We are finalizing our proposal to amend Sec. 155.170(a) to provide that any State-required benefits will be considered “in addition to EHB” (and thus not EHB) if they are: required by a State action taking place after December 31, 2011; applicable to the small group and/or individual markets; specific to required care, treatment, or services; and not required by State action for purposes of compliance with Federal requirements. Under this finalized policy, such State-required benefits will be considered in addition to EHB regardless of whether the mandated benefits are embedded in the State's EHB-benchmark plan. We are finalizing this policy with a modification that it will be effective beginning with PY 2028 instead of PY 2027. We also are finalizing revisions to Sec. 156.115(a) to align with this policy and to have State and issuer responsibilities for State-required benefits appear in a more logical reading order in the CFR.

We believe that this revision will have a mixed effect on the cost to States and the Federal Government. We stated in the proposed rule that a small number of States and issuers have taken significant action based on current Sec. 155.170, including some States having sought or seeking EHB-benchmark plan changes under Sec. 156.111 to add certain State-required benefits as EHB with the understanding that the cost of these additions would not require defrayal by the State (91 FR 6447). We stated that, in such States, this proposal may frustrate such efforts should it become effective in PY 2027, as any State-required benefit that fulfills the four proposed conjunctive elements at Sec. 155.170(a)(1)(i) through (iv) would require defrayal, regardless of whether the benefit is included in the State's EHB-benchmark plan. We note that this defrayal policy is being finalized in this rule at Sec. 155.170(a)(2)(i) through (iv) for plan years on or after PY 2028.

In States that ceased defraying the cost of State-required benefits included in their EHB-benchmark plans beginning in PY 2025 under the previous regulation but will be required to defray the cost of State- required benefits beginning in PY 2028 under the provision finalized in this final rule, the percentage of premium attributable to coverage of EHB for purpose of calculating APTC may decrease. Under this finalized policy, in a State that enacts a mandate for a benefit that is currently covered in its EHB-benchmark plan, there will be a decrease to Federal Government expense as the benefit will no longer be permitted to be included in the percentage of premium attributable to coverage of EHB for purpose of calculating APTC. States should evaluate the overlap between mandates and benefits covered in the State's EHB benchmark-plans for benefits for which they will be required to defray the cost under this finalized policy. Specifically, a State that wants to avoid defrayal obligations for the cost of State-required benefits that are already in the State's EHB-benchmark will be able to do so by repealing the applicable State requirement as being applicable to QHPs. While we expect that there should not be any measurable operational implications or infrastructure changes needed for States to implement this provision, we sought comments from States on any administrative costs that would be incurred as a result of implementing this provision. We likewise recognize that States that opt to retain benefit-mandates that carry defrayal obligations will incur defrayal costs. The scale of these costs will depend on the cost attributable to the State-required benefit. We sought comments from States on such estimates where applicable. Issuers may have to make modifications to their plan designs and plan filings to reflect any possible changes in designation of benefits as EHB because of this finalized policy, in the regular course of updating those annual materials. Given variation in State legislative calendars and session timing, and the need for issuers to update their plan filings and rates to account for benefits that will be defrayed by the State, we solicited comment on finalizing an effective date for PY 2028 instead of PY 2027.

We sought comment on these impact 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 impact estimates for this policy, but with the modification to the final policy to delay the effective date to PY 2028. We summarize and respond to public comments received on the proposed estimates later.

Comment: Commenters broadly supported delaying the applicability of the proposed policy until at least PY 2028, with some commenters urging HHS to delay applicability until 2029 or 2030. Commenters explained that States need time to assess which benefits are now considered “in addition to” EHB under the new policy and coordinate with CMS and issuers, and align with legislative and rate filing timelines, which would not allow sufficient time for PY 2027 implementation of the proposed policy. Commenters also emphasized that State legislative calendars and budget processes (which both vary by State) require additional time to allow for States to consider legislative or regulatory changes and to secure appropriations for defrayal, if necessary. Some commenters stated concern that the proposed policy would create instability and uncertainty for States and issuers, undermining their ability to engage in long-term fiscal and operational planning. These commenters stated that changes to defrayal requirements could result in benefits previously considered EHB becoming subject to new defrayal obligations, creating a shifting regulatory landscape with moving targets for States and issuers.

Some commenters stated concern that because the proposal could effectively apply new defrayal obligations to past State actions taken under prior regulatory frameworks, States will be forced to make difficult financial decisions that place certain benefits at risk.

Response: We acknowledge that providing States enough time to plan to effectuate the new defrayal requirements would be beneficial. To assist States in complying with their defrayal obligations and ensure they have sufficient time, we are extending the date by which States must be compliant with the finalized policy to PY 2028 to provide States ample time to comply. We believe that this revised timeline will help mitigate a number of the operational and fiscal concerns raised by commenters, including by providing States additional time to conduct benefit-by-benefit analyses, engage with issuers and legislative bodies, secure any necessary

appropriations for defrayal, and communicate with consumers and other interested parties regarding changes to benefit classifications.

We also understand that a small number of States and issuers have taken significant action based on current Sec. 155.170 requirements, including that some States have sought or are seeking EHB-benchmark plan changes under Sec. 156.111 to add certain State-required benefits as EHB based on the understanding that such EHB additions would be effective indefinitely absent any further EHB-benchmark plan changes under Sec. 156.111 and that the cost of these additions would not require defrayal by the State. As finalized, any State-required benefit that fulfills the four conjunctive elements at Sec. 155.170(a)(2)(i) through (iv) would require defrayal, regardless of whether the benefit is included in the State's EHB-benchmark plan.

We believe finalizing a delayed effective date of PY 2028 provides sufficient time for States to make these determinations and take any necessary action.

Comment: One commenter urged HHS to withdraw the proposal, stating that finalization would impose significant financial and operational burden on States, including the burden of reappealing State mandated benefits, conducting benefit-by-benefit analysis on benefits that are “in addition to EHB”, and engaging with issuers on defrayal payment modifications. The commenter further stated concern that the proposed policy would cause significant consumer confusion and create extra work for State agencies and lawmakers.

Response: We acknowledge the financial and operational implications associated with the proposed policy. However, we note that HHS has historically required States to conduct defrayal analyses for State mandated benefits under previous policy interpretations of Sec. 155.170, and ensure a developed processes for operationalizing defrayal. We believe States are equipped and have the established infrastructure and experience to implement the financial and operational aspects of compliance with the finalized policy. We also note that the extended applicability date of PY 2028 is intended to provide States and issuers with sufficient time implement changes to benefit classifications, thereby reducing the potential for consumer confusion. Further, we intend to continue to engage with States and provide technical assistance as needed to ensure States understand when a State-benefit requirement is in addition to EHB and requires defrayal. 8. Mandating the HHS-Approved and -Created Consumer Consent Form-- Eligibility Application Review and Documenting Receipt of Consumer Consent (Sec. 155.220(j))

As discussed in the preamble of this final rule, we are finalizing amendments to Sec. Sec. 155.220(j)(2)(ii)(A) and (j)(2)(iii)(A) to require agents, brokers, and web-brokers to use the HHS-approved and - created consumer consent form to meet the eligibility application review requirements and consent documentation requirements. We are finalizing this policy with a modification that it will be effective beginning with PY 2028 instead of PY 2027. Accordingly, we are also finalizing the redesignation of current Sec. 155.220(j)(2)(ii)(A)(2) as Sec. 155.220(j)(2)(ii)(A)(3) and current Sec. 155.220(j)(2)(iii)(C) as Sec. 155.220(j)(2)(iii)(D). We are also finalizing corresponding changes to Sec. Sec. 155.220(j)(2)(ii)(A) and (j)(2)(iii)(A) to state that current documentation policies for eligibility application and review and consent are effective until PY 2028. Our finalized policy will eliminate the current broad allowances for meeting these requirements. The language in the regulation will also be changed to clarify what types of actions constitute “taking an action” to meet the regulatory requirements. The goal of this policy is to reduce confusion among agents, brokers, and web-brokers on what constitutes compliant eligibility application review documentation and what constitutes compliant consumer consent by ensuring objective standards, which protects consumers ultimately. These provisions also greatly improve HHS' investigative abilities into agent, broker, and web-broker eligibility application review and consumer consent review by creating a clear and objective standard for all applications clearly outlining what HHS deems complaint.

Given this finalized policy will require the usage of the HHS- approved and -created consumer consent form, agents, brokers, and web- brokers who had previously relied exclusively on text messaging, or other non-HHS-approved and -created consumer consent form methods will be particularly impacted by this change. Importantly, the HHS-approved and -created consumer consent form guarantees and ensures all regulatory requirements are in the documentation provided to the consumer, as well as making documentation review of potentially noncompliant agents, brokers, and web-brokers more streamlined and efficient. The HHS-approved and -created consumer consent form \395\ we are finalizing to become standard also went through a readability analysis, which entails a review of language to help make text easier to understand, especially with documentation that may contain industry terms of art, such as healthcare. Requiring that agents, brokers, and web-brokers use the HHS-approved and -created consumer consent form will help ensure consumers are reviewing documentation that has been reviewed to be consumer-friendly but still contains the regulatory requirements. Agents, brokers, and web-brokers will still be able to provide consumers with more details than what is listed on the documentation and answer specific questions a consumer may have about a plan, policy, or the enrollment process.

\395\ See CMS Model forms, OMB Control Number: 0938-1438, Expiration Date: 07/31/2028. https://www.cms.gov/files/document/cms-model-consent-form-marketplace-agents-and-brokers.pdf.

As estimated in section IV.C of this final rule, the estimated annual cost of requiring agents, brokers, and web-brokers to use the HHS-approved and -created consumer consent form to meet the eligibility application review requirements and the consumer consent documentation requirements is $96,694,640, beginning in PY 2028.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and this final rule, we are finalizing these estimates with the modification to implement the policy effective PY 2028. 9. Misleading Marketing (Sec. 155.220(j)(3))

As discussed in the preamble of this final rule, the finalized regulatory amendments will create a new standards of conduct section in Sec. 155.220(j) describing marketing requirements. These requirements will list certain prohibited practices, provide HHS audit authority, and put agents, brokers, and web-brokers on notice that they are responsible for marketing created by their downstream entities. This finalized policy will allow HHS to increase its efforts to engage in compliance actions for misleading marketing by providing agents, brokers, and web-brokers notice of the types of activities that are prohibited, allowing HHS to review marketing materials for compliance, and ensure agents, brokers, and web-brokers are not able to push responsibility to third-parties. Creating a

marketing standards of conduct section is necessary to protect consumers and maintain the integrity of the Exchanges.

The finalized provisions will provide instructive language agents, brokers, and web-brokers may utilize when creating Exchange marketing materials. This will help ensure agents, brokers, and web-brokers are creating compliant marketing from the beginning and will not be subject to enforcement actions.

As estimated in section IV.D, the estimated total cost for the burden of responding to HHS regarding misleading marketing will be $1,392.96, beginning in 2027.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 10. Removal of the Vendor Program (Sec. 155.222)

As outlined in the preamble of this final rule, we are finalizing our proposal to remove the vendor program requirements established at Sec. 155.222, that allow for certain training and information verification functions to be provided by HHS-approved vendors. Removing these requirements will permit HHS to discontinue the vendor program.

Considering the lack of utilization of this program by agents and brokers, as well as dwindling interest on the part of potential vendors, as outlined in the preamble, we do not anticipate potential vendors, nor agents and brokers, to be substantially impacted by these proposals. Agents and brokers will continue to have the ability to complete the annual training and information verification requirements through the MLMS at no cost.

This finalized policy will additionally save the government approximately $300,000 each plan year beginning in 2027 by removing the contractual costs required to facilitate the program.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 11. Limiting APTC Eligibility to “Eligible Noncitizens” (Sec. Sec. 155.20, 155.305(f)(1), and 155.320)

We estimate that there are currently 1,227,000 individuals receiving APTC through Exchanges who are lawfully present noncitizens, but who are not “eligible noncitizens,” and will therefore become ineligible for APTC and income-based CSRs beginning in PY 2027 under section 71301 of the WFTC legislation. This estimate is based on evaluating internal FFE data regarding “eligible noncitizen” enrollees and extrapolating that data to estimate the size of the impacted population in State Exchanges. Based on average monthly APTC expenditures of $656.89 per person, we project that this population becoming ineligible for APTC will reduce annual APTC expenditures by $9,672,048,360 (1,227,000 enrollees x $656.89 average APTC x 12 months), beginning in 2027.

We also anticipate that this change will result in costs to State Exchanges and the Federal Government to update eligibility systems in accordance with this finalized policy. As discussed further in section IV.F of this final rule, in aggregate we estimate $15,810,185 in PY 2026 in estimated one-time costs for implementation ($193,990 Federal government + $678,965 Exchanges on the Federal platform + $14,937,230 State Exchanges). For the three States and DC currently approved to operate a BHP beginning in 2027, we estimate the annual ongoing cost to be $39,133.60.

As some noncitizens will no longer be eligible for PTCs under this new provision, there are also individuals for whom the Federal Government will not make a payment if enrolled in a BHP. In Table 25, we provide our projections of BHP enrollment and spending prior to the impacts of the WFTC legislation. We have updated these projections to include New York's BHP, which is scheduled to restart effective July 1, 2026. [GRAPHIC] [TIFF OMITTED] TR20MY26.044

In 2025, we estimate there were about 138,100 BHP enrollees in 2 States based on the quarterly enrollment estimates that States submit to CMS. With DC starting a BHP in 2026 and New York restarting its BHP July 1, 2026, we project that enrollment would have increased by 479 percent in 2026 and by 83 percent in 2027, prior to any of the changes made by legislation and described in this final rule. We project enrollment will decrease in 2028 by 7.7 percent to 1,348,200 due to other legislative changes, and increase by 0.4 percent to 1,353,100 in 2029 and remain at that level through 2030.

We also estimate that the current Federal BHP payment in 2025 is about $644 per member per month, based on payments the Federal Government has made to the 2 BHP States last year. We project that these will increase by 25 percent in 2026 and to decrease 0.5 percent in 2027, with an average monthly payment of $803 in 2027 prior to changes made by legislation. These trends are heavily influenced by the restart of New York's BHP, which accounts for the majority of BHP enrollees and spending, and has a relatively higher average BHP payment per person. We project payments will increase at an average rate of about 5.2 percent after 2027.

We estimate that this provision will affect about 1.6 percent of BHP enrollees

starting in 2027. These estimates are based on analysis of citizenship and residence status of enrollees in the health insurance exchanges. To develop these estimates, we reviewed the number of eligible noncitizens receiving PTCs through the Exchanges in 2025 using the Multidimensional Insurance Data Analytics System (MIDAS) database. We found about 1.6 percent of all individuals receiving PTC were lawfully present noncitizens who would not be considered “eligible noncitizens” under this section of the legislation. We multiplied projected BHP enrollment by this percentage, and then we multiplied the enrollment change by the projected average per member per year Federal BHP costs to develop the expenditure amounts. This change will impact about 16,100 individuals in 2027, somewhat fewer in 2028 and then an increasing number of individuals through 2030. The changes will also reduce Federal spending by about $149 million in 2027 (real 2026 dollars), with a somewhat smaller effect in 2028 and then an increasing amount through 2030. These impacts after 2027 are largely influenced by the overall trends in BHP enrollment and spending. The annual estimates are shown in Table 26. [GRAPHIC] [TIFF OMITTED] TR20MY26.045

We sought comments on these impact 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 impact estimates for this policy with the modifications made previously. We summarize and respond to public comments received on the proposed estimates later.

Comment: Several commenters claimed that the estimates were inaccurate and that the figures presented in the proposed rule did not match their attempt to reproduce the results.

Response: We believe that differences between the commenters' results and the estimates presented in the proposed rule may reflect differences in methodology or assumptions used to reproduce the analysis. These differences may also reflect rounding (where the figures in the proposed rule were generally rounded to the nearest thousand enrollees or the nearest million dollars), as well as differences between nominal and real dollar estimates. In the interest of presenting this analysis more clearly, we have updated this section of the impact analysis. We have also rounded enrollment estimates to the nearest hundred in these figures. In addition, we have updated the estimates with more recent data on enrollment and per member per month costs. These changes had minimal effects on the overall estimates. We have also included the effects for New York, which is restarting its BHP on July 1, 2026, and that change resulted in larger impacts than shown in the proposed rule. 12. Prohibition of APTC for Individuals Who Are Ineligible for Medicaid Due to Their Immigration Status and Have Income Below 100 Percent of the FPL (Sec. 155.305(f)(2))

As described in the Collection of Information Requirements in section IV.G of this final rule, we estimate that implementing this finalized policy will require one-time costs for Exchanges to make technical updates to their eligibility systems totaling $4,316,278 ($242,488 for Exchanges on the Federal platform + $4,073,790 for State Exchanges) in PY 2025. We also estimate that this finalized policy will result in a reduction of the amount of DMIs with a total estimated annual reduction in burden for these information collection requirements of $24,126,144 ($16,341,600 for removal of MLP DMIs for Exchanges on the Federal platform + $4,575,648 for removal of AI DMIs for Exchanges on the Federal platform + $3,208,896 for removal of AI DMIs for State Exchanges), beginning in 2026.

As of the end of the Open Enrollment period for 2025, there were 237,125 enrollees who were part of the population of consumers with an annual household income of less than 100 percent of the FPL, who were also ineligible for Medicaid due to their immigration status and were enrolled in Marketplace coverage with APTC on the FFE. We estimate the average monthly value of that APTC was $656.89. Through this finalized policy and subsequent elimination of APTC across all exchanges, we estimate $1,869,180,495 (237,125 enrollees x $656.89 average APTC x 12 months) in APTC savings per year, beginning in PY 2026. We estimated the impact of section 71302, which no longer allows PTC during periods of Medicaid ineligibility on BHP enrollment and spending. Prior to the enactment of the WFTC legislation, some noncitizens would have been eligible for Medicaid on the basis of income and other criteria except for the 5-year waiting period for lawful permanent residents (LPRs) to be allowed to enroll in Medicaid. For those individuals, they would have instead been eligible for PTC through enrolling in a QHP on the health insurance exchanges assuming they met all other criteria. Similarly, those individuals would have been included in Federal BHP calculations in States that had elected to operate a BHP. Generally, these are individuals with household incomes up to 100 percent of the FPL.

Under section 71302 of the WFTC legislation, these individuals will no longer be eligible for PTC, and therefore the Federal Government will not make a payment for these individuals if enrolled in a BHP. We reviewed current BHP enrollment data based on the quarterly enrollment estimates, and we estimate that in 2026 about 223,000 BHP enrollees will no longer be eligible for PTC under this section, and thus there will not be BHP payments made for these enrollees. These projections have been updated since the proposed rule to include New York's BHP, which is scheduled to restart on July 1, 2026. From 2027 through 2030, we estimate the number of affected individuals will be between 400,000 and 440,000 annually. We project Federal spending will be lower by $2,522 million in 2026 (real 2026 dollars), and between $4,300 million and $4,700 million lower annually between 2027 and 2030. The annual estimates are shown in Table 27.

[GRAPHIC] [TIFF OMITTED] TR20MY26.046

We sought comment on these impact 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 impact estimates for this policy with the modifications made previously. We summarize and respond to public comments received on the proposed estimates later.

Comment: Several commenters claimed that the estimates were inaccurate and that the figures presented in the proposed rule did not match their attempt to reproduce the results.

Response: We believe that differences between the commenters' results and the estimates presented in the proposed rule may reflect differences in methodology or assumptions used to reproduce the analysis. These differences may also reflect rounding (where the figures in the proposed rule were generally rounded to the nearest thousand enrollees or the nearest million dollars), as well as differences between nominal and real dollar estimates. In the interest of presenting this analysis more clearly, we have updated this section of the impact analysis. We have also rounded enrollment estimates to the nearest hundred in these figures. In addition, we have updated the estimates with more recent data on enrollment and per member per month costs. These changes had minimal effects on the estimates. We have also included the effects for New York, which is restarting its BHP on July 1, 2026, and that change resulted in larger impacts than shown in the proposed rule. 13. Failure To File and Reconcile (FTR) (Sec. 155.305(f)(4))

We are finalizing our proposal to amend paragraph Sec. 155.305(f)(4) so that in PY 2028 and beyond, all Exchanges may not determine a tax filer or their enrollee eligible for APTC if: (1) HHS notifies the Exchange that APTC were paid on behalf of the tax filer, or their spouse if the tax filer is a married couple, for one year for which tax data would be utilized for verification of household and family size, and (2) the tax filer did not comply with the requirement to file a Federal income tax return and reconcile APTC for that year (referred to as the “1-tax year FTR” process). We also are finalizing that, at the option of the Exchange, an Exchange may choose to implement this policy earlier in PY 2027 if they have the resources and capability to adopt the 1-year FTR process or continue to follow the 2- year FTR process until PY 2028. Exchanges on the Federal platform intend to adopt the 1-year FTR process in PY 2027, as HHS has the resources possible to do so. To conform with this finalized policy, we further are finalizing our proposal to amend the notice requirement at Sec. 155.305(f)(4)(iii), which is where the notice requirements have been reorganized. Our changes are aimed at addressing the notice messaging for tax filers who are at risk for losing APTC under a 1-year FTR policy, either for the Exchanges that adopt this option in PY 2027, and for all Exchanges in PY 2028. Exchanges operating under a 1-year FTR policy should use the more urgent language currently contained in the second-year notice of the 2-year FTR policy notices to accurately convey to tax filers or their enrollees that they are at imminent risk of losing APTC if they do not file and reconcile.

This provision will align with the WFTC legislation starting in PY 2028, but we additionally are finalizing that Exchanges can choose to implement this as early as PY 2027.

In light of the finalized policy changes for FY 2027 and beyond, we estimate that it will take the Federal Government and each State Exchange, if they choose to implement the 1-year FTR policy for PY 2027, instead of PY 2028 as required by the WFTC legislation, approximately 10,000 hours in 2026 to develop and code changes to the eligibility systems to evaluate and verify FTR status under the revised FTR process, such that enrollees are found to be FTR after 1 tax year of failing to file and reconcile their APTC. Of those approximately 10,000 hours, we estimate it will take a database and network administrator and architect 2,500 hours at $103.34 per hour and a computer programmer 7,500 hours at $94.88 per hour based on our prior experience with system changes. In aggregate for the State Exchanges, we estimate a one-time burden in 2026 of 200,000 hours (20 State Exchanges x 10,000 hours) at a cost of $19,399,000 (20 States x [(50,000 hours x $103.34 per hour) + (150,000 hours x $94.88 per hour)]) for completing the necessary updates to State Exchange eligibility systems in 2026, if State Exchanges implement the 1-year FTR process for PY 2027. If Exchanges choose to implement the 1-year FTR process for PY 2028, these estimated costs will be delayed by one year to 2027. For the Federal Government, we estimate a one-time burden in 2026 of 10,000 hours at a cost of $969,950 ((2,500 hours x $103.34 per hour) + (7,500 hours x $94.88 per hour)). In total, the burden associated with all system updates to revert back to the 1-year policy will be 210,000 hours at a cost of $20,368,950.

We also estimate that by switching to the 1-year policy from the current 2-year policy in PY 2028 or at the Exchange's option in PY 2027, the Federal Government will save APTC from the population of 1- year FTR consumers who would otherwise have retained APTC eligibility for an additional coverage year under the 2-year FTR policy. We estimate that total enrollment for the Exchanges will decrease by approximately 725,000 to 1,800,000 individuals in PY 2026 as compared to PY 2025 due to the expiration of the enhanced APTC subsidies, the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), and the WFTC legislation. The resulting reduction in Exchange enrollment from these law and policy changes, will also affect the total amount of expected households in FTR status. For PY 2025, the total FTR 1-year population dropped from almost 1.5 million households prior to Open Enrollment to less than 400,000 households during FTR Recheck. The total FTR 2-year population dropped from approximately 350,000 households prior to Open Enrollment, to approximately 300,000 households at FTR Recheck, and then after the final

check of IRS data, HHS terminated APTC for approximately 200,000 households. Under our finalized 2028 1-year policy with the option to early adopt in 2027, we expect to remove APTC from all households still in an FTR status in our final Recheck. Based on historical FTR data and expectations for Exchange population size due to changes from the 2025 Marketplace Integrity and Affordability final rule, expiration of enhanced APTC subsidies, and the WFTC legislation, we expect that the total amount of households that lose APTC could be approximately 28,500 on the Federal Exchanges. While we do not have any data regarding the impact of the FTR process on consumers served by State Exchanges, the State Exchange population is approximately 46 percent of the total population of consumers served by Exchanges on the Federal platform. Extrapolating that proportion, it is possible that approximately 13,100 consumers on State Exchanges could lose APTC in PY 2028 for failing to file and reconcile, assuming all State Exchanges choose to wait to adopt the 1-year policy until 2028. This is the population that will otherwise retain their APTC in a 2-year policy during PY 2028. The annual savings generated by removing their APTC based on 8 months of enrollment and the average amount of APTC removed per household of $784 per month is approximately $179 million. Depending on how many Exchanges elect to adopt the 1-year FTR policy in PY 2027, the savings could be achieved as early as PY 2027, as the Exchanges on the Federal platform plan to early adopt the 1-year FTR policy.

For the purposes of this RIA, we assume the scenario that Exchanges will comply with the policy in PY 2028 to align with the WFTC legislation. We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 14. Income Verification When Data Sources Indicate Income Less Than 100 Percent of the FPL (Sec. 155.320(c)(3)(iii))

In this final rule, we are amending Sec. 155.320(c)(3)(iii)(A) to indefinitely extend the requirement for applicants to submit documentation when they attest to income that would qualify the taxpayer as an applicable taxpayer per 26 CFR 1.36B-2(b), but trusted data sources show income below 100 percent of the FPL starting in 2027.

As discussed further in section IV.I of this final rule, we estimate an approximate annual increase in burden costs of $20.2 million for Exchanges using the Federal platform and $12.4 million for State Exchanges starting in 2027 to receive, review, and verify submitted verification documents as well as conduct outreach and determine DMI outcomes for applicants below 100 percent of the FPL. The implementation of this finalized policy will result in a one-time cost of $775,960 to Exchanges on the Federal platform and approximately $16.3 million total State Exchanges in 2026 to update the eligibility systems and perform other technical updates to implement the additional verification of an applicant's annual household income attestation when tax data is returned that is under 100 percent of the FPL while the household's annual income attestation is at or above 100 percent of the FPL. Finally, we estimate an increase in burden of approximately $13.7 million across all Exchanges in 2027 and annually onwards for consumers to submit documentation to fulfill income verification requirements. We recognize the burden the continuation of policy may place on State Exchanges, and we sought comment from these and other impacted interested parties to inform this decision.

While there would be additional annualized budget impacts of this policy on State Exchanges and the Federal Platform, there may be some savings associated with an anticipated reduction in APTC for consumers. Based on our analysis of enrollment data from DMI generation numbers from when this DMI was previously in place, we estimate creating DMIs that require additional verification will reduce the number of people who receive APTC annually by 50,000 for Exchanges on the Federal platform. We estimate the annual reduction of people who receive APTC in the State Exchanges to be 31,000. Using an estimated average four months reduced APTC and an average monthly APTC rate of $656.89 per person, we estimate total APTC expenditures will be reduced by approximately $213 million per year starting in 2027 for the period in which we maintain this policy (50,000 x $656.89 x 4 + 31,000 x $656.89 x 4).

We sought comment on these impact estimates and assumptions. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. We summarize and respond to public comments received on the burden estimates of the proposed policy to perform further income verification processes when the IRS returns income that is below 100 percent FPL but an applicant's attested projected annual household income would consider them an applicable taxpayer according to 26 CFR 1.36B-2(b) for the plan year for which coverage is requested, and is more than a reasonable threshold above the annual household income, below.

Comment: Many commenters stated concerns about the costs and burdens for this proposal on Exchanges. Commenters mentioned that they believe the proposal would increase administrative costs, and that this would result in having to divert funds from other important eligibility and enrollment operations to implement and maintain. Many also stated that State Exchanges do not currently have appropriated funds or other resources to implement this change and are especially concerned given the expected upcoming costs associated with upcoming changes from the WFTC legislation. Some commenters stated skepticism that this would result in a net gain in saved APTC, with one commenter mentioning how if a consumer ends up in Medicaid after their income DMI expires it does not save the government money.

Response: We acknowledge the costs associated with implementing this proposal. We are confident that the Exchanges on the Federal platform can implement this proposal by the rule's effective date and are not concerned with implementation operations. Additionally, we believe that the costs associated with implementing and operating this policy are justified, as this is a critical program integrity measure to ensure consumers who may not be eligible for APTC are not erroneously receiving APTC throughout the entire plan year. Because of that, while we understand State Exchanges are concerned about the implementation and ongoing costs, including any upcoming changes due to the passing of the WFTC legislation, we believe that the program integrity gains outweigh the potential costs to State Exchanges. Finally, we emphasize that while some consumers may end up in Medicaid and therefore, result in costs associated with that instead of APTC, we believe that it is important that consumers end up in the correct coverage for the scenario. 15. Removal of the Requirement To Accept Attestations of Household Income When Tax Data Is Unavailable (Sec. 155.320(c)(5))

In this final rule, we are finalizing our proposal to remove Sec. 155.320(c)(5), which will allow Exchanges to continue the income verification process when IRS is successfully contacted but IRS returns no data rather than accepting an

applicant's annual household income attestation.

As further discussed in section IV.J of the final rule, we estimate an increase in annual burden costs of approximately $102.3 million for Exchanges on the Federal platform and approximately $62.8 million total for State Exchanges starting in 2027 to receive, review, and verify submitted verification documents as well as conduct outreach and determine DMI outcomes for applicants whose tax return data is unavailable. The implementation of this finalized policy will result in a one-time cost of $872,955 to Exchanges on the Federal platform and approximately $18.3 million total State Exchanges in 2026 to update the eligibility systems and perform other technical updates to implement the additional verification of an applicant's annual household income attestation when tax data is unavailable. As also further discussed in section IV.J of this final rule, we also estimate an increase in annual burden of $69,480,540 for consumers in 2027 and beyond to submit documentation to fulfill income verification requirements associated with this finalized provision.

Based on our analysis of enrollment data from DMI generation numbers from when this DMI was previously in place, as well as historical enrollment data, we estimate creating DMIs that require additional verification will result in a decrease in APTC, potentially to zero, for 252,000 enrollees for Exchanges on the Federal platform and 155,000 enrollees on State Exchanges each year. Using an estimated average 4 months reduced APTC, as estimated based on internal 2016-2020 APTC data, with an average monthly APTC rate of $656.89 per person, we anticipate that this change could result in an annual reduction of $1,069 million (252,000 x $656.89 x 4 + 155,000 x $656.89 x 4) in APTC expenditures starting in 2027. We accepted comments on whether this number may be slightly less because of potential decreased enrollment if the enhanced PTC are no longer in effect.

We sought comment on these impact estimates and assumptions.

For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. We summarize and respond to public comments received on the burden estimates proposed policy later.

Comment: Most commenters oppose this proposal, stating that it will create barriers for vulnerable consumers and increase administrative costs. Commenters also stated this could destabilize the risk pool because these changes could increase adverse selection because less healthy individuals have greater incentive to put in the time and effort necessary to resolve income verification issues.

Response: We acknowledge commenters' concerns around administrative burden and risk pool impacts. We believe eligible applicants would likely have documentation to verify their household income as readily available to them as the standard tax filer without an income DMI. Although reintroducing income verification for applicants with no tax return data would increase the burden on some applicants, we do not anticipate this burden would deter many eligible people from enrolling. An accurate household income estimate is a critical program integrity element of the Affordable Care Act's framework for verifying and determining eligibility for APTC. We acknowledge the concerns about the impact of this proposal on the risk pool and the agree about the importance of maintaining a healthy risk pool. However, we emphasize that having people improperly enrolled, especially for many without their knowledge, does not improve the risk pool. We believe that the positive impact to program integrity will outweigh any negative impacts. 16. Premium Payment Threshold (Sec. 155.400)

We are finalizing modifications to Sec. 155.400(g) to remove paragraphs (2) and (3), which establish an option for issuers to implement a fixed-dollar and/or gross percentage-based premium payment threshold (if the issuer has not also adopted a net percentage-based premium threshold) beginning in the 2027 coverage year. Permanently removing the options for issuers to implement either a fixed-dollar and/or gross percentage will continue to help strengthen program integrity by ensuring that enrollees cannot remain enrolled in coverage for extended periods of time without paying any premium, increasing the likelihood that consumers who were improperly enrolled become aware of their enrollment.

We do not anticipate that there will be any costs for issuers going forward since issuers were not able to implement these thresholds in PY 2026 per the 2025 Marketplace Integrity and Affordability final rule (90 FR 27133), and we are extending this policy permanently in this final rule.

While we did not initially provide these estimates in the proposed rule, we did not receive any response to the proposed impact estimates for this policy when they were previously proposed in the 2025 Marketplace Integrity and Affordability rule (90 FR 27202). For the reasons outlined in this final rule, we are finalizing these estimates. 17. Extend the Removal of the 150 Percent FPL SEP Beyond Plan Year 2026 (Sec. 155.420)

We are finalizing our proposal to no longer “sunset” the prohibition on Exchanges offering the 150 percent FPL SEP, in alignment with section 71304 of the WFTC legislation. As explained in preamble in section III.D.15 of this final rule, section 71304 of the WFTC legislation prohibits APTC for plans enrolled in through the 150 percent FPL SEP, and therefore eliminates the SEP's ability to facilitate access to affordable coverage. We are therefore finalizing our proposal to no longer permit Exchanges to offer the 150 percent FPL SEP.

In the proposed rule, we stated that absent the WFTC legislation, and assuming that the prohibition on Exchanges offering the 150 percent FPL SEP had “sunset” on December 31, 2026, we assume that all Exchanges would have elected to begin offering the 150 percent FPL SEP again in PY 2027 (91 FR 6451). We stated that this assumption is based on past experience with the overwhelming majority of Exchanges choosing to offer this SEP. If all Exchanges offered the 150 percent FPL SEP beginning in PY 2027, we assumed that this would result in increased adverse selection, which will result in increases to premiums and APTC expenditures. As a result, we estimated that the proposed policy would reduce premiums by 3 to 4 percent, as a result of improvements to the risk pool as the removal of the SEP would limit consumers' ability to wait until they need services to enroll in coverage. We estimated that the reduced premiums would have resulted in an overall decrease in APTC expenditures of $3.4 to $4.5 billion per year, beginning in PY 2027. For the purposes of the RIA in the proposed rule, we used $3.8 billion as the estimated annual decrease in APTC expenditures, beginning in PY 2027.

We sought comment on these impact 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 impact estimates with the following modifications. We have reduced the estimated premium impact of this policy to 2 to 3 percent resulting in a decrease in APTC expenditures of $2.5 to $3.6 billion per year. For the purposes of the RIA, we used $3.1 billion as the estimated annual decrease

in APTC expenditures, beginning in PY 2027. The previous estimates assumed a lack of program integrity would lead to abuse of this policy and create an environment where almost anyone could use this SEP to obtain coverage after becoming sick. We summarize and respond to public comments received on the proposed estimates below.

Comment: Some commenters disputed the estimate that the elimination of the 150 percent FPL SEP would result in a 3 to 4 percent decrease in premiums. Commenters cited that section 71304 of the WFTC legislation, which was effective January 1, 2026, disallows individuals who enroll through an income-based SEP from accessing APTC. Because of this, commenters believe that the purported adverse selection effects of allowing Exchanges to offer the 150 percent FPL SEP were overstated. This is because even if HHS were to maintain its current regulatory posture and permit Exchanges to offer the SEP again beginning in PY 2027, section 71304 of the WFTC legislation prohibits enrollees using the SEP from accessing APTC. Enrollees utilizing the SEP would therefore be much less likely to be able to afford to enroll, and as a result, changing HHS' regulatory posture to prohibit the 150 percent FPL SEP would not have a significant impact on the risk pool or premiums.

Response: We acknowledge that, if we were to permit Exchanges to offer the 150 percent FPL SEP, section 71304 of the WFTC legislation makes it much less likely that individuals would use the SEP to enroll, given that section 71304 prohibits APTC for their coverage. While affordability makes it less likely healthier individuals would enroll, it does not prevent adverse selection, as the cost of health insurance can be less expensive for individuals that become sick. We do agree the previous impact of 3 to 4 percent assumed a lack of program integrity that would allow for greater abuse of this SEP, so we have revised the impact to a 2 to 3 percent decrease in premiums.

Comment: Some commenters disputed the estimate that the elimination of the 150 percent FPL SEP would result in a 3 to 4 percent decrease in premiums, given that section 71304 of the WFTC legislation eliminated the 150 percent FPL SEP. One commenter stated that HHS had advised Exchanges that section 71304 of the WFTC legislation was self- executing.

Response: We clarify that section 71304 of the WFTC legislation does not prohibit Exchanges from offering income-based SEPs, including the 150 percent FPL SEP. Rather, it prohibits the availability of PTC, and therefore of APTC and CSRs, for individuals who enroll through such SEPs. We also clarify that we did not advise Exchanges that section 71304 of the WFTC legislation was self-executing; rather, we regulated to remove Exchanges' ability to provide the 150 percent FPL SEP in the Marketplace Affordability and Integrity Rule (90 FR 27074), which was finalized prior to the passage of the WFTC legislation. 18. Pre-Enrollment Special Enrollment Period Verification (Sec. 155.420(g))

In this final rule, we are finalizing the provision to allow Exchanges on the Federal Platform to continue to conduct pre-enrollment verification for SEPs other than Loss of Minimum Essential coverage and add the requirement that Exchanges on the Federal Platform conduct pre- enrollment verification for at least 75 percent of new enrollments.

We anticipate that revisions to Sec. 155.420 will have a positive impact on program integrity by verifying eligibility for SEPs. Increasing program integrity through continuing this policy will reduce improper subsidy payments and could contribute to keeping premiums low and therefore, further protecting taxpayer dollars. This policy may deter enrollments among younger people at higher rates, which could worsen the risk pool and increase premiums. However, we expect any such deterrence will impact a very small number of young people and, therefore, have only a minimal impact on the risk pool and premiums. We estimate that the net effect of pre-enrollment verification will reduce premiums by approximately 0.5-0.8 percent and will maintain the reduction in APTC spending of approximately $105.4 million, beginning in PY 2027.\396\

\396\ The reduction in APTC was calculated by multiplying the estimated new SVIs by the previous SVI expiration rate (293,073 x 0.137 = 40,151) and then multiplying that number by the estimated annual APTC amount per SEP consumer (40,151 x $2,625 = $105,396,375).

We anticipate this policy will moderately increase the regulatory burden on Exchanges using the Federal platform. Based on past experience, we estimate that maintaining the expansion in pre- enrollment verification to most individuals seeking to enroll in coverage through all applicable SEPs offered through Exchanges on the Federal platform will result in an additional 293,073 individuals having their enrollment delayed or “pended” annually until eligibility verification is completed, although for the vast majority of individuals the delays would be less than 1-3 days. As mentioned in section IV.K of this final rule, we anticipate that maintaining the expansion of SEP verification will result in increased inconsistencies, with an associated cost increase for consumers of approximately $7,332,686 beginning in 2027. There will also be an increase in ongoing costs for Exchanges on the Federal platform due to an increase in the number of SEP enrollments for which they must conduct verification. We estimate that the total increase in ongoing processing costs to maintain compliance with this requirement for the FFE will be approximately $11.7 million annually (293,073 additional SVI x $40 cost per SVI). Furthermore, as mentioned in section IV.K, we anticipate that expanding verification will result in an increase in annual burden of labor costs on Exchanges on the Federal platform at a cost of $2,902,615 annually.

We sought comment on these impact 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 as proposed. We summarize and respond to public comments received on the proposed estimates later.

Comment: Several commenters stated concern that expanding SEPV would increase the burden on Exchanges using the Federal platform, which could potentially result in delayed coverage and discourage enrollment. Commenters also stated that the proposed estimates did not account for additional expenditures related to consumer communications, outreach, and assister training.

Response: We agree that expanding SEPV will increase the burden on Exchanges using the Federal platform. Our estimates are based on historical data from the FFE, and we anticipate that the expansion of SEPV will result in an increase in annual labor burden on Exchanges using the Federal platform at an estimated cost of $2,902,615 annually. 19. Expansion of Hardship Exemption Eligibility (Sec. 155.605(d)(1))

This final rule amends Sec. 155.605(d)(1) to codify and expand hardship exemption eligibility to individuals who are ineligible for APTC or CSRs due to projected household income (below 100 percent or above 250 percent of the FPL). This expansion will allow these individuals to qualify for catastrophic coverage under section 1302(e) of the Affordable Care Act.

Most State Exchanges currently delegate hardship exemption processing to HHS. However, four State Exchanges--California, Connecticut, Maryland, and the District of Columbia--currently process their own exemptions. Following HHS guidance published on September 4, 2025, this policy expansion has been implemented for consumers in all States that currently delegate exemption processing to HHS. This final rule will extend the same hardship exemption eligibility to consumers in the four State Exchanges that currently process their own exemptions, ensuring that consumers in all States have access to affordable coverage.

We assume the four State Exchanges that process their own exemptions will experience an administrative burden associated with processing hardship exemption applications under the expanded eligibility criteria. Based on previous experience, we estimate that Exchange staff will require approximately 19 minutes (0.32 hours) to review and process each hardship exemption application. Using the median hourly wage of $24.76 for Eligibility Interviewers, Government Programs (occupation code 43-4061), and adjusting for fringe benefits and overhead, we calculate an adjusted hourly wage of $49.52. Based on these figures, we estimate the cost per application to be $15.75, calculated as follows: (19 minutes / 60 minutes) x $49.52/hour = $15.75 per application.

Based on our analysis of operational FFE data regarding existing hardship exemption requirements and the new requirement finalized in this rule, we estimate these four State Exchanges will collectively process approximately 1,072 applications annually under the expanded hardship exemption eligibility criteria when considering their combined share of approximately 10 percent of total Exchange enrollment.

Using the per-application manual processing cost of $15.75, we estimate the total annual cost burden for these four State Exchanges in total to be approximately $16,884 (1,072 applications x $15.75 per application). Individual State burden will vary depending on each State Exchange's enrollment volume and the proportion of consumers who fall into the expanded hardship exemption category. States with larger enrollment volumes and higher proportions of consumers with income below 100 percent FPL or above 250 percent FPL may experience higher application volumes than States with smaller enrollment or different demographic characteristics.

We note that the actual burden may be lower over time than estimated if State Exchanges implement automated exemption processing similar to the FFE's system. The FFE experience demonstrates that automated processing significantly reduces the need for manual paper application review, as the system automatically grants hardship exemptions for consumers ineligible for APTC due to income when they apply for catastrophic coverage. State Exchanges that adopt similar automated systems will experience reduced administrative burden while ensuring consumers have seamless access to hardship exemptions and catastrophic coverage.

To estimate the cost of developing an automated exemption processing system, we analyzed personnel and time requirements across three major phases: system development, testing and quality assurance, implementation and training. The hour estimates presented later are illustrative examples intended to demonstrate the general magnitude of costs that might be associated with automated system development.

We estimate that Computer Systems Analysts will need approximately 400 hours at an adjusted hourly wage of $99.80, resulting in a cost of $39,920. Computer Programmers will require the most substantial time investment, with an estimated 600 hours at an adjusted rate of $94.88 per hour, totaling $56,928. Database and Network Administrators will need approximately 200 hours at $103.34 per hour to configure the necessary data infrastructure and system architecture, costing $20,668. A Project Manager will oversee the development effort for approximately 160 hours at $96.88 per hour, adding $15,501 to the total. The combined system development cost will be approximately $133,017, requiring 1,360 total staff hours.

Following initial development, the system will require comprehensive testing to ensure accuracy, compliance with Federal regulations, and proper integration with existing Exchange systems. Computer Systems Analysts will conduct approximately 120 hours of testing at $99.80 per hour, costing $11,976. Compliance Officers will review the system for regulatory compliance for approximately 80 hours at $75.40 per hour, adding $6,032. The total testing and quality assurance cost will be approximately $18,008, requiring 200 staff hours.

The final phase will involve deploying the automated system and training staff on any residual manual processes or system monitoring requirements. Management Analysts will coordinate the implementation for approximately 80 hours at $97.30 per hour, costing $7,784. Eligibility Interviewers will require approximately 40 hours of training at $49.52 per hour to understand the new automated processes and handle any exceptions, totaling $1,981. The implementation and training phase will cost approximately $9,765, requiring 120 staff hours.

Combining all three phases, the total estimated one-time cost in PY 2026 to develop an automated exemption processing system will be approximately $160,790, so in total $643,160 for four State Exchanges. This estimate represents 1,680 total staff hours across multiple occupational categories and assumes a standard development timeline and complexity level.

We recognize that this cost estimate could vary significantly depending on several factors. States with more modern and flexible existing system infrastructure may experience lower development costs due to easier integration. Conversely, States with legacy systems may face higher costs. State-specific requirements, customizations, or additional compliance considerations could also increase costs.

We sought comment on these burden estimates, including the estimated number of applications, time required for consumers to complete applications, and time required for Exchanges to process applications. We also sought comment on opportunities to further reduce burden through automation or other streamlined processes.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in this final rule, we are finalizing these estimates as proposed. 20. Modification of Exchange Network Adequacy Standards (Sec. 155.1050)

We are finalizing our proposal to amend Sec. 155.1050(a)(2) to eliminate the requirements under Sec. 155.1050(a)(2)(i) and (ii) for State Exchanges and SBE-FPs to establish and impose quantitative time and distance network adequacy standards for QHPs that are at least as stringent as standards for QHPs participating on the FFEs under Sec. 156.230; instead, we will require that State Exchanges and SBE-FPs ensure that each QHP provides sufficient access to providers in a manner that meets applicable standards specified in Sec. 156.230(a)(1)(ii) and (a)(1)(iii) for network plans, or, for plan years beginning on or after January 1, 2027, Sec. 156.236(a) for non-network plans if

such plans are allowed to be offered through the Exchange, as applicable. State Exchanges and SBE-FPs have traditionally managed their respective network adequacy reviews, and many State Exchanges and SBE-FPs demonstrated to HHS that they have robust network adequacy standards and reviews in place beyond the requirements specified in Sec. 155.1050(a)(2)(i) or were determined to have standards and reviews in place that satisfied the exception described at Sec. 155.1050(a)(2)(ii). We recognize that State Exchanges and SBE-FPs are often best positioned to evaluate local provider networks and market conditions.

We anticipate this finalized policy will maintain the regulatory burden on the 22 State Exchanges and 1 SBE-FP we expect for PY 2027, providing them with more flexibility to regulate and review for network adequacy in a manner that best protects their respective consumers. We estimate this impact to be $1,560,780 beginning in PY 2027, as outlined in section IV.M of this final rule. We anticipate this provision might increase the administrative burden on issuers that operate in multiple States as they navigate varying regulatory frameworks and standards. The impact to consumers is not known at this time but there is a risk of potential decreased access to care for consumers if those State standards and their reviews are less consumer protective than the Federal network adequacy review framework.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed rule, we are finalizing these estimates as proposed. 21. General Program Integrity and Oversight Requirements (Sec. 155.1200)

We are finalizing our proposal to amend Sec. 155.1200(d) to reduce duplication between the SEIPM program described in subpart Q and the annual independent external programmatic audit requirements and standards described at Sec. 155.1200(c) and (d). We are finalizing our proposal to add Sec. 155.1200(e) to permit a State Exchange to satisfy certain annual independent external programmatic audit requirements, as described at Sec. 155.1200(d), by completing the proposed required annual SEIPM program process. As a result, we estimate that there will be a general burden reduction for State Exchanges related to the programmatic audit requirement under Sec. 155.1200(c). In particular, the current 22 State Exchanges that operate their own eligibility and enrollment platforms will incur lower costs for contracts with independent external auditors, since many requirements under subparts D and E will be addressed through completion of the SEIPM process for the applicable benefit year.

Based on industry estimates of the average cost of contracting an auditor to perform an independent external programmatic audit, HHS projects that the reduced audit scope would lower annual costs by approximately 30 percent or $45,000 for each State Exchange. This is based on an estimated average annual programmatic audit cost of approximately $150,000 for a medium-size State Exchange. We anticipate the total cost annual reduction across 22 State Exchanges will be approximately $990,000 and expect that these savings could begin as early as 2027, coinciding with the submission of independent external audits for the PY 2026 SMART. However, this change would also introduce a new burden associated with completing the SEIPM and the related CAP process, as discussed in the section later. For an estimate of the burden created under SEIPM, please refer to section V.C.22.

We requested comment on the reduction in burden and specifically sought feedback from State Exchanges regarding the annual cost of the programmatic audit process.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 22. State Exchange Improper Payment Measurement (Sec. Sec. 155.1600 Through 155.1650)

This policy will allow HHS to implement the Payment Integrity Information Act of 2019 (PIIA) requirements for State Exchanges. As described in the preamble earlier in this final rule, the PIIA requires that agencies measure the improper payments rate for programs susceptible to significant improper payments. HHS already undertakes annual measurements for Medicare, Medicaid, FFEs, and SBE-FPs. This final rule lays the groundwork to complete the Exchanges' measurement program by including State Exchanges and to enable HHS to estimate a comprehensive APTC improper payment rate as mandated by statute.

This policy will allow HHS to measure improper payments that are resultant from State Exchange operations related to the determination of eligibility and payment amounts for APTC and will require State Exchanges to provide Corrective Action Plans responsive to the findings of the measurement. Even slight decreases in this rate will accrue large taxpayer savings. To delineate the range of estimated burden across the State Exchanges, cost estimates were created at the State Exchange level using an average cost per sample of $499. State Exchanges with proportionally smaller amounts of APTC are planned to produce a sample size of 50 while the largest States are planned to produce a sample size of 250. Using these numbers multiplied by the average cost estimate per sample of $499, the SEIPM will incur a range of approximately $24,950.00-$124,750.00 in costs per respondent. As stated in the Information Collection in IV.O, the total costs for the State Exchanges to produce the information and to undergo the review process is estimated to be $1,097,800. Additionally, State Exchanges will incur a cost to develop and submit a corrective action plan (CAP) to HHS following an SEIPM cycle beginning in 2029. We estimate that it will take each State Exchange up to 1,000 hours or $97,300 to develop a CAP. We estimate that the total annual burden associated with this requirement for up to 22 State Exchange respondents will be up to 22,000 hours and $2,140,600. The burden related to this information collection will be submitted to OMB for approval after future rulemaking has been completed regarding the CAP process and requirements.

Additionally, we estimate that six Full Time Equivalents (FTEs) will be necessary to complete the activities associated with SEIPM and SEIPM contract management. This estimate is based upon our experience with staffing the Improper Payment Pre-Testing and Assessment (IPPTA) which has been operationalized in a similar manner and format as will be the SEIPM. The estimated annual cost per Full-Time Equivalent (FTE) is $376,075. This figure was derived by identifying the maximum salary for a Federal employee on the general pay table in the Baltimore area, which was $183,500 in 2023. To ensure conservative budgeting and sufficient funding, this salary was used as the base. The base salary was then multiplied by a factor of two to account for employee fringe benefits and overhead costs. Consequently, the total annual estimate per FTE is $376,075, leading to an aggregate annual cost of $2,256,450 for all FTEs.

Finally, we anticipate total estimated annual contracting costs of $19.5 million incurred by HHS. These costs include but are not limited to: collecting the information from the State Exchanges, building and completing automated review systems, creating the statistical methodology and identifying the sample, appeal adjudication, estimating the improper payment rate, generating required reports, and IT support and infrastructure costs.

In summary, we expect total annual costs incurred across the State Exchanges to being $3.2 million, total HHS contracting costs to being $19.5 million, and total HHS staffing costs to being $2.3 million for a total cost of $24.8 million annually.

We believe that the potential benefits of this regulatory action justify the present costs. We sought comment on these impact 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 impact estimates for this policy as proposed. We summarize and respond to public comments received on the proposed estimates later.

Comment: Some commenters stated the proposal does not accurately estimate the hours, costs, procedural requirements, and the hiring of additional full-time staff needed to complete SEIPM. Some commenters stated concern with operational and staff burden to complete data and documentation submission activities. One commenter stated that the proposed alternative data collection solution will still require significant mapping, validation, and reconciliation.

Response: We appreciate these comments and recognize the operational and financial costs that will be incurred as a result of SEIPM activities. SEIPM addresses a critical gap in HHS' ability to comply with the Payment Integrity Information Act of 2019 (PIIA). Under PIIA, HHS is required to produce reliable and statistically valid estimates of improper payments and report those estimates through the Agency Financial Report (AFR). We believe that the long-term benefits of improved program integrity, including identification and reduction of improper payments, justify the associated operational investment. We acknowledge the incurred operational and financial burden by the State Exchanges and intend to provide ongoing technical support and additional operational information through sub-regulatory guidance to support State Exchange planning and preparation.

We conducted a comprehensive analysis to identify specific personnel roles and time requirements across all phases of the data collection process. We used the GSA labor category table to estimate burden on key occupational roles that we considered crucial in SEIPM while also using some of the early survey data provided by State Exchanges in Group A. While we received some burden data from a couple of commenters, we did not receive information across all State Exchanges. We noted that some States during IPPTA were able to provide the required information with minimal challenges.

While some commenters stated that significant time and resources were required for IPPTA, we understand that there is variability across each State in terms of how much time and resources are required. The processes such as developing SQL scripts that were completed during IPPTA are intended to translate into the SEIPM process. The time and resources spent for developing those scripts and troubleshooting the output would not be experienced in SEIPM because the work will already have been completed. We also clarify that we will allow flexibility in the data submission process to alleviate some of the administrative burden placed on the State Exchanges. We also intend to release sub- regulatory guidance to provide further details on SEIPM. For these reasons, HHS believes that the proposed estimations are sufficient for the State Exchanges to complete SEIPM. Accordingly, we are finalizing Sec. 155.1600 as proposed. 23. FFE and SBE-FP User Fees (Sec. 156.50)

We are finalizing an FFE user fee rate of 1.9 percent of premiums for the 2027 benefit year, which is less than the 2.5 percent FFE user fee rate finalized for the 2026 benefit year. We are also finalizing an SBE-FP user fee rate of 1.5 percent of premiums for the 2027 benefit year, which is less than the 2.0 percent SBE-FP user fee rate we finalized for the 2026 benefit year.

Because we are decreasing the FFE and SBE-FP user fee rates for the 2027 benefit year from the current 2026 benefit year rates, we are estimating that this reduction in FFE and SBE-FP user fee rates will reduce transfers from issuers to the Federal Government by approximately $130 million for benefit year 2027 compared to the prior benefit year. We expect that available user fee collections will be sufficient to fund Exchange operations through 2027 at the finalized 2027 benefit year user fee rates.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy.

For the reasons outlined in the proposed rule and this final rule, we are finalizing these estimates as described in this section. 24. Provision of EHB (Sec. 156.115(d))

We are finalizing our proposal to revise Sec. 156.115(d) to prohibit issuers from including routine non-pediatric dental services as an EHB. We do not anticipate any immediate costs to the Federal Government, States, issuers, or enrollees because of this finalized policy. This finalized policy will once again prohibit issuers from covering routine non-pediatric dental services as an EHB, which avoids the potential imposition of premium increases associated with these services. However, we do not expect that the removal of routine non- pediatric dental services as an EHB will have a significant impact on premium reduction, as all benefits a State adds to their EHB-benchmark plan are subject to the typicality standard at Sec. 156.111(b)(2)(ii), which limits how generous the updated plan would be. For example, if a State added routine non-pediatric dental services as an EHB under the existing policy, as we explained in the 2025 Payment Notice final rule (89 FR 26348), they may have needed to consider removing and/or adjusting other benefits to make room for the non-pediatric dental services to ensure the scope of benefits falls within the typicality range.

Additionally, this finalized change only has a premium impact to the extent States already updated their EHB-benchmark plans to include routine non-pediatric dental services under the policy finalized in the 2025 Payment Notice that allows States to add routine non-pediatric dental services as an EHB beginning with PY 2027. Since no State has taken this action, this finalized policy has no premium impact. Finalized as proposed, this policy to prohibit coverage of routine non- pediatric dental services as an EHB will be effective upon the effective date of this final rule, preventing any future premium impact from the former policy.

Consistent with our note in the 2025 Payment Notice final rule (89 FR 26409), which acknowledged that removing the prohibition on routine non-pediatric dental services as an EHB may increase costs for issuers who may need to expand their networks to cover these services, this policy may avoid cost increases for issuers that would have needed to expand their networks

to cover these new required services, although issuers could have contracted with a dental vendor to administer the routine non-pediatric dental EHB if such a benefit was adopted by a State as an EHB. As we also noted in the 2025 Payment Notice final rule, the size of non- pediatric dental networks varies by State, therefore, some States would have been affected by the need to build a new network of dental providers (or contract with dental vendors) more than others. Therefore, by reinstating the prohibition at Sec. 156.115(d), this policy will avoid these potential network expansion costs.

While this finalized policy may limit potential premium increases for enrollees and cost increases for issuers related to network expansion, we acknowledge that this policy may impact long-term health outcomes and associated medical costs. As we explained in the proposed 2025 Payment Notice (88 FR 82597-98), oral health and overall health are inextricably linked; untreated oral health conditions can increase risk for and complicate the management of chronic conditions.\397\ As we also noted in the 2025 Payment Notice final rule (89 FR 26348), improving access to non-pediatric dental services would reduce health care costs by yielding downstream savings in overall health care expenditures and reducing costly emergency room department visits for dental care. However, as we mentioned in preamble of this final rule, we clarify that this prohibition on including routine non-pediatric dental services as an EHB does not prevent States from addressing non- pediatric oral health and overall health outcomes--and associated medical costs--through alternative policy mechanisms. For example, as we mentioned earlier in this final rule, States could mandate coverage of routine non-pediatric dental services as a non-EHB and defray the cost associated with that benefit. We believe ensuring better alignment of the regulatory requirements at Sec. 156.115(d) with section 1302(b)(2)(A) of the Affordable Care Act regarding the EHB typicality standard outweighs these other policy considerations.

\397\ Kapila Y.L. (2021). Oral health's inextricable connection to systemic health: Special populations bring to bear multimodal relationships and factors connecting periodontal disease to systemic diseases and conditions. Periodontology 2000, 87(1), 11-16. https://doi.org/10.1111/prd.12398. Periodontal disease has been associated with diabetes, metabolic syndrome, obesity, eating disorders, liver disease, cardiovascular disease, Alzheimer disease, rheumatoid arthritis, adverse pregnancy outcomes, and cancer.

We solicited comment on the impact of our proposal to revise Sec. 156.115(d) to prohibit issuers from including routine non-pediatric dental services as an EHB and whether other impacts should be considered.

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 impact estimates for this policy as proposed. We summarize and respond to public comments received on the proposed estimates below.

Comment: Several commenters stated concerns regarding the downstream cost impacts of this proposal, particularly in regard to increased emergency department (ED) visits as a result of a lack of dental coverage and access to preventative care. At least one commenter urged CMS before implementing this proposal to consider how reinstating the prohibition of non-pediatric dental in EHB will impact local communities and shift costs to States. As an example, one commenter explained that data shows the long-term impact of the elimination of Medicaid adult dental benefits has been increased costs to States and overburdened local health care systems when individuals without access to dental coverage resort to ED visits to receive treatment for non- traumatic dental conditions (NTDC).\398\ This commenter cited data showing that ED visits for NTDCs cost States $3.9 billion in 2022, driven by a 29 percent increase in the mean cost of an ED visit for dental conditions, which was significantly higher than the average cost of a dental visit.\399\ This commenter also noted that increased costs are especially pronounced for individuals managing chronic conditions such as diabetes and coronary artery disease, and that the long-term impact of eliminating adult dental coverage has historically been increased costs to States and overburdened local health care systems.

\398\ Bhaumik, Deesha, et al., “What Happens if the Adult Medicaid Dental Benefit Goes Away?,” American Dental Association Health Policy Institute (March 2025).

\399\ 19 CareQuest Institute for Oral Health, “Dental Care in Crisis: Tracking the Cost and Prevalence of Emergency Department Visits for Non-Traumatic Dental Conditions,” (Oct. 2025).

Response: We appreciate commenters' concerns regarding downstream cost impacts and cost-shifting to States. We recognize that oral health and overall health are inextricably linked. However, as we noted in the preamble, this prohibition does not prevent States from addressing non- pediatric oral health outcomes and associated costs through alternative policy mechanisms, including mandating coverage of routine non- pediatric dental services as a non-EHB benefit and defraying the associated costs. Additionally, as we noted previously, since no State has updated its EHB benchmark plan to include routine non-pediatric dental services under the policy finalized in the 2025 Payment Notice, this finalized policy has no immediate premium or cost impact. We believe that achieving better alignment with section 1302(b)(2)(A) of the Affordable Care Act regarding the EHB typicality standard outweighs these other policy considerations. 25. Multi-Year Terms for Catastrophic Plans To Improve Health (Sec. Sec. 156.130 and 156.155)

Under current regulations, catastrophic plans, like all QHPs offered through the Exchanges, have annual contract periods that require re-enrollment each year during the open enrollment period. The finalized regulation will provide consumers who are eligible for catastrophic coverage with the potential of more predictable multi-year coverage arrangements, with a term of multiple consecutive plan years not to exceed 10 years, compared to annual re-enrollment, though premiums may be adjusted during the contract term in accordance with applicable requirements. As finalized, other than the fact that a multi-year catastrophic plan could have a term of up to 10 consecutive plan years for individuals who qualify for such plans upon enrollment, and coverage could be provided before the deductible is met for certain VBID benefits to be specified in future guidance, there would be no material differences between the regulatory requirements for such plans and 1-year catastrophic plans. This may potentially reduce premium volatility and administrative burden while maintaining the EHB and consumer protections required under the Affordable Care Act. This finalized policy aims to enhance market stability for a segment of consumers who may benefit from longer-term coverage arrangements. The finalized regulation will be effective for plan years and policy years beginning on or after January 1, 2027.

We sought comments on issuer participation, State and State Exchange operational impacts, and market segmentation effects.

The finalized regulation is anticipated to deliver benefits for eligible consumers and participating issuers. Consumers who enroll in multi-year catastrophic plans may benefit from more predictable multi- year coverage, with a term of multiple consecutive plan years not to exceed 10 years, reduced need to navigate annual open

enrollment periods, and decreased risk of coverage gaps due to missed enrollment deadlines. Issuers offering multi-year catastrophic plans may experience reduced administrative burden associated with annual re- enrollment activities and lower operational expenses related to annual plan document preparation and filing. The extended contract periods may also promote continuous coverage among individuals. Even though premiums may be adjusted during the contract term in accordance with applicable requirements, issuers may price plans conservatively to account for uncertainty, potentially resulting in higher initial premiums. Additionally, there is uncertainty about how multi-year catastrophic plans might affect risk selection, including whether healthier individuals would disproportionately select multi-year plans. We note that there is currently no available evidence on these potential effects and data that could help understand the potential unintended consequences.

Issuers may incur costs related to developing multi-year catastrophic plans, such as developing new pricing models. States and the Federal Government will face costs associated with reviewing and approving multi-year catastrophic plan filings. We sought comments on costs and data that could be used to quantify these impacts.

The availability of multi-year catastrophic plans may result in transfer effects impacting consumers, issuers, States, and the Federal Government, with the magnitude dependent on uptake rates. We sought comments on transfer effects, premium impacts, Federal PTC expenditures, and data that could be used to quantify these impacts.

Given that this will be a new option for consumers, there is uncertainty regarding consumer demand for multi-year catastrophic plans. There is also uncertainty regarding how premiums will be structured for multi-year catastrophic plans, including the methodology and frequency of adjustments (such as annual adjustments tied to inflation or other factors) permitted under applicable requirements. Additionally, there is uncertainty about how consumers enrolled in multi-year catastrophic plans will respond if their health status changes and what implications this may have for consumers. We sought comment on these uncertainties and requested data that could help quantify the potential impacts of multi-year catastrophic plans on enrollment patterns, premium levels, and Federal expenditures.

As discussed in section III.E.6. of this 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 this policy with the following modifications. We are finalizing Sec. 156.155(a)(6) with minor revisions to refer to “plan years” instead of “years” for greater clarity and precision. We are also finalizing Sec. 156.155(a)(6) to state that multi-year catastrophic plans may utilize value-based insurance designs to provide benefits before reaching the deductible, under guidelines issued by the Departments. We are also finalizing a conforming amendment at Sec. 156.155(a)(3), providing that catastrophic plans provide no benefits before the annual limitation on cost sharing is reached, except as provided in paragraph (a)(6). We are not finalizing the proposed conforming amendments to Sec. 156.155(a)(1), as multi-year catastrophic plans, like other catastrophic plans, must meet all applicable requirements for health insurance coverage in the individual market. We are not finalizing the proposed addition of Sec. 156.130(c) which provided that in the case of a multi-year catastrophic plan, the annual limitation on cost sharing for the initial plan year of the contract may apply on an annual basis, or on average over the life of the contract. We summarize and respond to public comments received on the proposed impact estimates for this policy later.

Comment: A few commenters supported the proposal, contending that multi-year catastrophic plans could create lower-premium or more predictable coverage options for people who are not well served by current offerings, reduce churn, improve continuity, expand HSA use, and strengthen incentives for issuers to invest in preventive care and other long-run health management activities. A few of these commenters also viewed added flexibility for pre-deductible preventive services as a meaningful improvement over current catastrophic plan design. Several commenters contended that the proposal's claimed benefits are either unproven or unlikely to materialize in the individual market. These commenters stated that multi-year catastrophic plans would not meaningfully reduce churn, lower premiums, or reduce administrative burden, particularly once new pricing, oversight, and systems costs are taken into account. Some commenters noted that the RIA does not treat premium reductions, administrative savings, or improved long-term health outcomes as quantified results; rather, it identifies them as potential effects and these commenters noted that they believed this approach to be appropriate given the novelty of the product type but did not provide any specific usable data.

Response: We appreciate the comments received on this topic. We acknowledge commenters who noted that multi-year catastrophic products could improve continuity of coverage, reduce repeated enrollment friction, and better align issuer incentives with long-term prevention and care management. As discussed in section III.E.6. of this final rule and this RIA, we are of the view that those are among the potential benefits of finalizing the proposed requirements under which issuers of catastrophic coverage may enroll individuals for multiple plan or policy year terms with periods of up to 10 years. We acknowledge commenters who stated that these benefits are uncertain or may not materialize in practice and we recognize that the benefits discussed in this rule, given the uncertainties regarding State, issuer, and consumer reaction to the finalized provisions, may not materialize to the degree anticipated. We agree with those commenters that noted that they believed our approach to qualitatively describe the potential benefits of this provision to be appropriate given the novelty of the product type. We did not receive any data or additional information from commenters that would assist in our ability to quantify the potential effects of this provision. Regarding those commenters that stated that multi-year catastrophic plans would not meaningfully reduce churn or lower premiums, as discussed in more detail in section III.E.6. of this final rule, we agree that medical costs and other factors cause premiums to increase; however, we believe that reductions in marketing and administrative cost associated with multi-year catastrophic plans could help moderate premium increases. We recognize that any realized benefit will depend heavily on actual issuer uptake, plan offers and features, retention, and implementation costs.

Comment: A few commenters stated support for the proposal to the extent that structures that spread cost-sharing out monthly or otherwise, together with additional pre-deductible value-based design for preventive service benefits, could reduce upfront financial shock, improve access to preventive and chronic care management, and make catastrophic coverage more usable for some enrollees than under current annual cost-sharing structures. As

discussed in section III.E.6. of this final rule, many commenters stated concern that long-duration catastrophic products could leave enrollees effectively “locked into” inadequate coverage as their health, income, employment, family, or geographic circumstances change. These commenters emphasized that consumers who develop chronic conditions (for example, cancer, kidney disease, diabetes, multiple sclerosis, and behavioral health conditions) could end up stuck in plans with very high cost-sharing and limited practical value. Other commenters warned that front-loaded or variable MOOP/deductible structures could result in enrollees incurring significant medical debt, worsen instances of underinsurance, and increase uncompensated care (especially in rural markets). Additionally, these commenters noted that, given the overall lack of medical literacy, these products could be confusing enough that some consumers would underestimate their true liability at enrollment.

Response: We acknowledge and appreciate the comments received. We acknowledge commenters who observed that spreading cost-sharing or allowing additional pre-deductible preventive benefits could, in theory, reduce abrupt out-of-pocket costs and encourage timely use of high-value care. However, as discussed in greater detail in section III.E.6. of this final rule, we are finalizing the VBID provision, with modifications, to permit multi-year catastrophic plans to utilize value-based insurance designs to provide benefits before reaching the deductible, under guidelines issued by the Departments. Regarding commenters who stated that individuals could be “locked into” multi- year catastrophic plans, as further noted in section III.E.6. of this final rule, enrollees may terminate coverage at any time without penalty and may also enroll in other coverage during open or special enrollment periods. Therefore, they are not locked into these plans. We acknowledge that certain benefit designs may create incentives to remain enrolled, and we expect issuers to disclose those features. An example of how benefit design differences can incentivize voluntary enrollment over a longer term can be found in Germany, where the German population has many publicly subsidized insurance plans with indefinite coverage terms from which to choose, and only 5 percent of the population switches plans in a given year despite the ability to do so annually.\400\ We also recognize the substantial concern that multi- year catastrophic products could expose enrollees to potential unexpectedly high initial out-of-pocket costs and the possibility of being underinsured if their health needs change after enrollment, if the enrollee is unaware of the policy terms. As discussed in section III.E.6. of this final rule, we are not finalizing the provision that would have permitted the annual limitation on cost sharing to apply on an average basis over the life of the contract, and we note that section 1302(e) of the Affordable Care Act requires that, for each 12- month plan year within a multi-year catastrophic plan, the plan must comply with the Federal annual limitation on cost sharing that applies for that plan year, and the limitation on cost sharing for each plan year of a catastrophic plan must equal the applicable maximum annual limitation on cost sharing for that plan year and cannot vary by disease or other health status, thereby limiting the risk of the front- loaded or variable MOOP/deductible structures that commenters warned could result in significant medical debt and underinsurance. Further, as discussed in this RIA, we recognize and note this as a potential unintended consequence, which could be exacerbated if there are instances of potential reduced flexibility to switch plans in response to changing health needs or life circumstances. As discussed in section III.E.6. of this final rule, we encourage all individuals, including those enrolled in a multi-year catastrophic plan, to review their coverage options regularly and select the option that best suits their needs and budget.

\400\ Pugh, Tom. “How to Switch German Health Insurance Providers and Save Money.” The Local Germany, 2 Jan. 2026.

Comment: A few commenters stated that multi-year catastrophic plans could improve the risk pool by keeping healthier unsubsidized consumers in the Affordable Care Act market rather than uninsured, and, if implemented carefully, the product flexibility could attract issuer participation without necessarily destabilizing the market. Many commenters stated an opposing view noting that healthier or more price- sensitive individuals would disproportionately select multi-year catastrophic plans, worsening the morbidity of remaining metal-tier risk pools resulting in increased premiums for more comprehensive coverage. Many commenters also stated that if healthier individuals enroll in multi-year catastrophic plans, any resulting adverse selection could lead to increases in benchmark premiums and PTC expenditures, or otherwise shift costs toward consumers who need more comprehensive coverage. Many commenters, including providers, safety- net organizations, and State regulators, stated concern that shifting enrollment toward high-deductible multi-year catastrophic coverage would increase uncompensated care, bad debt, or charity-care burdens for hospitals, rural providers, emergency departments, and community health centers because more patients would be unable to meet large deductibles or cost-sharing obligations.

Response: We appreciate and agree with those commenters that stated, if implemented carefully, multi-year catastrophic plans could retain healthier unsubsidized individuals in the risk pool as opposed to remaining or becoming uninsured and the flexibilities could increase issuer participation. We also acknowledge commenters who warned that longer-term catastrophic plans could worsen adverse selection in metal- tier products. We recognize that given current market conditions, that both outcomes are a possibility and could result in additional changes in market dynamics. As discussed in section V.C.25 of this RIA, due to the current lack of data and information on the potential effects of multi-year catastrophic plans and how they would be structured, we note the uncertainty in potential changes in market dynamics. Further, as discussed in section III.E.6. of this final rule, we are not finalizing a provision that would extend the multi-year plan standards to metal level plans in this final rule. For those commenters stating that adverse selection could lead to increases in premiums and PTC expenditures, we acknowledge the potential effect on premiums, PTC expenditures, and additional transfer effects which would ultimately depend on actual uptake, the mobility of those who enroll, and whether consumers who become higher risk remain in or discontinue these products. However, we also are of the view that, because multi-year catastrophic plans remain part of the individual market risk pool, if uninsured individuals that are healthier enroll in these types of plans, rather than remain uninsured, they could lead to improvements in the risk pool and thus an overall reduction in premiums. Similarly, provider spillovers will depend on realized cost-sharing burdens and enrollee churn.

Comment: Many commenters stated that pricing multi-year catastrophic products is materially more difficult than annual rating. They highlighted

uncertainty around medical trends, utilization, regulatory changes, changes in benefit mandates, and consumer behavior over multi-year periods. Commenters noted that these uncertainties could either result in higher initial premiums or create material solvency and mispricing risk, including the possibility of product withdrawal or issuer distress. As noted in section III.E.6. of this final rule, several commenters recommended delay, phased implementation, or a shorter initial pilot--often two years rather than up to 10 years--together with more detailed actuarial and State review guidance before allowing broad rollout.

Response: We appreciate the comments received on this topic and recognize the significant actuarial concerns raised. Pricing any new insurance product requires assumptions about expected claims, utilization, and retention, and those uncertainties materially increase as the pricing horizon lengthens. However, as discussed in more detail in section III.E.6. of this final rule, for rate setting, rate calculations for multi-year plans will be determined each year, as they are for a 1-year plan that renews each year. Thus, rate increases for the whole term will not be set at the initial filing, and enrollees will not progress through the age curve each year. Therefore, we are of the view that this will decrease the likelihood that issuers may ultimately either load premiums for this uncertainty, which could result in higher premiums, or risk inadequate rate setting that could result in financial distress. With regard to comments suggesting that the applicability date should not be imminent, while we are finalizing the proposal to be applicable starting in PY 2027, we will provide additional guidance or rulemaking, as necessary, to address certain aspects of this policy.

Comment: Many commenters stated concern that the evidentiary basis for the proposal is limited. These commenters stated that insufficient empirical information exists regarding consumer demand, enrollment persistence, premium effects, market segmentation, transfer effects, State operational costs, and Federal spending to support conclusions. Several commenters specifically noted that the agency had not provided sufficient detail, analysis, or data for commenters to fully evaluate the proposal's likely effects on the individual market dynamics, consumers, providers, and other affected entities.

Response: We acknowledge that the evidentiary record for this novel policy option is limited. Nevertheless, we also reiterate that, as stated previously, Germany offers an example of how the availability of plans with terms that exceed 1 year has potential to reduce churn. Although many different public health insurance plans are offered with indefinite term lengths in Germany, and despite the fact that enrollees can switch plans annually, 39 percent never switch plans in their lifetime.\401\ As discussed in V.C.25. of this RIA, we recognize that available evidence and data on potential effects is lacking and we requested comment and additional data that could help us quantify the impacts multi-year catastrophic plans might have on enrollment patterns, premium levels, Federal expenditures, and operational costs. However, we did not receive any actionable data or information that would assist in further analyzing these issues.

\401\ Id.

26. Cost-Sharing for Bronze and Catastrophic Plans (Sec. Sec. 156.136 and 156.155)

To address an issue that has arisen in the implementation of section 1302(c) through (e) of the Affordable Care Act, we are finalizing our proposal adding new Sec. 156.136 to change the permissible cost-sharing parameters for bronze plans and revisions to Sec. 156.155(a)(3) for updated requirements for catastrophic plans with modifications.

We are finalizing changes to the cost-sharing requirements at Sec. 156.155(a)(3) for catastrophic plans in the individual market to address an irreconcilable conflict between section 1302(c) through (e) of the Affordable Care Act. Specifically, we are finalizing our proposal to permit some individual market bronze plans to exceed the maximum annual limitation on cost sharing beginning in PY 2027, but we are modifying to require these bronze plans not to exceed 130 percent of the standard annual limitation on cost sharing, rounded down to the next lowest multiple of 50 dollars, and to achieve an AV within the standard bronze de minimis variation at Sec. 156.140(c). We are finalizing our proposal to allow individual market issuers the option to offer one or more increased annual limitation on cost sharing plans only if they offer at least one bronze plan that meets the annual limitation on cost sharing (that is, does not have an increased annual limitation on cost sharing). We are also finalizing our proposal, effective beginning PY 2028, to require catastrophic plans to provide no benefits for any plan year (except as provided in Sec. 156.155(a)(4), (b), and (c)) until an amount equal to 130 percent of the annual limitation on cost sharing is reached. As finalized, we expect that this would incentivize enrollment in bronze plans if issuers can offer these bronze plans at lower premiums than they are currently able under the current annual limitation on cost sharing restriction. This, in turn, would raise the expected out-of-pocket costs by up to 30 percent for enrollees in these additional plans who incur health care costs in excess of the current annual limitation on cost sharing. We also believe that this would provide consumers with additional choice of bronze plans, including the potential for plan designs with lower deductibles and lower premiums.

We sought comment on these impact 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 impact estimates for this policy with the following modifications: to require that the higher MOOP limit which is permitted for some bronze plans not exceed the calculation of 130 percent of the annual limitation on cost sharing; to make a correction to the calculation of 130 percent of the annual limitation; and to delay the implementation of the requirement to calculate the catastrophic annual limitation on cost sharing as 130 percent of the standard annual limitation cost sharing until PY 2028. We summarize and respond to public comments received on the proposed estimates later.

Comment: Several commenters stated that we failed to consider that raising MOOPs would worsen affordability, delay care, increase medical debt, and potentially contribute to bankruptcy. Many comments noted that providers and hospitals would face increasing uncompensated care when enrollees would not be able to afford their out-of-pocket contribution in such a plan. Many comments stated concern about wider shifts in risk, premium, and enrollment due to the required higher MOOP limits for catastrophic plans, as potentially splitting the population into plans according to their health and level of subsidy, with healthier, richer enrollees selecting catastrophic plans, and only the sicker remaining enrollees remaining in metal tier coverage. Chronic illness was often cited by commenters as making enrollees especially vulnerable to the higher costs possible under this proposal.

Response: We acknowledge providers and hospitals may become responsible for an increased share of health costs

when consumers are less shielded from the actual costs of services and treatments available through their health plan. However, we are skeptical that many issuers will utilize this enhanced MOOP flexibility for individual market bronze plans in PY 2027, and do not anticipate such widespread availability and enrollment that would require setting premiums responsive to this suspected shift in risk selection. We agree with comments that sicker enrollees may face higher cost sharing, but anticipate limited impact given that those with high medical expenses may generally not opt to purchase a catastrophic plan. We will monitor implementation to be informed of any unanticipated effects.

Comment: Several comments requested we consider alternatives to altering the annual limitation on cost sharing for catastrophic and bronze plans other than increasing the annual limitation on cost sharing.

Response: As we stated in the proposed rule, we believe the impasse was not the result of methodological decisions, and no administrable alternatives exist. This issue arises from incongruence between health care cost trends and statutory cost sharing provisions of the Affordable Care Act. In the end, we stated that we believe the differing rates of changes between the three major factors of AV calculation pose an insurmountable statutory problem created by the cost-sharing provisions of section 1302 of the Affordable Care Act. As this will eventually make it impossible for issuers to simultaneously comply with all of these provisions, it produces a result Congress could not have intended, including the eventual elimination of the bronze metal tier. As we previously described, we believe that the policy we are finalizing in this rule represents the best possible outcome since it ensures that meaningful difference be restored between catastrophic plans and bronze plans, attracts currently uninsured individuals who are not eligible for subsidies and deterred by the high premiums of metal tier plans, and will eventually improve the overall risk pool. The underlying actuarial problem--the gradual convergence of catastrophic and bronze plan designs and value--has been developing for several years, and we have been monitoring and discussing this issue since at least the 2017 Market Stabilization Rule. We do not believe that further delay would change the actuarial trajectory or the need for regulatory action, but we have chosen to delay implementation by 1 year to ease the impact of the catastrophic plan change on issuers, States, and Exchanges. We note again that offering catastrophic plans is optional for issuers, as is offering bronze plans. Nothing prevents issuers from conducting a risk assessment when deciding whether to offer these plans for PY 2027 and future plan years that are subject to the cost-sharing changes. Thus, of the various options we identified, the policy we finalize in this rule is one that meets the statutory requirements, considering the other options we identified would put us clearly out of compliance with AV requirements, including by requiring deviation from generally accepted actuarial principles, cause bronze plans to become non-viable more quickly, or both; and we previously described in greater detail how bronze plans becoming impossible to design would be outside of the outcomes clearly intended by Congress. In other words, although we could make adjustments to the AV Calculator methodology and its underlying data sources with the express purpose of preserving bronze plans, we are not convinced that such changes would comply with section 1302(d) of the Affordable Care Act and actuarial standards. Specifically, as we stated earlier in this rule and in the proposed rule, we are not aware of any administrable, actuarially sound regulatory alternatives that could mitigate this problem. We provided examples of alternatives that we considered but did not implement, such as trending the AV Calculator to account for changes in the standard population. However, we believe such a change would make the AV Calculator meaningless, and likely would be contrary to section 1302(d) of the Affordable Care Act. Therefore, we do believe that a real conflict exists, and that the best way to solve the conflict is to give issuers the flexibility, at their option, to offer bronze plans exceeding the standard annual limitation on cost sharing as long as they offer a bronze plan that meets the standard annual limitation on cost sharing. This resolution both ensures that plans meeting the standard annual limitation on cost sharing will be available and that all plans will meet the statutorily-created AV requirements. 27. Discontinuation of Standardized Plan Options (Sec. Sec. 155.20, 155.205(b)(1), 155.220(c)(3)(i)(H), 156.201, and 156.265(b)(3)(iv))

We are finalizing our proposal to discontinue the full suite of standardized plan option policies effective beginning in PY 2027. Specifically, we are finalizing our proposal to remove the following from our regulations: the definition of “standardized options” at Sec. 155.20; all requirements pertaining to standardized plan options at Sec. 156.201 (the requirements for FFE and SBE-FP QHP issuers in the individual market to offer these plans at paragraphs (a) and (b) as well as the requirement for these plans to meaningfully differ from one another at paragraph (c)); the authority to differentially display standardized plan options on HealthCare.gov at Sec. 155.205(b)(1); and the corresponding standardized plan option differential display requirements for approved web-broker and QHP issuer enrollment partners using a DE pathway to facilitate consumer enrollment through an FFE or SBE-FP at Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv). Finally, we are finalizing our proposal to cease the annual design and publication of these plans in the applicable Payment Notice for each plan year.

However, we recognize that some issuers and consumers may still find certain features of these plan designs valuable. This is why we did not propose to require issuers to discontinue their existing standardized plan option offerings altogether. Instead, under this finalized approach, issuers will be permitted to choose whether to discontinue these offerings altogether or to continue offering them with either the same or modified cost sharing, while we simultaneously discontinue the differential display of these plans on HealthCare.gov and the DE pathways.

Under this finalized approach, if issuers wished to discontinue their standardized plan option offerings altogether, they will be permitted to do so, and enrollees in these plans will be crosswalked to a different plan in accordance with the crosswalk hierarchy at Sec. 155.335(j). Additionally, if issuers wished to continue offering these standardized plan options with the same cost sharing, they will also be permitted to do so, and enrollees in these plans will continue to be auto-reenrolled in these plans from one plan year to the next. However, these plans will no longer be visually distinguished as standardized plan options on HealthCare.gov or the DE pathways. Finally, if issuers wished to continue offering these standardized plan options but also wished to modify these plans' cost sharing structures, they will be permitted to do so, but these issuers will continue to be subject to the requirements under the definition of “plan” at Sec. 144.103 and to the uniform modification requirements at Sec. 147.106.

In most scenarios where an issuer modifies the cost sharing structure of one of its standardized plan option offerings, the newly modified plan that was formerly the standardized plan option will be considered a new plan and will therefore require a new plan ID. In this scenario, enrollees will be crosswalked from the discontinued plan to another plan in accordance with the crosswalk hierarchy at Sec. 155.335(j). These enrollees could be crosswalked into the newly modified plan that was formerly the standardized plan option, or an entirely different plan altogether, depending on the unique circumstances in each county.

However, under the definition of “plan” at Sec. 144.103, a State may permit issuers to make greater changes to a plan's cost sharing while still permitting that plan to be considered the same plan--thus maintaining the same plan ID. Furthermore, under Sec. 147.106(e)(3)(iv), as long as the variation in cost sharing is solely related to changes in cost and utilization of medical care, or to maintain the same metal tier level (and other applicable requirements under Sec. 147.106(e) are met), the modifications could be considered uniform (thus, a viable exception to guaranteed renewability).

In the scenario where an issuer modifies what was formerly a standardized plan option's cost sharing structure while maintaining the same plan ID, enrollees in the plan will be auto-reenrolled from one plan year to the next. In either case, whether the modification of a former standardized plan option's cost sharing results in that plan being considered the same or a different plan, enrollees will be crosswalked in accordance with the crosswalk hierarchy at Sec. 155.335(j), and that plan will no longer be differentially displayed as a standardized plan option on HealthCare.gov or the DE pathways.

Adopting this approach will effectively remove the standardization component of this suite of policies while simultaneously minimizing the risk of disruption for consumers enrolled in and issuers of these plans. This approach will also ensure that issuers of these plans that wish to continue offering them will be able to do so at their discretion. If issuers did choose to continue offering these plans, either with the same or modified cost sharing structures, they will be able to continue utilizing existing benefit packages, provider networks, drug lists, and formularies, including those paired with standardized plan options for PY 2026. This will further minimize burden for these issuers.

In addition, we have assumed the responsibility for differentially displaying standardized plan options on HealthCare.gov in accordance with Sec. 155.205(b)(1), meaning that FFE and SBE-FP issuers have not been subject to this burden since the requirement to offer standardized plan options as well as the differential display of these plans were reintroduced in PY 2023. Thus, discontinuing the differential display of these plans on HealthCare.gov will not affect issuers or impose any additional burden in this regard.

However, we acknowledge that the discontinuation of the differential display requirements for the DE pathways at Sec. Sec. 155.220(c)(3)(i)(H) and 156.265(b)(3)(iv) will impose a degree of burden on approved web-broker and QHP issuer enrollment partners using a direct enrollment pathway to facilitate consumer enrollment through an FFE or SBE-FP, since these entities will be required to modify their own platforms in some manner. However, we anticipate that the burden of making these modifications will be minimal, as decommissioning existing functionalities (such as the differential display of standardized plan options, which will include the full suite of differential display features discussed in greater detail in the preamble to Sec. 156.201 of this final rule) and reverting to the previous state of display will entail significantly lower burden than introducing novel features and functionalities.

Further, since differential display of standardized plan options on HealthCare.gov is operationally contingent on these plans having the required cost sharing parameters, and since we will no longer design and publish standardized plan options in the applicable Payment Notice for each plan year, no plans will technically meet the requirements to be considered standardized plan options, meaning no plans will differentially display on HealthCare.gov--even if we made no changes to the current functionality. The same will be true for approved web- broker and QHP issuer enrollment partners using a direct enrollment pathway to facilitate consumer enrollment through an FFE or SBE-FP, meaning the discontinuation of the differential display features could occur even without disabling the existing functionality to differentially display standardized plan options on their respective platforms.

We refer readers to the preamble section for the finalized policy to discontinue standardized plan options (Sec. Sec. 155.20, 155.205(b)(1), 155.220(c)(3)(i)(H), 156.201, and 156.265(b)(3)(iv)) for a detailed discussion of relevant literature we considered in our approach to this finalized policy.

We sought comment on these impact estimates and assumptions. We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 28. Discontinuation of Non-Standardized Plan Option Limits and Exceptions (Sec. 156.202)

We are finalizing our proposal to discontinue non-standardized plan option limits and exceptions at Sec. 156.202. However, we recognize that some issuers and consumers may still find certain features of the chronic and high-cost condition plans that were originally offered through the non-standardized plan option limit exceptions process valuable. This is why we did not propose to require issuers to discontinue these chronic and high-cost condition plans. Instead, under this finalized policy, issuers will be permitted to choose whether to discontinue the chronic and high-cost condition plans originally offered through the non-standardized plan option limit exceptions process altogether or continue offering them with either the same or modified cost sharing. Issuers will similarly be permitted to continue offering other non-standardized plan options not associated with the non-standardized plan option limit exceptions process.

Under this finalized approach, if issuers wish to discontinue the chronic and high-cost condition plans originally offered through the exceptions process (or other non-standardized plan options not associated with the non-standardized plan option limit exceptions process) altogether, they will be permitted to do so, and enrollees in these plans will be crosswalked to a different plan in accordance with the crosswalk hierarchy at Sec. 155.335(j). Additionally, if issuers wish to continue offering the chronic and high-cost condition plans originally offered through the exceptions process (or other non- standardized plan options not associated with the non-standardized plan option limit exceptions process) with the same cost sharing structures, they will also be permitted to do so, and enrollees in these plans will continue to be auto-reenrolled in these plans from one plan year to the next. Finally, if issuers wish to continue offering the chronic and high-cost condition plans originally offered through the exceptions process (or other non-

standardized plan options not associated with the non-standardized plan option limit exceptions process) but also wish to modify these plans' cost sharing structures, they will be permitted to do so, but these issuers will continue to be subject to the requirements under the definition of “plan” at Sec. 144.103 and to the uniform modification requirements at Sec. 147.106.

In most scenarios where an issuer modifies the cost sharing structure of one of its chronic and high-cost condition plans originally offered through the exceptions process (or other non- standardized plan options not associated with the non-standardized plan option limit exceptions process), the newly modified plan that was formerly the exceptions process plan (or other non-standardized plan options not associated with the non-standardized plan option limit exceptions process) will be considered a new plan and would therefore require a new plan ID. In this scenario, enrollees will be crosswalked from the discontinued plan to another plan in accordance with the crosswalk hierarchy at Sec. 155.335(j). These enrollees could be crosswalked into the newly modified plan that was formerly the exceptions process plan, or an entirely different plan altogether, depending on the unique circumstances in each county.

However, under the definition of “plan” at Sec. 144.103, a State may permit issuers to make greater changes to a plan's cost sharing while still permitting that plan to be considered the same plan--thus maintaining the same plan ID. Furthermore, under Sec. 147.106(e)(3)(iv), as long as the variation in cost sharing is solely related to changes in cost and utilization of medical care, or to maintain the same metal tier level (and other applicable requirements under 45 CFR 147.106(e) are met), the modifications could be considered uniform (thus, a viable exception to guaranteed renewability).

In the scenario where an issuer modifies what was formerly an exceptions process plan's (or other non-standardized plan options not associated with the non-standardized plan option limit exceptions process) cost sharing structure while maintaining the same plan ID, those enrolled in the plan will be auto-reenrolled from one plan year to the next. In either case, whether the modification of a former exceptions process plan's cost sharing results in that plan being considered the same or a different plan, enrollees will be crosswalked in accordance with the crosswalk hierarchy at Sec. 155.335(j).

Ultimately, adopting this approach will substantially reduce regulatory complexity and the burden associated with the non- standardized plan option limit and the corresponding exceptions process while simultaneously minimizing the risk of disruption to consumers enrolled in and issuers of the chronic and high-cost condition plans originally offered through the exceptions process (or other non- standardized plan options not associated with the non-standardized plan option limit exceptions process). If issuers did choose to continue offering these plans, either with the same or modified cost sharing structures, they will be able to continue utilizing existing benefit packages, provider networks, drug lists, and formularies, including those paired with what were formerly the exceptions process plans for PY 2026. This will further minimize burden for these issuers.

We refer readers to the preamble section for the finalized policy to discontinue standardized plan options (Sec. Sec. 155.20, 155.205(b)(1), 155.220(c)(3)(i)(H), 156.201, and 156.265(b)(3)(iv)) for a detailed discussion of relevant literature we considered in our approach to the finalized policy to discontinue non-standardized plan option limits and exceptions.

We sought comment on these impact estimates and assumptions. We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 29. Provider Access Standards for Network Plans (Sec. 155.1050 and Sec. 156.230)

We are finalizing our proposal at Sec. 155.1050(d) to allow FFE States, including States that perform plan management, that elect to do so, to conduct provider access reviews for issuers' plans that use and do not use a provider network, provided that the State demonstrates it has sufficient authority and the technical capacity to conduct such reviews by satisfying the applicable criteria to be considered to have an Effective Provider Access Review Program as described at Sec. 155.1050(d)(2) through (d)(4). This policy will apply effective beginning in PY 2027 for provider access certification reviews for issuers' plans that use a provider network and effective PY 2028 for provider access certification reviews for issuers' plans that do not use a provider network. HHS will continue to conduct network adequacy reviews consistent with Sec. 156.230 for QHP issuers that use a provider network and, for plan years beginning on or after January 1, 2028, provider access reviews for QHP issuers that do not use a provider network in FFE States that do not elect to conduct such reviews, or in FFE States that do not demonstrate they have sufficient authority and the technical capacity to conduct such reviews by satisfying the applicable criteria to be considered to have an Effective Provider Access Review Program, as described at Sec. 155.1050(d)(2) through (d)(4). Under this finalized policy, we will continue to collect network adequacy data, including time and distance and appointment wait time data. We will continue collecting this data from all FFE issuers, either to use to conduct Federal network adequacy reviews in FFE States that do not elect to do so or do not demonstrate they have sufficient authority and the technical capacity to conduct these reviews by satisfying the criteria to be considered to have an Effective Provider Access Review Program as described at Sec. 155.1050(d)(2) through (d)(4), or with a view to make it available in a standardized format to States that are determined to have an Effective Provider Access Review Program, to assist them in their network adequacy analysis.

The preceding years of conducting reviews of QHP issuer provider network adequacy, including analyzing issuer submitted data and discussions with States, issuers, and other various interested parties around diverse market conditions, have demonstrated that a one-size- fits-all approach to provider network adequacy review is not satisfactory. For example, issuers have highlighted to us persistent challenges in locating and contracting with enough providers of various specialties (for example, allergy and immunology, behavioral health, gastroenterology) in remote or difficult to access areas of a State. States have brought to our attention various geographic constraints that impact QHP issuer's ability to satisfy time and distance requirements and have made arguments to assess based on time or distance individually rather than being required to meet a time and distance standard that may be insurmountable due to a topographical constraint such as a body of water or navigating roads in mountainous terrain. Partnerships with States performing plan management, that have elected to conduct their own network adequacy reviews, have highlighted for us how States may innovate in their approach to conducting network adequacy reviews in ways that are sensitive to conditions and capacity in the State. These are among the factors

that led us to revisit our previous approach to defer network adequacy reviews to States as we recognize that a State, with its more intimate knowledge of its own demographics, topographical considerations, and provider supply, is often best positioned to evaluate local provider networks and market conditions and can tailor network adequacy standards in a more nuanced way than the broader Federal Government requirements may. Thus, in recognition of the crucial role States have in developing and enforcing network adequacy standards and because we believe that States are often best positioned to evaluate local provider networks and market conditions, we are finalizing at Sec. 155.1050(d) to allow FFE States, including States that perform plan management, that elect to do so, to conduct provider access reviews for issuers' plans that use and do not use a provider network, provided that HHS determines the State has sufficient authority and the technical capacity to conduct the reviews by satisfying the applicable criteria to be considered to have an Effective Provider Access Review Program as described at Sec. 155.1050(d)(2) through (d)(4). As noted previously, this policy will be effective beginning PY 2027 for provider access reviews of network plans, and beginning PY 2028 for provider access reviews of non-network plans. In addition, we will continue collecting network adequacy data from all FFE issuers, either to use to conduct Federal network adequacy reviews in FFE States that do not elect to do so, or do not demonstrate they have sufficient authority and the technical capacity to conduct these reviews by satisfying the criteria to be considered to have an Effective Provider Access Review Program as described at Sec. 155.1050(d)(2) through (d)(4), or with a view to make it available in a standardized format to States that are determined to have an Effective Provider Access Review Program, to assist them in their network adequacy analysis.

We do not anticipate any additional costs to the Federal Government as part of this finalized policy. While HHS still intends to collect data from QHP issuers in States with Effective Provider Access Review Programs, there is the potential for cost savings at the Federal level related to provider access reviews during QHP certification if HHS shifts these responsibilities to States that elect to conduct their own reviews. However, this may increase costs in States if they do not already possess capability and resources necessary to conduct sufficient provider access reviews, as well as ensure compliance and appropriate consumer protections. For QHP issuers, this finalized policy may have reduced administrative costs and efficiency gains. While HHS will still collect network adequacy data from issuers in these States, issuers will not have to undergo network adequacy certification reviews at the Federal level which often requires additional reporting to HHS to address corrections in network adequacy required to meet Federal standards. Additionally, many QHP issuers already have State specific network adequacy requirements with which they must comply to operate plans in the State. Thus, redirecting network adequacy review activities to States, that issuers already need to report to, could streamline the efficiency of the QHP certification process and reduce burden for issuers. However, requiring issuers to submit network adequacy data on both the State and Federal levels could potentially duplicate efforts and increase costs for issuers, though the extent of any administrative burden is uncertain as States may have different data collection and submission requirements, and it is not yet known how FFE States would implement or may change network adequacy data collection as part of an Effective Provider Access Review Program and if existing data collection processes already exist or need to be modified to support requirements under finalized Sec. 155.1050(d).

Regarding Federalism implications of this finalized policy, the Affordable Care Act does not require States to establish and enforce network adequacy certification criteria and review programs for QHP issuers; if a State elects not to establish any of these programs or is not approved to do so, HHS must establish and operate the programs in that State. As part of this finalized policy, we will not require that States elect to conduct provider access certification reviews as part of an Effective Provider Access Review Program. Rather, we are finalizing our proposal to allow States flexibility to conduct provider access certification reviews, should they choose, provided they have sufficient authority and the technical capacity to conduct these reviews by satisfying the applicable criteria in Sec. 155.1050(d)(2) through (d)(4).

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 30. Essential Community Provider Standards (Sec. 155.1051 and Sec. 156.235)

In this final rule, we are not finalizing our proposal to reduce the minimum percentage requirements described under Sec. 156.235(a)(2)(i) and (b)(2)(i) from 35 to 20 percent for the overall, FQHC, and family planning ECP thresholds, and will maintain the minimum percentage at 35 percent for each of the three aforementioned thresholds. We are finalizing our proposal to amend the narrative justification requirement language at Sec. 156.235(a)(3) and 156.235(b)(3) to reflect current operations and data submission requirements as part of ECP certification reviews, as narrative justifications are no longer required for issuers not meeting the ECP standard as they input contract statuses directly into the ECP User Interface in the MPMS. Additionally, we are finalizing our proposal with modifications to allow FFE States flexibility to elect to conduct ECP certification reviews. Specifically, as discussed earlier in this final rule, we are finalizing our proposal to allow FFE States flexibility to elect to conduct ECP certification reviews for network plans effective beginning PY 2027; however, we are modifying our proposal that will allow FFE States to conduct ECP certification reviews for non-network plans effective beginning PY 2028 under Sec. 155.1051 due to the delayed implementation of the provisions of allowing certification of non-network plans as QHPs.

ECP requirements under the General Standard at Sec. 156.235(a)(2)(i) specify that a plan applying for QHP certification to be offered through a FFE must demonstrate in its QHP application that the issuer's provider network includes as participating providers at least a minimum percentage, as specified by HHS, of available ECPs in each plan's service area collectively across all ECP categories defined under Sec. 156.235(a)(2)(ii)(B), and at least a minimum percentage of available ECPs in each plan's service area within certain individual ECP categories, as specified by HHS. Alternate Standard issuers must demonstrate similar minimum percentage requirements as described at Sec. 156.235(b)(2)(i). For PY 2014, we set this minimum percentage at 20 percent and increased the minimum percentage to 30 percent for PY 2015. For QHP certification for PY 2018 and through the end of PY 2022, we returned to the percentage used in PY 2014, and to again consider the

issuer to have satisfied the threshold requirement if the issuer contracted with at least 20 percent of available ECPs in each plan's service area to participate in the plan's provider network. We increased the minimum percentage to 35 percent starting in PY 2023 and required issuers to separately meet 35 percent minimum percentage requirements within two standalone ECP categories, FQHCs and family planning providers, as finalized in the PY 2024 Payment Notice. In this final rule, we are not finalizing our proposal to reduce the minimum percentage requirement from 35 to 20 percent, but we are instead retaining the minimum percentage requirement at 35 percent. Accordingly, medical QHP and SADP issuers will be considered to have satisfied minimum percentage requirements under Sec. 156.235(a)(2)(i) and (b)(2)(i) if they contract with at least 35 percent of available ECPs in each plan's service area collectively across all ECP categories defined under Sec. 156.235(a)(2)(ii)(B), they contract with at least 35 percent of available FQHCs that qualify as ECPs in each plan's service area, and they contract with at least 35 percent of available family planning providers that qualify as ECPs in the plan's service area (medical QHPs only) to participate in the plan's provider network. While we maintain that reducing the minimum percent to the previous 20 percent would have allowed additional flexibility for QHP issuers to build provider networks that comply with the ECP Standard under Sec. 156.235, we believe the majority of issuers exceed the minimum percentage requirement within their provider networks and may not require this level of flexibility. For example, for PY 2026, the average threshold percentage for all FFE issuers, including issuers in States performing plan management, for the overall ECP requirement was 71 percent, for the family planning provider requirement was 85 percent, and for the FQHC requirement was 79 percent despite the minimum percentage being set at 35 percent. Thus, many issuers continue to exceed current threshold requirements by more than 30-percent, so even if the threshold were reduced to 20 percent, the reduction may not have influenced issuer contracting behavior and associated administrative cost savings.

We do not anticipate any major new impacts associated with maintaining the minimum ECP threshold percentage at 35 percent described under Sec. Sec. 156.235(a)(2)(i) and (b)(2)(i), compared to previous plan years. Retaining existing requirements for network size may stabilize costs for consumers as issuers may have responded to reduced minimum percentage requirements by contracting with fewer ECPs, which could have increased out-of-pocket costs for consumers whose preferred ECPs transition out-of-network. Retaining the existing minimum percentage requirement will minimize additional costs from increased travel time and wait time for appointments or reductions in continuity of care for patients whose providers have been removed from their insurance networks. Issuers who maintain existing contracting levels to meet the 35-percent minimum percentage requirement will likely maintain any current costs.

We are finalizing our proposal to modify the narrative justification requirement under Sec. Sec. 156.235(a)(3) and 156.235(b) to make the language more consistent with current operations and data submission requirements for ECP certification reviews. As part of the narrative justification requirements, an issuer applying for QHP certification that is not meeting the ECP standard under Sec. 156.235 had to include as part of its QHP application a written open-ended narrative describing how the issuer's provider network as currently designed would provide an adequate level of service for individuals residing in low-income zip codes or Health Professional Shortage Areas within the plan's service area, and how the issuer would strengthen the plan's provider network in future years. We have instituted multiple refinements and modernizations to the justification process over time, and recently in PY 2025, leveraged information technology to embed justification related information (for example, contract statuses) into the new ECP User Interface (UI) in the MPMS. In alignment with this modernization that now allows issuers to easily select and report the contract status of ECPs included within their networks or who are being recruited into their networks, we are finalizing our proposal to modify Sec. Sec. 156.235(a)(3) and 156.235(b) to instead designate that a network plan applying for QHP certification to be offered through a FFE must include as part of its QHP application the status of contract offers to qualified ECPs available in the network plan's service area. A network plan will not need to report on the status of contract offers for all available ECPs in the network plan's service area but should at least report on the status of contract offers for all ECPs which the issuer has either included in its network plan or offered a contract to be included in its network plan within each service area.

We believe these changes to the narrative justification requirements at Sec. Sec. 156.235(a)(3) and 156.235(b) will not have meaningful impacts to issuers since these amendments reflect current ECP data submission requirements that have been in place since PY 2025. Issuers will continue to upload ECP data into MPMS and complete required fields within the ECP UI, including selecting or importing ECPs included within their networks and designating the status of their contract offers. Although this finalized language does not modify current requirements as part of ECP certification reviews, it will reflect modernizations to the ECP data collection process that have introduced significant program efficiencies that have improved data quality, and effectively reduced the time, resources, and administrative costs required by issuers to submit supporting justification documentation for meeting the ECP standard under Sec. 156.235.

Furthermore, we are finalizing our proposal with minor modifications to allow FFE States, including States performing plan management, to elect to perform their own State reviews of issuer- submitted ECP data provided the State demonstrates sufficient legal authority and the technical capacity to conduct these reviews by meeting the applicable criteria, as determined by HHS, to be considered to have an Effective ECP Review Program under Sec. 155.1051. We are finalizing this policy for FFE States to conduct their own ECP certification reviews of issuers' plans with a provider network effective beginning in PY 2027, and we are modifying our proposal to be effective PY 2028 for ECP certification reviews for issuers' plans that do not use a provider network. We are finalizing that FFE States must ensure that a QHP with a provider network includes in its provider network a sufficient number and geographic distribution of ECPs, where available, to ensure reasonable and timely access to a broad range of such providers for low-income individuals or individuals residing in Health Professional Shortage Areas within the QHP's service area, in accordance with the Exchange's network adequacy standards. In addition, we are finalizing our proposal that FFE States must also ensure that a non-network plan applying for certification as a QHP to be offered through an FFE demonstrates that it provides reasonable and timely access to ECPs that accept the plan's benefit amount as payment in full to ensure that services will be accessible without

unreasonable delay. We also are finalizing that FFE States must have established ECP requirements that are set forth in State statute or regulation, and FFE States must demonstrate that these established ECP requirements ensure plans meet all the following requirements that promote a sufficient number and geographic distribution of ECPs: Minimum percentage requirements (under Sec. 156.235(a)(2)(i) and Sec. 156.236(b)(1)), Indian health care provider requirements (under Sec. 156.235(a)(2)(ii)(A) and Sec. 156.236(b)(3)), and category per county requirements (under Sec. 156.235(a)(2)(ii)(B) and Sec. 156.236(b)(2)). We are also finalizing that FFE States with alternative ECP requirements must demonstrate how those requirements would promote a sufficient number and geographic distribution of ECPs to ensure reasonable and timely access to ECPs. At Sec. 155.1051(e), we also set forth factors that HHS would consider in its review to determine if an FFE State has an Effective ECP Review Program. Additionally, HHS will be available to provide technical assistance and various resources to FFE States, including that we will continue collecting ECP data from FFE issuers in FFE States with an Effective ECP Review Program with the goal of providing this data in a standardized format to FFE States that could inform additional assessments of access to ECPs across the State and assisting FFE States that may require additional support due to more limited resources.

We anticipate several potential impacts associated with these finalized changes to implement the Effective ECP Review Program provisions at Sec. 155.1051. First, while we believe that predominately collecting and reviewing ECP data on the Federal level as part of QHP certification for issuers across the FFE has helped ensure that issuers include a sufficient number and geographic distribution of ECPs within their networks, we believe providing FFE States more flexibility and authority to conduct their own ECP certification reviews may deliver quality improvements to the review process. We acknowledge that States possess unique knowledge on local and contextual factors, such as on market conditions, geographic constraints, and areas in the State with limited economic resources, provider shortages, workforce issues, and population demographics. FFE States may incorporate these various factors to tailor their ECP certification reviews and apply ECP certification results to more directly address State-specific challenges for consumers as it pertains to ECP access, which is more difficult to accomplish at the Federal level with a one-size-fits all approach for all States. In addition, continuing to leverage Federal infrastructure to collect ECP data from issuers in FFE States with an Effective ECP Review Program will create opportunities for a State-Federal partnership where HHS could provide data in a standardized format to States to inform their ECP certification reviews and provide support to FFE States that require additional assistance.

Additionally, we presume there are several cost-related implications of this finalized policy. We do not anticipate any additional costs to the Federal Government as part of this finalized policy. While HHS still intends to collect data from QHP issuers in FFE States with Effective ECP Review Programs, there is still the potential for cost savings at the Federal level as it pertains to reviewing such ECP data during QHP certification and taking enforcement actions against QHP issuers after QHP certification as part of compliance if HHS shifts these responsibilities to FFE States that elect to conduct their own reviews of issuers as part of the Effective ECP Review Program. Though, in turn, this may increase costs among FFE States if they do not already possess the capability and resources to conduct complex, data-intensive ECP certification reviews and enforcement actions against issuers that neglect to meet ECP requirements. For QHP issuers, this finalized policy may have reduced administrative costs and efficiency gains. While HHS will still collect ECP data from issuers in these FFE States, issuers will not have to undergo intensive ECP certification reviews at the Federal level which often requires coordination with HHS to address corrections in ECP data until ECP requirements are met. Also, many QHP issuers already need to coordinate with FFE States to meet various requirements to operate plans in the State. Thus, redirecting ECP review activities to FFE States that issuers already need to coordinate with could further streamline the efficiency of the QHP certification process. However, requiring issuers to submit ECP data on both the State and Federal levels could potentially duplicate both effort and costs among issuers, but the extent of this administrative burden is uncertain as States likely have different data collection and submission requirements, and it is not yet known how FFE States will implement ECP data collection as part of the Effective ECP Review Program and if existing data collection processes already exist or need to be developed to support requirements under Sec. 155.1051.

Lastly, as it pertains to Federalism implications of this proposal, the Affordable Care Act does not require FFE States to establish and enforce ECP certification criteria and review programs for QHP issuers; if an FFE State elects not to establish any of these programs or is not approved to do so, HHS must establish and operate the programs in that State. As part of this finalized policy, we will not require that FFE States elect to conduct ECP certification reviews as part of the Effective ECP Review Program. Rather, we are finalizing additional flexibilities to allow FFE States with the desire to conduct ECP certification reviews to have an opportunity to do so, provided they have sufficient authority and the technical capacity to conduct these reviews by meeting the applicable criteria in Sec. 155.1051. Thus, FFE States that elect to perform their ECP certification reviews and undergo HHS' determination process for assessing if an FFE State has an Effective ECP Review Program will be willingly assuming this responsibility.

We sought comment on these impacts and assumptions.

We did not receive any comments in response to the proposed impact estimates for these policies as part of the regulatory impact analyses. However, several commenters raised general concerns on the potential cost impacts to consumers, ECPs, and issuers if the minimum percentage requirement is reduced to 20 percent. Please see our response to this discussion in section III.E.11.a. of this final rule. For the reasons outlined in the final rule, we are finalizing these estimates with modifications to reflect the impacts associated with not finalizing the proposed minimum percentage reduction. These modifications include no projected impacts due to retaining the minimum percentage at 35 percent on consumer's access to continuous care and out-of-pocket costs, and administrative costs to issuers. 31. QHP Certification of Non-Network Plans (Sec. 156.236)

We are finalizing a number of revisions to part 155 and part 156 to allow plans that do not use a network (non-network plans) to obtain QHP certification by demonstrating sufficient access to a broad range of providers in a manner consistent with sections 1311(c)(1)(B) and (C) of the Affordable Care Act. Non-network plans will be permitted to obtain QHP certification effective PY 2028, if satisfying all

applicable certification requirements, including those under finalized Sec. 156.236. This finalized policy will not require States to approve non-network plans for sale nor will it require Exchanges to allow such plans to operate on the Exchange in their State. States that do not approve non-network plans as QHPs will see no impact under this proposal. The following impact analysis applies only to States that decide to offer such plans as QHPs.

Non-network plans may typically attract healthier enrollees who are generally more willing and able to engage in a sufficient number of price negotiations with providers to benefit from the value a non- network plan can provide. Conversely, individuals requiring frequent care may prefer enrolling in network plans to avoid the need to conduct price negotiations for a greater volume of needed care. This, in turn, naturally leads to favorable risk selection in non-network plans. Consequently, under this finalized policy, non-network plans should anticipate and budget for risk adjustment transfers in their premium calculations, at least to the extent that the issuers of such plans do not already have sufficient reserves at hand to be able to pay an expected high risk adjustment transfer amount.

This dynamic also means that non-network plans may tend to have lower premiums than network plans, so we expect that they would tend to be among the least expensive plans in a particular area. This could affect premium tax credits to the extent that non-network plans are the lowest and/or second-lowest cost silver plan in that area.

We sought comment on these impact estimates and assumptions.

While commenters did not specifically comment on the proposed estimates within this section, commenters shared concerns consistent with this discussion regarding consumer out-of-pocket costs and balance billing risks, financial impacts on providers unable to negotiate benefit amounts with non-network plans, the likelihood for non-network plans to lower health care costs, non-network plans potentially affecting the benchmark for advanced premium tax credits, and the possibility for non-network plans to alter risk pools by attracting healthier enrollees. Please refer to our responses to these concerns in III.E.12. of this final rule. For the reasons outlined in the proposed and final rule, we are finalizing these estimates. 32. Strengthening HHS' Oversight of the Administration of the Advanced Payments of the Premium Tax Credit, Cost-Sharing Reductions, and User Fee Programs and Clarifying HHS' Compliance Review Authority (Sec. 156.480)

We are finalizing our proposal to modify Sec. 156.480 to clarify HHS' authority to audit or conduct a compliance review to assess issuers' compliance with requirements related to the APTC, CSR, and user fee programs. Specifically, we are clarifying that under Sec. 156.480(c), HHS or its designee may audit or conduct a compliance review to assess compliance with all requirements related to the APTC, CSR, and user fee programs applicable to issuers offering a QHP in an Exchange. For consistency, we are also finalizing our proposal to make conforming changes to Sec. 156.480(c)(6) to provide that in instances where HHS enforces compliance with any requirements related to the APTC, CSR, and user fee programs for QHP issuers participating in State Exchanges or SBE-FPs, HHS may do so in accordance with Sec. 156.805. We are further clarifying that the compliance review authority in Sec. 156.480(c) allows for compliance reviews on an as needed or annual basis.

We estimate that the audits that we will conduct under this authority will not impose additional costs beyond what is already accounted for in the audit review process (86 FR 24140, 24281). We estimate that we will conduct compliance reviews under this authority to address systemic issues for approximately 150 issuers each year. We estimate that it will take a business operations specialist 10 hours (at a rate of $78.14 per hour) to compile and submit data and other information necessary for a compliance review. We estimate it will take a compliance officer (at a rate of $75.40 per hour) 4 hours to review and sign off on the submission. The cost per issuer to develop and submit the compliance information will be approximately $1,083.

The total annual cost to issuers undergoing compliance reviews will be approximately $162,450 ($1,083 x 150 issuers) beginning in 2026. However, conducting compliance reviews on an as needed or annual basis if determined appropriate by HHS to assess issuer compliance with requirements related to the APTC, CSR, and user fee programs may reduce the amount of APTC overpayments and result in HHS recouping those overpayments. Further, this additional information could assist issuers in correcting their data for APTC payments not received in advance of the 3-year window, after which HHS only recoups overpayments.\402\ While there will be some Federal costs to conduct the compliance reviews, we expect benefits of more accurate APTC reconciliation and payment adjustments to outweigh the costs.

\402\ Plan year data inaccuracies described to HHS or the State Exchange (as applicable) before the end of the 3-year period beginning at the end of the plan year are eligible for resolution and payment to the issuer of any confirmed APTC underpayments. Data inaccuracies identified after the 3-year period are not eligible for repayment to the issuer. However, should an issuer identify a payment error after the 3-year period, the issuer must notify HHS or the State Exchange (as applicable) and repay any overpayments. See 45 CFR 156.1210(c).

We sought comment on the proposed impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates with modifications to update for the current adjusted hourly wage rates used in burden estimates provided in Table 14 of part IV.A. 33. Factors Considered in Determining the Amount of CMPs and HHS' Authority To Impose CMPs Against Issuers in State Exchanges or SBE-FPs (Sec. 156.805)

We are finalizing our proposal to amend Sec. 156.805 to reiterate what HHS considers when imposing CMPs as enforcement remedies against QHP issuers in Exchanges. Specifically, we are amending Sec. 156.805(b) to provide that HHS, in determining the amount of CMPs, will identify the lawful purpose or purposes of the CMP.

We are also finalizing our proposal to clarify the authority HHS has to impose CMPs against issuers in State Exchanges and SBE-FPs for identified violations. Specifically, we are amending Sec. 156.805(f) to clarify that, when HHS' authority to enforce requirements in State Exchanges and SBE-FPs is triggered, HHS may impose CMPs against issuers in State Exchanges and SBE-FPs for violations of requirements described in Sec. 156.805(a) that are applicable to issuers offering a QHP in a State Exchange or SBE-FP.

We do not believe that the finalized amendments will impose substantial additional costs to HHS beyond the costs that are already accounted for as part of the existing bases and process for imposing CMPs in the FFE, State Exchanges, and SBE-FPs. This is an existing policy that already applies broadly to those issuers participating on the Exchange, and since this amendment does not independently add

any new requirements for any issuer in an Exchange, we believe that the burden associated with it is already covered by existing requirements in Sec. 156.805. Therefore, we do not believe there will be additional burden to issuers under this finalized policy. The burden associated with these requirements is the time and effort necessary to draft and submit audit reports that form the basis for subsequent CMP assessments. While these requirements do impose burdens, data collection requirements associated with imposing CMPs on QHP issuers in an Exchange are exempt from PRA requirements in accordance with 44 U.S.C. 3518(c)(1)(B)(ii), as effectuated through 5 CFR 1320.4(a)(2), because this information would be collected during the conduct of an administrative action or investigation involving an agency against specific individuals or entities.

On balance, we anticipate that this finalized policy will streamline our compliance and enforcement processes and limit the administrative burden for evaluating Exchange standards and requirements applicable to issuers offering QHPs participating in Exchanges.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 34. Administrative Review of QHP Issuer Sanctions (Sec. Sec. 156.903 and 156.935)

We are finalizing our proposal to amend to Sec. 156.903 to provide that an ALJ presiding over an appeal of a sanction imposed in accordance with Sec. 156.805 may issue subpoenas, upon his or her own motion or at the request of a party, if they are reasonably necessary for the full presentation of a case and to add procedures governing the process for issuing subpoenas. We are also finalizing our proposal to amend Sec. 156.935 to ensure that the discovery provisions set forth therein do not apply to appeals of proposed CMPs to be assessed under Sec. 156.805 that result from violations identified in audits under Sec. 156.480(c).

We do not believe that the finalized amendments will impose additional costs to HHS beyond what is currently accounted for in appeals to the DAB. The DAB's procedures include subpoena procedures which follow the procedures established by a program's regulations. We also do not believe the finalized amendments to exclude appeals of CMPs to be assessed under Sec. 156.805 that result from violations identified in audits under Sec. 156.480(c) from discovery will impose additional costs on HHS or issuers, as both parties would be able to provide and obtain information during the audit and informal refutation process and obtain publicly available information that would help to develop a record for appeal.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 35. Quality Improvement Strategy (Sec. 156.1130)

As discussed in section IV.U of this final rule, there is no information collection associated with this finalized policy and no changes were proposed to the QIS data collection requirements applicable to QHP issuers.

We sought comment on this impact estimate and assumption.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 36. Netting and Establishment of Debt Regulations To Include CMPs (Sec. 156.1215)

We are finalizing our proposal to amend the payment and collections processes set forth at Sec. 156.1215(b) to provide that any CMPs assessed against health insurance issuers for violations of any applicable Exchange standards and requirements or PHS Act requirements applicable health insurance issuers, will be subject to netting as part of HHS' integrated monthly payment and collections cycle. We also finalize our proposal to amend Sec. 156.1215(c) to provide that any amount owed to the Federal Government by an issuer and its affiliates for unpaid CMP amounts, after HHS nets amounts owed by the Federal Government under these program affiliates, will be the basis for calculating the determination of the debt.

We do not believe that the finalized amendments will impose additional costs to HHS beyond costs that are already accounted for as part of the existing payment and collections process. The existing payment and collection process uses netting as one means to collect debts from health insurance issuers. The finalized amendments provide that HHS will use the existing process to collect unpaid amounts for CMPs assessed against issuers and their affiliates operating under the same tax identification number that are already subject to netting. This finalized policy also reduces the number of payments and charges flowing back and forth between HHS and issuers, allowing for more efficient collections.

Therefore, we anticipate this finalized policy will streamline the payments and collections processes and limit the administrative burden for operating our programs.

We sought comment on these impact estimates and assumptions.

We did not receive any comments in response to the proposed impact estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed. 37. Regulatory Review Cost Estimation

As discussed in the 2027 Payment Notice proposed rule, due to the uncertainty involved with accurately quantifying the number of entities that would review the rule, we assumed that the mid-point between the total number of unique commenters on the 2026 Payment Notice proposed rule (269) and the number of page views on the Federal Register website during the comment period for that rule (15,824) would be the approximate number of reviewers (8,046) of this final rule. We acknowledged that this assumption may understate or overstate the costs of reviewing this rule. It was possible that not all commenters reviewed last year's rule in detail, and it was also possible that some reviewers chose not to comment on the proposed rule. For these reasons, we thought that the mid-point of unique commenters and page views would be a fair estimate of the number of reviewers of this rule. We welcomed any comments on the approach in estimating the number of entities which would review the proposed rule. We also recognized that different types of entities are in many cases affected by mutually exclusive sections of the proposed rule, and therefore for the purposes of our estimate, we assumed that each reviewer reads approximately 50 percent of the rule. We sought comments on this assumption. Using the wage information from the BLS for medical and health service managers (Code 11-9111), we estimated that the cost of reviewing the proposed rule is $113.42 per hour, including overhead

and fringe benefits.\403\ Assuming an average reading speed of 250 words per minute, we estimated that it would take approximately 6.5 hours for the staff to review half of the proposed rule. For each entity that reviewed the rule, the estimated cost is $741.77 (6.54 hours x $113.42). Therefore in the proposed rule, we estimated that the total cost of reviewing this regulation is approximately $5,968,281.42 ($741.77 x 8,046 reviewers).

\403\ U.S. Bureau of Labor Statistics. (n.d.). Occupational Employment and Wage Statistics. Dep't. of Labor. https://www.bls.gov/oes/current/oes_nat.htm.

We sought comment on these estimates and assumptions.

We did not receive any comments in response to the proposed estimates for this policy. For the reasons outlined in the proposed and final rules, we are finalizing these estimates with the following modifications. The mid-point between the actual number of comments received for the 2027 Payment Notice proposed rule (2,861) and the number of page views on the Federal Register website as of March 26, 2026 (25,723) would be the approximate number of reviewers (14,292) of this final rule. As noted previously, the estimated cost for each entity to review the rule is $741.77. Therefore, we finalize the regulatory review cost estimation as approximately $10,601,376.80 ($741.77 x 14,292 reviewers). 38. Overall Impact of the Proposed Payment Notice Individual Provisions

In the regulatory impact analysis of this final rule, we include impact analyses and estimates for each finalized policy separately, as we intend for each provision to be severable from the rest. Please see section III.I. of this final rule for a more detailed discussion on the severability of the provisions of this rule. However, we anticipate that the provisions of this final rule, while severable, may work in concert with each other and affect many of the same individuals seeking coverage through the individual health insurance market. Therefore, the overall impact of this final rule will likely be less than the simple accumulation of the individual provisions' impact analyses. To the best of our ability, we provide overall impact estimates of these provisions for enrollment, premiums, and APTC, that minimize the overlap of individuals affected.

The baseline starts with internal CMS data of enrollment by month, premiums, and APTCs, we summarize the data using average monthly amounts. These monthly averages are projected throughout the year using historical monthly patterns during a similar environment. For future years, the enrollment is trended by the projected growth in the under age 65 population, however, there is a decrease in 2028 enrollment due to the expected impact of the WFTC legislation which is expected to reduce the level of improper enrollments through additional eligibility verification standards. Spending amounts are trended using projected growth in NHEA less Medicare. While effectuated enrollment numbers are unavailable at this time, we have increased the 2026 average baseline enrollment by 1.151 million to 18.861 million compared to the 17.71 million baseline used in the proposed rule based on enrollee activity we have seen so far in 2026. Moreover, our 2027 baseline enrollment is 18.881 million compared to the 17.729 million in the proposed rule. We have also reduced the impact of the under 150 percent FPL SEP that was included in the proposed rule.

Based on the analysis presented thus far in this section, we expect average enrollment for 2027 to decrease between 1.2 and 2 million enrollees compared to baseline estimates. We expect average premium PMPMs to range from 1.2 percent to 1.8 percent lower compared to the baseline scenario before normal premium trends. Many enrollees will discontinue coverage when stronger eligibility verifications identify they are no longer eligible for subsidies, and we believe it is likely that healthier enrollees are more likely to discontinue coverage. The expected worsening of morbidity in the market is offset by protecting against adverse selection with pre-enrollment SEP verification, removal of the SEP for those under 150 percent FPL, and a reduction in exchange user fee charges.

We have estimated a 1.7 percent increase in premiums in the scenario where 1.2 million enrollees leave the market and a 2.4 percent premium increase if 2 million enrollees leave. These premium impact estimates assume the 1.2 million leaving enrollees have average claims expenses that are 75 percent of the average risk pool and the 2 million leaving enrollees have average claims expenses that are 80 percent of the average risk pool. If the average claims PMPM is 86 percent of the premium PMPM (0.86 x $764.28 = $657.28), we estimate the 1.2 million exiting enrollees have claims costs of $492.96 PMPM (0.75 x 657.28 = 492.96), and the remaining 17.681 million enrollees have an average claims cost of $668.44 (1.2/18.881 x 492.96 + 17.681/18.881 x 668.44 = 657.28). Comparing the new claims PMPM of $668.44 to the prior claims PMPM of $657.28 shows a 1.7 percent increase in average claims (668.44/ 657.28-1 = 0.017). Similarly, if 2 million enrollees leave the market, they are likely to be closer to the average claims cost of the market, so we estimate this population averages 80 percent of the average risk pool cost or $525.83 PMPM (0.80 x 657.28 = 525.83). If 2 million enrollees with average claims cost of $525.83 leave the risk pool, the remaining 16.881 million enrollees would have an average claims cost of $672.86 (2/18.881 x 525.83 + 16.881/18.881 x 672.86 = 657.28), which is 2.4 percent higher than the baseline claims PMPM. Assumptions regarding the relative health of the population leaving the market compared to the health of the average population were further informed considering various economic studies. Consistent with Tebaldi's (2023) research \404\ showing equilibrium in health insurance exchanges demonstrates younger people are more price sensitive and cheaper to cover, we focused on how friction impacts decisions for healthier enrollees. However, research by Deshpande and Li (2019) \405\ and Homonoff and Somerville (2019) \406\ suggest enrollment friction can be a barrier despite potential benefits to the enrollee, so it is not only the young and healthy we should expect to leave the market. Therefore, we reduced the role of health status in explaining how friction impacts enrollment.

\404\ Pietro Tebaldi, Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA, The Review of Economic Studies, Volume 92, Issue 1, January 2025, Pages 586-620, https://doi.org/10.1093/restud/rdae020. Available at https://academic.oup.com/restud/article-abstract/92/1/586/7612959.

\405\ Deshpande, Manasi, and Yue Li. 2019. “Who Is Screened Out? Application Costs and the Targeting of Disability Programs.” American Economic Journal: Economic Policy 11 (4): 213-48.DOI: 10.1257/pol.20180076. Available at https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20180076.

\406\ Homonoff, Tatiana, and Jason Somerville. 2021. “Program Recertification Costs: Evidence from SNAP.” American Economic Journal: Economic Policy 13 (4): 271-98.DOI: 10.1257/pol.20190272. Available at https://pubs.aeaweb.org/doi/pdfplus/10.1257/pol.20190272.

These increases are offset by pre-enrollment SEP verification to improve the health of the risk pool from adverse selection by removing opportunities for unauthorized enrollment and plan switches. With loss of enhanced subsidies and an increase in the member shared responsibility payment, an enrollment option always being available encourages healthier individuals to forgo coverage and wait until they are sick to enroll in an

Affordable Care Act plan. These policies help mitigate that risk. We originally assumed 3 to 4 percent premium savings due to eliminating the under 150 percent FPL SEP; however, after consideration of comments and the impact of additional income verifications in the rule that will proactively lower the amount of people determined eligible for this income-based SEP, we have reduced the estimated impact to 2 percent savings in the 1.2 million enrollment scenario and 3 percent savings in the 2 million enrollment scenario. We are also implementing pre- enrollment SEP verification that we estimate will lead to a 0.5 percent premium reduction in the 1.2 million enrollment scenario and a 0.8 percent premium reduction in the 2 million enrollment scenario beginning in 2027.

The FFE user fee is being reduced to 1.9 percent of monthly premiums, and the SBE-FP user fee rate is being reduced to 1.5 percent, so we reduce the premium estimate by 0.4 percent beginning in 2027. The 0.4 percent premium reduction was calculated using total premiums by State to weight the user fee reduction across all States to obtain an overall market premium impact for this change. Overall, after accounting for the market morbidity impact along with policies aimed at mitigating adverse selection, premiums are expected to be 1.2 percent lower in the 1.2 million enrollment scenario and 2.4 percent lower in the 2 million enrollment scenario in 2027 compared to the baseline scenario before normal premium trends.

For the 1.2 million enrollment scenario, premium trend is estimated to increase by 4.5 percent for 2027 and 4 percent the following years. Premium trend is estimated to increase by 6 percent for 2027 and 4.5 percent in the following years for the 2 million enrollment scenario. Starting with a 2026 premium PMPM of $736.36 and applying the adjustments mentioned previously, we arrive at estimated premium PMPMs of $760.66 in the 1.2 million enrollment scenario and $767.28 in the 2 million enrollment scenario [736.36 x (1 + 0.045 + 0.017-0.02-0.005- 0.004) = 760.66 and 736.36 x (1 + 0.06 + 0.024-0.03-0.008-0.004) = 767.28]. We assume APTC PMPMs will be approximately 88.5 percent of premium PMPMs, leading to projected 2027 APTC PMPMs of $673.18 for the 1.2 million enrollment scenario and $679.05 for the 2 million enrollment scenario (760.66 x 0.885 = 673.18 and 767.28 x 0.885 = 679.05).

Future enrollment is expected to shrink by 2.3 percent for 2028 as these policies continue to take full effect. We estimate modest enrollment increases of 0.3 percent for 2029 and 0.03 percent for 2030.

While not specifically accounted for in these estimates, we further expect a decrease in average premiums and APTC payments resulting from better estimates of the CSR load factor. By providing guidance that the CSR load factor must be set to only collect expected unpaid CSR amounts and not inappropriately inflate Federal expenditures, the likely result will be reduced benchmark plan premiums in several states which will also cause a shift in metal tier enrollment distribution. These additional premium decreases will potentially lead to net reduction in premium under this final rule.

Comment: We received comments that addressed the overall impacts of the finalized policies and the lower and upper bound analyses. Some commenters expressed concerns with the enrollment drops estimated in the proposed rule. Other commenters requested additional information on the assumptions that guide the baseline and the impact estimates, including the enrollment and premium impact trends. Some commenters believed that the year-over-year coverage losses should be higher starting in PY 2027 given the interactions of various eligibility provisions. Commenters also believed that the provisions in this rule would lead to increased adverse selection and premiums compared to what was estimated in the proposed rule. One commenter requested HHS to separately calculate premium impacts of each provision and release the underlying data that supports the impact analyses.

Response: We have updated the overall impact of the finalized policies, including reducing the impact of the 150 percent FPL SEP. As mentioned above, we believe there is likely overlap in the populations affected by these policies, and that is reflected in the estimated enrollment decrease. We also expect the enrollment decreases will result in a morbidity increase to the individual market, leading to an additional 1.7 to 2.4 percent increase in claims and premium as described above. BILLING CODE 4120-01-P

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BILLING CODE 4120-01-C 39. Regulatory Impact Considerations Regarding City of Columbus v. Kennedy

This final rule finalizes updates to policies that were previously finalized with an earlier effective date in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), including Sec. 155.305(f)(4) Failure to File and Reconcile (FTR), Sec. 155.320(c)(3)(iii) Income Verification when Data Sources Indicate Income Less than 100 Percent of the FPL, Sec. 155.320(c)(5) Income Verification When Tax Data is Unavailable, and Sec. 155.420(g) Pre- Enrollment Special Enrollment Period Verification. Although these policies were initially finalized in the 2025

Marketplace Integrity and Affordability final rule with a sunsetting at the end of PY 2026, they are currently stayed by the court.\407\

\407\ See City of Columbus v. Kennedy, 796 F. Supp. 3d at 170.

While we cannot postulate on active judicial proceedings, we have considered the regulatory impact if this stay was lifted and these provisions from the 2025 Marketplace Integrity and Affordability final rule became effective. If the stay is lifted in PY 2026, these provisions may become effective in PY 2026, but there still may be an operational delay in effectuating the policies. If the provisions become effective in PY 2026, the regulatory impacts that were estimated in the 2025 Marketplace Integrity and Affordability final rule would be in effect for PY 2026. From PY 2027, the ongoing regulatory impacts that are estimated in this final rule would be in effect. Any costs to sunset the provisions that were estimated in the 2025 Marketplace Integrity and Affordability final rule would be nullified if this final rule is finalized as proposed because the policies would continue beyond PY 2026. We do not anticipate additional impacts beyond what has been estimated in the 2025 Marketplace Integrity and Affordability final rule and this final rule. If the court stay is lifted after PY 2026 and this rule is finalized as proposed, we do not anticipate additional regulatory impacts from the court decision, as the policies in this final rule will be in effect, and we have estimated the regulatory impacts under the relevant provisions in this final rule.

Due to the uncertainties mentioned previously, we are unable to further quantify the impact regarding the active court proceedings. We sought comment on these estimates and assumptions.

We did not receive any comments in response to these proposed impact estimates. For the reasons outlined in the proposed and final rules, we are finalizing these estimates as proposed.