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

1. 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))

In the 2027 Payment Notice proposed rule (91 FR 6383), we proposed to exercise our authority under sections 1311(c)(1) and 1321(a)(1)(B) of the Affordable Care Act to discontinue the full suite of standardized plan option policies effective beginning in PY 2027. As discussed in greater detail in the preamble section of this final rule addressing Sec. 156.201, we proposed to remove the following from our regulations: the definition of “standardized option” 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 differential display of 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). We also proposed to redesignate paragraphs (c)(3)(i)(I) through (M) of Sec. 155.220 as paragraphs (c)(3)(i)(H) through (L), respectively. Finally, we proposed to cease the annual design and publication of these standardized plan options in the applicable Payment Notice rulemaking for each plan year.

We refer readers to section III.E.8. of this final rule for discussion of our proposals and final policies related to standardized plan options (including proposed amendments to Sec. Sec. 155.20, 155.205(b)(1), 155.220(c)(3)(i)(H), 156.201, and 156.265(b)(3)(iv)) as well as summaries of and responses to public comments received on those proposals. We did not receive any comments in response to our proposal to redesignate paragraphs (c)(3)(i)(I) through (M) of Sec. 155.220 as paragraphs (c)(3)(i)(H) through (L), respectively. For the reasons outlined in the proposed rule and this final rule, we are finalizing these redesignations as proposed. 2. Approval of a State Exchange (Sec. 155.105)

In the 2027 Payment Notice proposed rule (91 FR 6327), we proposed to remove Sec. 155.105(b)(4) to rescind a requirement made in the 2025 Payment Notice (89 FR 26259 through 26261), that a State seeking to operate a State Exchange must first operate, for at least 1 plan year, a State-based Exchange on the Federal platform (SBE-FP). The original amendment was intended to give States sufficient time to create, staff, and structure a State Exchange. However, in the proposed rule, we recognized that requiring States to first operate as an SBE-FP for at least 1 plan year could potentially create unnecessary barriers for States that are well prepared to implement a State Exchange more immediately.

Sections 1311(b) and 1321(b) of the Affordable Care Act allow States to elect to operate their own health insurance Exchanges to provide individuals and employers with health insurance coverage. Every State that has implemented a State Exchange after 2014--the year the initial 13 State Exchanges began operation--first operated an SBE-FP for at least 1 plan year, before codification of the current requirement in the 2025 Payment Notice. This history shows how first operating an SBE-FP has been the preferred approach. However, in the proposed rule, we stated that we recognize that States may have existing infrastructure, relationships, and expertise that could support a State's successful operation of a State Exchange, without first operating an SBE-FP. For example, FFE States are permitted to elect to perform plan management functions similar to the plan management functionality required of all SBE-FPs.\100\ The infrastructure and the associated interested party relationships and State expertise to support such functionality could be leveraged from a direct FFE to State Exchange implementation. Additionally, the technology infrastructure available today to States for implementation of State Exchanges has become more compatible, such that the technology used to support one State Exchange implementation could

be leveraged by another State Exchange. 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. For the reasons provided in this document, we proposed to remove Sec. 155.105(b)(4), such that a State seeking to operate a State Exchange is not required to first operate an SBE-FP for at least 1 plan year, including its first open enrollment period.

\100\ A State may choose to operate plan management functions within the FFE. CMS. (2012, May). Plan Management Partnership in the Federally Facilitated Exchange (FFE). Available at https://www.cms.gov/CCIIO/Resources/Presentations/Downloads/hie-plan-management-partnership-in-the-ffe.pdf.

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. We summarize and respond to public comments received on the proposal to rescind a requirement that a State seeking to operate a State Exchange must first operate, for at least 1 plan year, an SBE-FP below.

Comment: Several commenters opposed the proposal and urged HHS to retain the existing policy. These commenters indicated that removal of the 1-year requirement minimizes consumer safeguards given the potential increased risk that a State implements a State Exchange prior to demonstrated readiness. These commenters further indicated that the requirement for a State to operate an SBE-FP for at least 1 plan year provides States with sufficient time to develop necessary relationships with interested parties and provides interested parties sufficient time to contribute to a State's readiness to operate a State Exchange. A few of these commenters indicated that the current requirement codifies a best practice that States benefit from operating an SBE-FP for at least 1 plan year, and that all States that transitioned from an FFE to a State Exchange over the past several years first operated an SBE-FP, including prior to the codification of the current requirement in the 2025 Payment Notice. These commenters also requested that HHS provide more detail regarding how the current requirement could be an unnecessary barrier to State Exchange implementation, as well as more detail on technological advancements that support removal of the current requirement.

Response: As discussed in the proposed rule, 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. To expand further, HHS' review process entails a careful analysis of a State's operational readiness to implement a State Exchange according to the regulatory requirements, which, for example, is demonstrated through a series of CMS test cases of eligibility and enrollment functionality, and through discussions about best practices and lessons learned from previous State Exchange transitions. As an example, for the impact of a State Exchange implementation on interested parties, HHS reviews a State's plan and progress toward interested party engagement and communications, as well as interested party activities and progress in meeting State Exchange operations. This includes reviewing State Exchange programmatic requirements for their agents and brokers, assisters, navigators, and issuers, including funding, training and certification activities to ensure compliance. Further, to support minimizing consumer confusion around a transition, we work closely with a State implementing a State Exchange to develop coordinated consumer outreach plan with the intent to minimize consumer disruptions and maintain consumer trust with the State entity operating the State Exchange during a transition.

A State that is deficient in any of the State Exchange functional requirements would not be approved to implement a State Exchange for its intended plan year and would be given the choice to continue demonstrating operational readiness to HHS for a future plan year. Notably, we do not require a maximum number of months required for a State to demonstrate operational readiness to HHS to implement a State Exchange. However, we do require that a State submit its first State Exchange blueprint application to HHS at least 15 months prior to a State's first intended open enrollment as a State Exchange, and the review process with HHS generally begins at that time. This means that HHS review process for a State Exchange implementation could take longer than 15 months, until HHS determines that a State is fully ready to meet the requirements of a State Exchange and adequately support its consumers.

Moreover, as discussed in the proposed rule, the technology infrastructure available today to States for implementation of State Exchanges has become more compatible, such that the technology used to support one State Exchange implementation could be leveraged by another State Exchange. For example, there may be State vendor-supported informational technology platforms, such as call center technology, developed for one State Exchange that can be leveraged for another State Exchange, which could reduce upfront implementation time. Our proposal aims to be supportive of evolving technology growth that could factor into a State's ability to more easily implement a State Exchange that meets all of the required functionality and meets HHS operational readiness review requirements

Comment: A few commenters supported the proposal and indicated support for State flexibility and reduced barriers in State Exchange implementation. One commenter further recommended that HHS should continue to ensure that a State is ready to implement a State Exchange prior to HHS approval.

Response: We acknowledge these comments and reiterate that a State must demonstrate its ability to operationalize State Exchange functional requirements through a well-established and robust review process with HHS. As stated above, 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. 3. Election To Operate an Exchange After 2014 (Sec. 155.106)

In the 2027 Payment Notice proposed rule (91 FR 6327), we proposed to amend Sec. 155.106(a)(2) to rescind a requirement we made in the 2025 Payment Notice (89 FR 26261 through 26263) that, as part of a State's activities for its establishment of a State Exchange, the State must provide, upon request, supporting documentation demonstrating progress toward meeting or implementing State Exchange Blueprint requirements. Section 155.106(a)(2) requires that States electing to operate a State Exchange submit a State Exchange Blueprint Application to HHS for approval. The current State Exchange Blueprint application provides that we may require live demonstrations of Exchange functionality on the State Exchange's platform, as well as supporting documentation, as evidence of the State's progress toward meeting State Exchange Blueprint application requirements. For clarity, we had finalized in the 2025 Payment Notice to codify that as part of the State's submission of a State Exchange

Blueprint application, HHS has the authority to request supplemental documents it determines necessary for the State to detail its implementation of the required State Exchange functionality. To support deregulation where possible, we proposed to remove what we codified.

The State Exchange Blueprint continues to serve as a vehicle for a State to document its progress toward implementing its intended Exchange operational model. HHS approves a State's Exchange Blueprint Application and subsequently provides approval for a State to operate a State Exchange, based upon a State meeting State Exchange implementation requirements noted in the Blueprint Application. The current Blueprint Application requires a State to sign and agree that HHS may require supporting documentation from a State as evidence of its progress toward meeting State Exchange Blueprint Application requirements, which is part of the overall process for providing a State with approval to operate a State Exchange. Notably, in our experience, States recognize the need for HHS to request supplemental documentation for HHS to assess a State's readiness to operate a State Exchange, which supports a State's successful State Exchange operation. States have provided such supplemental documentation upon HHS request both before and after this requirement was originally codified. Given this preexisting process, we stated in the proposed rule that we do not believe deregulation in this instance is harmful, nor would it lead to burden on States. Therefore, we proposed to rescind the requirement that a State provide, upon request, supporting documentation demonstrating progress toward meeting or implementing State Exchange Blueprint requirements from Sec. 155.106(a)(2).

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. We summarize and respond to public comments received on the proposal that a State provide, upon request, supporting documentation demonstrating progress toward meeting or implementing State Exchange Blueprint requirements below.

Comment: Several commenters objected to the proposal to rescind the requirement that a State provide, upon request, supporting documentation demonstrating progress toward meeting or implementing State Exchange Blueprint requirements. A few of these commenters indicated that removal of the requirement, while it may support deregulation per Executive Order 14192, could instead lead to confusion in expectations for a State to demonstrate readiness to HHS to implement a State Exchange. In particular, these commenters noted that removal of the requirement may create uncertainty with regard to the language in the State Exchange Blueprint application, which requires a State to sign and agree that HHS may require supporting documentation from a State as evidence of its progress toward meeting State Exchange Blueprint Application requirements. The remaining commenters that objected to the proposal indicated that maintaining the current regulatory requirement supports HHS ability to confirm that a State is ready to implement a State Exchange.

Response: Per Sec. 155.106(a)(2), a State must submit a State Exchange Blueprint Application to HHS for approval. As noted in the proposed rule, the State Exchange Blueprint Application includes that HHS may require supporting documentation from a State as evidence of its progress toward meeting State Exchange Blueprint Application requirements. This requirement in the State Exchange Blueprint Application will continue to exist. Notably, in our experience, and as discussed in the proposed rule, States have recognized the need for HHS to request supplemental documentation for HHS to assess a State's readiness to operate a State Exchange through the approval of a State's Blueprint Application. States have long submitted supplemental documentation to HHS upon request prior to the codification of the requirement in the 2025 Payment Notice, since the requirement that a State submit such supplemental document is noted in the State Exchange Blueprint Application. HHS review and feedback of State-submitted supplemental documentation is used to provide a State with meaningful feedback, including best practices observed in other State Exchange transitions and State Exchange and FFE operations, which overall supports a State's successful State Exchange implementation. We will continue to request supplemental documentation from a State seeking to implement a State Exchange, as needed to assess a State's readiness to implement a State Exchange as part of our approval of a State's Blueprint Application.

Comment: A few commenters supported the proposal and indicated support for deregulation to support State flexibility and reduced barriers in State Exchange implementation.

Response: We acknowledge these comments and reiterate that a State must demonstrate its ability to operationalize State Exchange functional requirements through a well-established and robust review process with HHS. 4. Amending Requirements for State Exchanges To Operate a Centralized Eligibility and Enrollment Infrastructure (Sec. Sec. 155.205(b) and 155.221(k)) a. Amending Requirements for State Exchanges To Operate a Centralized Eligibility and Enrollment Platform on the State Exchange's Website (Sec. 155.205(b))

In the 2027 Payment Notice proposed rule (91 FR 6328), we proposed to revise Sec. 155.205(b)(4) and (5) to remove the requirement that all State Exchanges operate a consumer-facing centralized eligibility and enrollment platform on the State Exchange's website such that a State Exchange could choose to rely entirely on web-brokers (a type of non-Exchange entity) for implementing and operating consumer-facing websites that facilitate the eligibility and enrollment process in a State Exchange pursuant to the proposal in section III.D.4.b. of this final rule. We stated in the proposed rule that these consumer-facing websites operated by web-brokers would facilitate the online submission of eligibility applications by individuals seeking coverage through a State Exchange and facilitate the selection and enrollment into QHPs on a State Exchange for qualified individuals. Further, we stated that these consumer-facing websites operated by web-brokers would also interface with the State Exchange website, which the State would still be required to operate broadly under Sec. 155.205(b), in such a manner as to transmit information from the non-Exchange website to the State Exchange website. We stated that this would facilitate the State Exchange meeting the requirements at Sec. Sec. 155.205(b)(4) and (5) which requires an Exchange to maintain a website that allows an individual to submit a single streamlined eligibility application to the State Exchange and enroll in coverage through the State Exchange. Operationally, we stated that such consumer-facing websites operated by web-brokers would be required to interface with the information technology platform that the State Exchange would still need to operate to appropriately process applicant eligibility determinations and process enrollment transactions with QHP issuers (that is, the State Exchange's `back-end' eligibility and enrollment

system). We stated that using State Exchange-approved technical specifications and/or standards for those interfaces (for example, web services) would allow the exchange of data between the consumer-facing websites operated by web-brokers and the State Exchange in a manner that is seamless to consumers. Additionally, we stated that such an interface would allow for the transmission of consumer eligibility application information and/or QHP selection and enrollment information necessary for the State Exchange to meet key Exchange functional requirements. These requirements include collecting information from applicants through an HHS-approved single, streamlined eligibility application for insurance affordability programs per Sec. Sec. 155.310 and 155.405; performing eligibility verifications required at Sec. Sec. 155.315 and 155.320; performing assessments or determinations of Medicaid/CHIP eligibility required at Sec. 155.302; and performing determinations of eligibility for QHP enrollment and APTC/CSRs at Sec. Sec. 155.305 and 155.310. This also includes key enrollment functions such as collecting and maintaining records of QHP enrollment for all consumers of the State Exchange as required under Sec. 155.400 and transmitting such enrollment information to CMS and IRS. We stated that such consumer-facing websites operated by web- brokers would also need to allow for consumers to select and enroll into a QHP (that is, through direct enrollment) in order to submit QHP selection and enrollment to the State Exchange. This model, referred to as the State Based Exchange Enhanced Direct Enrollment (SBE-EDE) model, was proposed and discussed in further detail in section III.D.4.b of the proposed rule. In the proposed rule, we stated that State Exchanges that opt to take this approach would be required to establish standards and a process for selecting the web-brokers who they may interface with in this manner, similar to the standards and criteria that we have established for direct enrollment entities at Sec. Sec. 155.221(j) and 155.220(n), including a requirement that a non-Exchange web-broker entity satisfy all requirements under Sec. 155.110(a).

When HHS finalized the requirement at Sec. 155.205(b) that Exchanges operate a centralized eligibility and enrollment platform on the Exchange's website in the 2025 Payment Notice (89 FR 26271), HHS' intent was to tie together regulatory requirements throughout part 155 regarding the integrated nature of online, real-time automated eligibility functions that Exchanges were intended to perform. This included the intent to clearly affirm the close integration that exists and is necessary between Exchange-operated websites, the online consumer-facing single streamlined eligibility application, and the back-end eligibility system that performs automated eligibility verifications and eligibility determination functions that return real- time, online results to the consumer.

While in the proposed rule we affirmed that State Exchanges are responsible for making all eligibility determinations for QHP coverage and related insurance affordability programs through a centralized eligibility processing system and enrollment records system, requiring State Exchanges to operate a consumer-facing, centralized eligibility and enrollment consumer website that interfaces with the State Exchange's back-end eligibility processing and enrollment records system may prohibitively restrict Exchange flexibility and innovation. While all State Exchanges that do not use the Federal platform currently operate their own eligibility and enrollment consumer interface on the State Exchange's website, we believe that maintaining this requirement in regulation could discourage State Exchanges from pursuing innovative approaches that might better serve their specific populations and enhance the consumer experience, including private sector-focused consumer engagement and enrollment strategies. We believe that providing State Exchanges with flexibility in how they offer their online eligibility and enrollment consumer interface may allow State Exchanges to develop solutions that address the unique needs of their residents and markets. Removing the requirement for an Exchange to operate an eligibility and enrollment consumer interface on its website is a necessary step in order to codify the SBE-EDE option we proposed at Sec. 155.221(k), as described in section III.D.4.b. and previously in this section. Under this option, the ability for State Exchanges to exclusively utilize web-brokers to operate consumer-facing websites that facilitate eligibility and enrollment is the key component.

We noted that sections 1311(c)(5) and (d)(4)(C) of Affordable Care Act do not require Exchanges to operate a centralized consumer-facing eligibility and enrollment website that supports both eligibility determinations for, and enrollments in, QHPs.\101\ Rather, section 1311(d)(4)(C) of the Affordable Care Act provides that an Exchange must maintain an internet website through which enrollees and prospective enrollees of QHPs may obtain standardized comparative information on QHPs available in the State. Exchanges must also undertake certain minimum functions to facilitate the purchase of QHPs under section 1311(b)(1)(A) of Affordable Care Act and make available QHPs to qualified individuals and employers under section 1311(d)(2)(A) of Affordable Care Act. These minimum functions facilitate the purchase of QHPs by helping to make the purchase of QHPs easier and also by administering elements of the structure necessary to make QHPs available. This approach of relying on private sector EDE entities aligns with the general Affordable Care Act framework that relies on and benefits from the government working within the existing health insurance coverage infrastructure rather than taking a purely governmental or public approach to advancing coverage for the individually insured population. The Affordable Care Act does not establish new government-provided health plans but instead creates Exchanges to facilitate the purchase of government-subsidized QHPs through the individual health insurance market. Exchanges support specific statutory functions that make QHPs available to purchase. These functions include certifying that QHPs conform to certain Federal standards in addition to State and Federal standards that govern the individual health insurance market. Exchanges must also provide certain tools to help consumers shop for QHPs, as well as support eligibility determinations and enrollment in other public health care programs such as Medicaid and CHIP. Importantly, these additional standards do not dictate any specific changes to the existing enrollment pathways on the individual market.

\101\ Section 1311(c)(5) of the Affordable Care Act instead requires the Secretary to make available to all Exchanges a model Exchange website template developed by the Secretary. Section 1311(d)(4)(C) of the Affordable Care Act requires the Exchanges to maintain an internet website through which enrollees and prospective enrollees of qualified health plans may obtain standardized comparative information on such plans.

In the context of operating an internet website, we interpret the statutory language at section 1311(c)(5) and (d)(4)(C) of Affordable Care Act to require that Exchanges minimally operate an informational website that provides consumers with the ability to view comparative information on QHP options, but that the Exchange may direct consumers to other entities or resources for purposes of facilitating the submission of applications for eligibility

and enrolling enrollment in QHPs, with APTC and CSRs, if otherwise eligible. We stated in the proposed rule that a State Exchange that elects the new SBE-EDE option would continue to be responsible for determining eligibility for, and granting exemption certifications under, section 1311(d)(4)(H) of Affordable Care Act, as applicable; making available an electronic calculator consistent with section 1311(d)(4)(G) of Affordable Care Act; establishing a Navigator program as required under section 1311(d)(4)(K) of Affordable Care Act; and providing for the operation of a toll-free telephone hotline under section 1311(d)(4)(B) of Affordable Care Act. As mentioned earlier and consistent with section 1311(d)(4)(F) of the Affordable Care Act, we stated that a State Exchange that elects to pursue this new SBE-EDE option would continue to be responsible for conducting assessments or determinations of eligibility for Medicaid and CHIP. We stated that they would use the information provided by consumers on the consumer- facing website operated by a web-broker State Exchange's approved single, streamlined eligibility application that is made available on the consumer websites operated by the web-brokers selected by the State Exchange as part of the SBE-EDE option, and for referring individuals who are assessed or determined eligible for Medicaid or CHIP to the appropriate State Medicaid agency for enrollment in those programs.

The State Exchanges that are currently operating have had to engage with private entities in a manner that would similarly translate to what a State Exchange would be doing under the SBE-EDE model, in terms of relying on the services of private entities to develop and operate a consumer-facing website (that is, online eligibility and enrollment portal) that facilitates consumers applying for and enrolling in QHPs through the State Exchange. Most State Exchanges currently in operation have competitively-procured services from a private entity to develop and operate an online eligibility and enrollment portal (including through which an applicant can submit a single, streamlined application for insurance subsidy programs) and consumer-facing QHP enrollment portal on their respective State Exchange website. These online, consumer-facing eligibility and enrollment portals on State Exchange websites facilitate the online submission of consumer eligibility applications and QHP selection and enrollments, and through web interfaces that are seamless to consumers, transmit that information to the State Exchange's back-end eligibility and enrollment processing information system. In the proposed rule, we stated that we believe that in the absence of a centralized consumer facing website for eligibility and enrollment operating on a State Exchange's website under the proposed SBE-EDE approach, web-brokers may provide that service to a State Exchange in a manner that is similar to that which currently exists between State Exchanges and the private entities they have contracted with to operate their centralized consumer-facing online eligibility and enrollment portal on the State Exchange's website. In both approaches, whether a web-broker provides the online eligibility and enrollment portal to consumers outside of the State Exchange's website, as we stated would be the case under this proposal, or a private entity has developed and operates the consumer-facing online eligibility and enrollment portal on the State Exchange's website in a centralized fashion, the State Exchange maintains responsibility for meeting all other Federal requirements for their online consumer assistance functions. As such, we stated that the State Exchange would still need to maintain a website that meets all other website requirements for State Exchanges under Sec. 155.205(b), in the same manner that SBE-FPs are currently required to maintain an informational website for consumers while relying on the Federal eligibility and enrollment platform for eligibility and enrollment functions. In particular, we stated that State Exchanges that elect the SBE-EDE option would be required to meet the minimum Exchange function requirement under section 1311(d)(4)(C) of the Affordable Care Act to maintain a website providing standardized comparative information on such plans to enrollees and prospective enrollees of QHPs.

In the 2025 Payment Notice (89 FR 26271), we amended Sec. 155.302(a) to codify the Exchange's responsibility for conducting eligibility determinations and maintaining records of all QHP enrollments on the Exchange. In the proposed rule, we stated that State Exchanges would still maintain this responsibly if it elects to pursue the new SBE-EDE option and exclusively utilize web-brokers for operating consumer websites that facilitate the eligibility and enrollment process in a State Exchange. Additionally, we stated that enrollment through such a consumer website would still be considered enrolling in a QHP through the State Exchange per Sec. 155.220(c)(3) and proposed Sec. 155.221(k)(2).

We noted in the proposed rule that this proposed amendment would not affect other regulatory requirements throughout 45 CFR part 155 that govern State Exchange eligibility and enrollment functions. For instance, per Sec. 155.405, we stated that State Exchanges would still be required to obtain HHS approval for the eligibility application used on the consumer websites. HHS' review of the State Exchange's eligibility application would follow the currently established processes, including requiring that the State Exchanges demonstrate appropriate functionality to make accurate determination. As such, State Exchanges that do not rely on the Federal eligibility and enrollment platform can continue to meet these obligations without operating a singular, centralized consumer-facing eligibility and enrollment website.

We recognized in the proposed rule that allowing State Exchanges to take this approach would create different consumer experiences in applying for and enrolling in coverage through State Exchanges as compared to an approach where a State Exchange implements and operates a centralized eligibility and enrollment infrastructure. We sought comment on how State Exchanges that implement such an approach can create comparable consumer experience, in addition to comments on HHS oversight and the approval requirements proposed in section III.D.4.b. of this final rule. We sought comment on this proposal.

We received a substantial number of thoughtful and substantive comments on this proposal, reflecting significant stakeholder interest in and engagement with this important policy area. The agency continues to strongly support the goals of the proposal and remains committed to creating flexibility that would allow States to better serve their residents' needs. However, given the volume and complexity of the comments received, we are unable to give those comments the thorough and careful consideration they deserve within the timeframe required to publish this final rule that provides States, health insurance issuers, and other interested parties benefit parameters and other rules they need for the PY 2027 rate setting, plan approval, and QHP certification processes. Rather than address the proposal without the benefit of a complete and deliberate review of the public record, we believe it is in the best interest of interested parties and the public to address this proposal, including all public comments

HHS received in response, during the 2028 Payment Notice rulemaking cycle.

We encourage interested parties to continue engaging with us on this important issue. b. SBE-Enhanced Direct Enrollment Option (Sec. 155.221(k))

To build on the success of the EDE pathways and enhance the consumer enrollment experience, in the 2027 Payment Notice proposed rule (91 FR 6330), we proposed to offer additional flexibility to State Exchanges to leverage the benefits of EDE through a private sector- supported consumer engagement and enrollment strategy that is tailored to the needs of local markets. Accordingly, we proposed to add a new paragraph (k) to Sec. 155.221 to establish a process for State Exchanges that do not rely on the Federal eligibility and enrollment platform to elect a new SBE-EDE option, in which the applicable State Exchange could seek HHS approval for web brokers to serve as the exclusive enrollment pathways for operating consumer-facing websites that facilitate the eligibility and enrollment process in a State Exchange. In the proposed rule, we stated that these consumer-facing websites operated by web-brokers will facilitate the online submission of eligibility application by individuals seeking an eligibility determination for, and enrollment in, a QHP offered through the Exchange with APTC and CSRs, if otherwise eligible. Previously, the Exchange DE option was finalized in part 1 of the 2022 Payment Notice Final Rule (86 FR 6151) and later repealed in part 3 of the 2022 Payment Notice (86 FR 53429). We proposed to codify this policy again and to also allow Exchanges to offer their consumers a form of EDE in which the Exchanges rely exclusively on web-brokers to implement and operate the consumer-facing websites through which consumers select and enroll in a QHP without requiring that the Exchanges also operate a centralized consumer-facing eligibility and enrollment website. The proposal applied exclusively to State Exchanges so that, if finalized, the experience and insights of State Exchanges that implement this model could be leveraged by other Marketplaces. We stated in the proposed rule that this would help inform operational considerations were we to expand this model to the FFEs and State Exchanges that use the Federal eligibility and enrollment platform, both of which were included in the previous policy. We stated that since the repeal of the Exchange DE option, many of the policy and operational priorities, as well as then-new Federal laws cited at that time to justify the repeal, are no longer competing for agency resources, and this has created bandwidth to codify a version of the DE option once again.\102\

\102\ Policy and operational priorities and then-new Federal laws included implementation of E.O. 13985 and E.O.14009; Affordable Care Act-related programs under the American Rescue Plan Act of 2021 (ARP) (namely, the State Exchange Modernization Grant Program) and the No Surprises Act; and activities undertaken by HHS to implement the COVID-19 SEP. While activities undertaken pursuant to the No Surprises Act continue, E.O. 13985 and 14009 have been rescinded. Additionally, many resources needed to implement and oversee administration of the enhanced subsidies codified under the ARP, and later extended under the Inflation Reduction Act of 2022, are no longer needed since they expired at the end of 2025. The State Exchange Modernization Grant program also has concluded and States closed out their grants between January and August of 2023. Additionally, activities related to implementing the COVID-19 SEP, including coordination with and oversight of State Exchanges with respect to similar SEPs they implemented in response to the COVID-19 public health emergency (PHE), concluded before the PHE ended in 2023.

We stated in the proposed rule that a State Exchange electing to implement the SBE-EDE option will continue to be responsible for meeting and ensuring that all approved EDE partners meet all applicable statutory and regulatory requirements governing application for and enrollment in QHPs. Additionally, we stated that the State Exchange will also continue to be responsible for sharing eligibility determination and enrollment information in coordination with issuers and HHS in accordance with Sec. Sec. 155.340, 155.400, and 155.430. We stated that the State Exchange will continue to provide HHS enrollment data to ensure accurate APTC payments are made to issuers on behalf of qualified individuals and in support of reconciliation of APTC on individual income tax returns.

In connection with the SBE-EDE option, we stated in the proposed rule that the State Exchange will still be required to make available a website listing basic QHP information for comparison,\103\ and a listing with links to approved partner websites for consumer shopping, plan selection, and enrollment activities. Consistent with section 1311(d)(4)(E) of Affordable Care Act, we stated that the comparative plan information presented on the State Exchange's website will need to continue to utilize a standardized format, including the use of the uniform summary of benefits and coverage established under section 2715 of the PHS Act.\104\ We stated that the standardized comparative information displayed on the Exchange website will also be required to continue to include the quality ratings assigned to each QHP offered through the Exchange.\105\ In addition, we stated that the State Exchange, along with its EDE partners, would continue to be responsible for meeting Federal accessibility standards under Sec. 155.205(c) for individuals living with disabilities and for individuals who have limited English proficiency.\106\ Finally, we stated that all consumer data collected, stored, or transmitted through web-broker platforms operating under the SBE-EDE option would remain subject to the privacy and security standards established at Sec. 155.260 and web-brokers participating in the SBE-EDE option would be subject to HHS oversight and monitoring pursuant to Sec. 155.280 as a non-Exchange entity. We stated that State Exchanges implementing the SBE-EDE option would be required to ensure that web-brokers comply with these protections, including, but not limited to, encryption, access controls, and audit logging requirements.

\103\ 45 CFR 155.205(b)(1) outlines the QHP comparative information which must be displayed.

\104\ See Sec. 155.205(b).

\105\ See section 1311(d)(4)(D) of Affordable Care Act and 45 CFR 155.205(b). Also see sections 1311(c)(3) and (c)(4) of Affordable Care Act and Sec. Sec. 155.1400 and 155.1405.

\106\ Covered entities such as States, recipients of Federal financial assistance from HHS, programs or activities administered by HHS under title I of Affordable Care Act (such as the FFE), and programs or activities administered by any entity established under Title I (such as State Exchanges), must comply with applicable Federal civil rights laws that prohibit discrimination on the basis of race, color, national origin, sex, age, and disability. These laws include section 1557 of Affordable Care Act (42 U.S.C. 18116) (Section 1557), Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.) (Title VI), section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) (Section 504), and the Americans with Disabilities Act of 1990 (29 U.S.C. 12101 et seq.) (ADA).

In the proposed rule, we stated that HHS would maintain oversight authority over State Exchanges under Sec. 155.1200, which would enable enforcement of Federal requirements associated with the SBE-EDE option and would allow HHS to take necessary actions to mitigate program integrity risks inherent in this model. To ensure ongoing compliance and reduce program integrity risks under the SBE-EDE option, we stated that HHS would rely on the State-based Marketplace Annual Reporting Tool (SMART), as a key oversight mechanism. Under Sec. 155.1200(b), we stated that State Exchanges would be required to complete SMART submissions annually, attesting to their compliance with relevant Exchange operational requirements under part 155. Additionally, under Sec. 155.1200(c), we stated that State Exchanges would need

to engage independent qualified auditing entities to perform annual external financial and programmatic audits, which would be included with SMART submissions. We stated that HHS would review all SMART submissions and would issue formal letters to State Exchanges summarizing observations on areas of noncompliance and identifying any required corrective actions. We stated that This SMART-based compliance monitoring process would serve as a critical safeguard against program integrity risks by providing HHS with regular, audited documentation of State Exchange operations and would be relied on under the SBE-EDE model.

Beyond the SMART process, we stated in the proposed rule that HHS would employ additional oversight mechanisms to mitigate program integrity risks. These include formal technical assistance opportunities tailored to SBE-EDE implementation efforts and challenges, as well as ongoing informal communications with State Exchange leadership and staff for proactive, real-time issue identification and resolution. In the proposed rule, we stated that together, these oversight tools--anchored by the SMART compliance monitoring process--would enable HHS to exercise its enforcement authority and ensure that State Exchanges implementing the SBE-EDE option maintain program integrity and meet all Federal requirements.

In the proposed rule, we proposed to modify Sec. 155.221(k) such that, subject to HHS approval, a State Exchange that does not rely on the Federal eligibility and enrollment platform may elect to engage one or more web-brokers described in paragraph Sec. 155.221(a) to facilitate QHP enrollments through its Exchange. We stated that such approved entities would enroll qualified individuals in a QHP in a manner that constitutes enrollment through the Exchange \107\ and would also facilitate consumer submission of eligibility application through the entity's consumer website to the State Exchange to receive eligibility determinations from the State Exchange for APTCs and CSRs.

\107\ Section 1401(a) of Affordable Care Act added new section 36B to the Code, which provides for PTCs for eligible individuals, while section 1402 of Affordable Care Act provides for CSRs for eligible individuals. For individuals to be eligible to receive PTCs, among other requirements, the Affordable Care Act requires that individuals be enrolled in a QHP through an Exchange. We have interpreted this statutory language to allow a QHP issuer to enroll an applicant who initiates enrollment directly with the QHP issuer. See Sec. 156.1230, whereby individuals enrolling directly on the website of a QHP issuer are considered enrolled “through an Exchange” so long as the issuer meets applicable requirements. We adopted a similar approach to allow a web-broker to enroll an applicant who seeks to enroll through the web-broker's website. See Sec. 155.220(a)(2) and (c), whereby individuals enrolling directly through the site of a web-broker are considered enrolled “through an Exchange” so long as the web-broker meets applicable requirements.

At Sec. 155.221(k), we proposed requirements for a State Exchange to become an SBE-EDE. We proposed that a newly-transitioning or approved State Exchange must submit an Exchange Blueprint application, or Blueprint revision, to HHS for review at least 15 months prior to the targeted open enrollment launch date as an SBE-EDE.\108\ For an approved State Exchange, this would be considered a significant change to its Blueprint.\109\ We also proposed that the State Exchange must meet all other applicable Federal statutory and regulatory requirements for the operation of an Exchange, including for approved State Exchanges to request and obtain HHS approval for any significant changes to its single, streamlined eligibility application under Sec. 155.405. Following submission of an approved State Exchange's submission of a revised Exchange Blueprint application, in accordance with Sec. 155.105(e), HHS would have up to 90 days \110\ to review the revision and approve or deny the change.

\108\ This approach is consistent with the 15-month State Exchange approval timeline requirements under Sec. 155.106(a)(2) for States seeking to newly establish and operate a State Exchange to submit its State Exchange Blueprint for review and approval. While the SBE-EDE model is distinct from the State Exchange model, in the proposed rule we stated that we would consider a transition to the SBE-EDE model to require a significant operational effort to implement such that a consistent timeframe would have many benefits to the State and HHS, particularly while the SBE-EDE model remains a new Exchange model.

\109\ This approach is consistent with the requirement that a State notify HHS and receive written approval from HHS before significant changes are made to the Exchange Blueprint. See, for example, 77 FR 18316. In the proposed rule, we stated that significant changes could include altering a key function of Exchange operations or other changes to the Exchange Blueprint that would have an impact on the operation of the Exchange. This includes, but is not limited to, the process for enrollment in a QHP. See, for example, 76 FR 41871.

\110\ As detailed in Sec. 155.105(e), HHS generally has 60 days after receipt of a completed request to complete its review of a significant change to an Exchange Blueprint and, for good cause, may extend the review period by an additional 30 days up to a total of 90 days.

Additionally, in accordance with Sec. 155.105(c)(2), we proposed at Sec. 155.221(k)(1) that a State Exchange that wants to implement the SBE-EDE option would be required to demonstrate to HHS operational readiness for the State Exchange to enroll qualified individuals in a QHP in a manner that constitutes enrollment through the Exchange and to enable individuals to apply for APTC and cost sharing for QHPs, as well as receive assessments or determinations of Medicaid and CHIP eligibility from the Exchange as described in Sec. 155.302, using the eligibility application described in Sec. 155.405. We proposed a new requirement at Sec. 155.221(k)(2) that the State also would receive approval only if it provides HHS with an implementation plan and timeline that details the key activities, milestones, and its communications and outreach strategy to support the transition of enrollment operations to EDE entities. We stated that this is to ensure that HHS and the State have an opportunity to coordinate these details to maximize the chances of a successful transition. We stated that State Exchanges that elect to implement the SBE-EDE option would retain the flexibility to determine their own business controls while complying with Sec. 155.220(n) and Sec. 155.221(j), which outline the applicability of Federal web-broker and EDE requirements to State Exchanges, including requirements related to standardized website disclaimers, web-broker operational readiness, business audit and security and privacy documentation, and display of website changes. We proposed at Sec. 155.221(k)(3) that HHS would not approve a State Exchange to implement the SBE-EDE option unless the State Exchange demonstrates to HHS that at least one EDE entity selected by the State is capable of enrolling all consumers in the State. In particular, we stated that we believe it is critical that State Exchanges that elect to implement the SBE-EDE option establish that at least one EDE entity meets the minimum Federal requirements to participate in the Federally- facilitated Exchange enhanced direct enrollment program, including requirements at Sec. Sec. 155.220 and 155.221, particularly Sec. 155.220(c)(3)(i)(A) and (D),\111\ to ensure consumers have at least one option through which to view detailed QHP information for all available QHPs in the State, and meets accessibility requirements under Sec. 155.205(c). Therefore, we proposed that if no EDE partner meets these requirements, the State Exchange would be required to continue operation of its own consumer-

facing State Exchange website for purposes of eligibility and enrollment. To assist State Exchanges in meeting requirements to become an SBE-EDE, we stated that State Exchanges could partner with an existing, HHS-approved web-broker EDE partner \112\ as a starting point to develop their own EDE programs, as these entities have already met requirements for HHS approval to participate in the FFE's EDE program. In summary, we proposed in the proposed rule to allow newly- transitioning or approved State Exchanges to make web-brokers the exclusive enrollment pathways to facilitate the online submission of eligibility applications by individuals seeking coverage through the State Exchange, including by adding the following new provisions: Sec. 155.221(k), which describes the proposed SBE-EDE option and approval process; Sec. 155.221(k)(1), which lays out the proposed requirement for a State Exchange to demonstrate operational readiness to enroll qualified individuals in a QHP through approved EDE entities to be considered an SBE-EDE; Sec. 155.221(k)(2), which details the proposed requirement to provide an implementation plan and timeline; and Sec. 155.221(k)(3), which proposed to require that a minimum of one EDE entity selected by the State meets minimum Federal requirements to participate in the FFE's EDE program and is capable of enrolling all consumers in the State in all available plan offerings, as well as meeting certain other requirements. We solicited comment on all aspects of the proposal, including any comments related to interest in pursuing this model among State Exchanges or other interested parties, expanding the option to other Exchange models, anticipated impacts to Exchange operating costs, and any other considerations or recommendations to effectively operationalize the SBE-EDE option. We also sought comment on the appropriate timing for making this option available to State Exchanges, specifically whether HHS should make this option available to State Exchanges for the PY 2028 annual open enrollment period (consistent with the 15-month Blueprint timeline referenced in this section) or delay implementation to PY 2029 (or later) to allow additional transition time for early adopters of the model.

\111\ In addition to ensuring there is at least one website available in the State that satisfies all accessibility requirements under Sec. 155.205(c), we proposed that there must also be at least one website available in the State through which consumers can view and enroll in all available QHPs in the State.

\112\ In coordination with third-party auditors, HHS vets prospective Classic DE and EDE partners that want to operate on the FFE's DE or EDE pathway to ensure compliance with Sec. Sec. 155.220 and 155.221, and meet other operational requirements further detailed in sub-regulatory guidance (available at https://www.cms.gov/files/document/guidelinesforenhanceddirectenrollmentauditsforyear8final.pdf and https://www.cms.gov/files/document/faq-regarding-decommissioning-classic-direct-enrollment-de-pathway091125.pdf). HHS also maintains an updated list of approved DE and EDE partners, which it posts publicly on the website for the Centers for Medicare & Medicaid Services (available at https://www.cms.gov/cciio/programs-and-initiatives/health-insurance-marketplaces/downloads/classic-de-webbrokers.pdf and https://www.cms.gov/files/document/ede-approved-partners.pdf).

For the same reasons we will not finalize the proposal discussed under section III.D.4.a. earlier in this preamble, we are not addressing finalization of this proposal in this final rule. We intend to consider finalizing this proposal, with or without modifications, in the 2028 Payment Notice rulemaking cycle or in another appropriate rulemaking vehicle in which we would address and respond to all comments received in response to the proposal.

We remind States that State Exchanges can still implement EDE programs regardless of whether we finalize these policies, subject to Federal requirements, including those at Sec. Sec. 155.200 and 155.221. We remain available to provide technical assistance to State Exchanges interested in working with EDE partners to improve their operations and the experiences of consumers who engage with the Exchange. 5. Additional Required Benefits (Sec. 155.170)

In the 2027 Payment Notice proposed rule (91 FR 6332), we proposed to revise Sec. 155.170(a) to provide that any State-required benefits would be considered “in addition to EHB” (and thus not an 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 proposal, we stated that such State-required benefits would be considered in addition to EHB regardless of whether the mandated benefits are embedded in the State's EHB-benchmark plan. We proposed that this change would be effective beginning with PY 2027. We also proposed revisions to the regulatory text at Sec. Sec. 155.170(a)(2) and 156.115(a) to align with this proposal and to have State and issuer responsibilities for State-required benefits appear in a more logical reading order in the CFR.

Section 1311(d)(3)(B) of the Affordable Care Act permits a State to require QHPs offered in the State to offer benefits in addition to the EHB, but requires the State to make payments, either to the individual enrollee or to the QHP issuer on behalf of the enrollee, to defray the cost of these additional State-required benefits.

In the 2013 EHB final rule (78 FR 12838), we finalized a standard at Sec. 155.170(a)(2) that specified that State-required benefits enacted on or before December 31, 2011, even if not effective until a later date, are considered EHBs and therefore the costs of these benefits are not required to be defrayed by the State. The 2017 Payment Notice (81 FR 12242 through 12244) revised Sec. 155.170(a)(2) to make clear that benefits required by State action taking place on or before December 31, 2011 are considered EHB, regardless of whether required benefits were established through legislative action, regulation, guidance, or other State action. We also amended Sec. 155.170(a)(2) to provide that benefits required by State action taking place on or after January 1, 2012, other than for purposes of compliance with Federal requirements, are considered in addition to EHB.

Most recently in the 2025 Payment Notice (81 FR 26264 through 26268), we finalized that, beginning in PY 2025, covered benefits in a State's EHB-benchmark plan are considered an EHB under Sec. 155.170(a)(2) and thus, do not require defrayal by the State. However, we noted that if at a future date the State updates its EHB-benchmark plan under Sec. 156.111 and removes the mandated benefit from its EHB- benchmark plan, the State may have to defray the costs of the benefit under the factors set forth at Sec. 155.170 as it will no longer be an EHB after its removal from the EHB-benchmark plan. Additionally, we noted that beginning in PY 2025, a State that is defraying the costs of a benefit required by a mandate that is in addition to the EHB under Sec. 155.170 will be permitted to cease defraying the costs of that benefit if the benefit was included in its EHB-benchmark plan or upon updating its EHB-benchmark plan to include such benefit coverage. We further clarified that because any covered benefits in a State's EHB- benchmark plan are considered to be an EHB, such benefits are subject to the various rules applicable to EHB, including the prohibition on discrimination in accordance with Sec. 156.125, the annual limitation on cost sharing in accordance with Sec. 156.130, and restrictions on annual or lifetime dollar limits in accordance with Sec. 147.126. We supported the revision to Sec. 155.170(a)(2) finalized in the 2025 Payment Notice in part based on our understanding of States' struggle to understand and operationalize the policy that previously required States to

defray the cost of State-required benefits, even if such benefits were included in the State's EHB-benchmark plan. We stated that finalization of this policy will promote consumer protections and facilitate compliance with the defrayal requirement by making the identification of benefits in addition to the EHB more intuitive.\113\

\113\ On November 12, 2025, the Government Accountability Office (GAO) released a report “Health Insurance Marketplaces: CMS Has Limited Assurance That Premium Tax Credits Exclude Certain State Benefit Costs. GAO-25-107220, available at https://files.gao.gov/reports/GAO-25-107220/index.html. We concurred with the GAO's recommendation to review CMS' current oversight approach for defrayal of State mandated benefits and determine whether additional oversight is needed, and that work is ongoing.

We have since reevaluated this position and in the proposed rule, stated that we believe we should not jeopardize the affordability of premiums, particularly for unsubsidized enrollees, for an intangible improvement to States' understanding of Federal defrayal requirements. We noted that when States enact benefit mandates, plan premiums must generally increase to account for the additional coverage. In the individual market (in which QHPs are sold), if State-required benefits are EHB, the associated premium increases will be entirely offset for consumers receiving APTC by higher APTC expenditures because the amount of APTC is tied directly to the premium amount. Over time, the accumulation of new State-required benefits that are EHB could substantially increase Federal APTC costs, undermining the purpose of the statutory defrayal policy. While premium increases associated with the accumulation of State-required benefits that are EHB will be offset for subsidized consumers, they are not offset for unsubsidized enrollees because they do not receive APTC. As a result, we stated in the proposed rule that we are concerned that the policy finalized in the 2025 Payment Notice that any covered benefits in a State's EHB- benchmark plan are considered EHB has an outsized impact on unsubsidized enrollees who do not receive APTC, which threatens to disincentivize enrollment amongst this population.

We stated in the proposed rule that our current policy incentivizes States to enact additional State-required benefits and then to select an EHB-benchmark plan under Sec. 156.111 that includes such State- required benefits such that these benefits are considered to be EHB. We stated that this approach drives up premiums, which, in turn, increases Federal APTC expenditures, negatively impacts unsubsidized enrollees, and exacerbates low enrollment amongst this population.

Therefore, we proposed to revise Sec. 155.170(a)(2) to revert to the standard that was in place prior to the 2025 Payment Notice, which required States to defray the cost of applicable State-required benefits at Sec. 155.170(a)(1) taken by State action after December 31, 2011, even if such benefits are included in the State's EHB- benchmark plan beginning with PY 2027. Specifically, we proposed to revise Sec. 155.170(a)(1) to provide that a State mandated benefit will be considered “in addition to EHB” (and thus not EHB) if it is: (i) required by a State action taking place after December 31, 2011; (ii) applicable to the small group and/or individual markets; (iii) specific to required care, treatment, or services; and (iv) not required by State action for purposes of compliance with Federal requirements.

We noted in the proposed rule that the proposed revisions at Sec. 155.170(a)(1)(i) through (iv) would explicitly add into the regulatory text four conjunctive elements that determine when State-required benefits require defrayal. These four elements have long been included as part of a State's defrayal analysis but have not all been included in the regulatory text at Sec. 155.170.\114\ We proposed to add them to Sec. 155.170 to make explicit the specific circumstances that require State defrayal of benefits in addition to EHB. We proposed to revise Sec. 155.170(a)(2) to state: “A State must make payments in accordance with paragraph (b) of this section to defray the cost of any State-required benefits in addition to the EHB.” We also proposed to revise and reorder the requirements for health plans to provide EHB at Sec. 156.115(a) by adding at Sec. 156.115(a)(2) the longstanding requirement that benefits required by State action taking place on or before December 31, 2011 are EHB that must be provided by health plans, and redesignating current paragraphs (a)(2) through (a)(6) as paragraphs (a)(3) through (a)(7). We emphasized in the proposed rule that, other than the proposed change to remove consideration of whether the benefits are included in the State's EHB-benchmark plan from the defrayal analysis, these proposed revisions are not intended to substantively change existing State and issuer responsibility for State-required benefits. We stated that these revisions are only intended to codify longstanding elements of the defrayal analysis, make conforming changes to the regulatory text, and to reorder these responsibilities so they would appear in a more logical reading order in the CFR. In particular, we proposed revisions to Sec. 156.115(a) that would ensure the regulatory text captures all the instances in which a benefit provided in a health plan is an EHB, as this regulation does not reference Sec. 155.170(a)(2).

\114\ These elements appear in the EHB Final Rule (78 FR 12838) and the 2017 Payment Notice (81 FR 12242). We acknowledge that the element that the State requirement must be “specific to required care, treatment, or services” has not previously been included in Sec. 155.170. However, in the EHB Final Rule (78 FR 12838), we stated that “[W]e interpret `State-required benefits' to include the care, treatment and services that an issuer must provide to its enrollees. Other State laws that do not relate to specific benefits, including those relating to providers and benefit delivery method, are not addressed in Sec. 155.170.” See also the 2025 Payment Notice (81 FR 26264).

We stated in the proposed rule that if finalized as proposed, a State would be required to defray the costs of any benefit that does not satisfy the proposed standard at Sec. 155.170(a)(1) by making payments to individual enrollees or to the QHP issuer on behalf of enrollees. We stated that we expect this would better mitigate premium increases and better support unsubsidized enrollees because States would be required to defray the cost of a wider array of State-required benefits than under the existing policy, such that both subsidized and unsubsidized enrollees alike would be shielded from the increase to premiums resulting from State-required benefits.

We stated in the proposed rule that starting in PY 2027, a State that is not defraying the costs of a State-required benefit because of the policy finalized in the 2025 Payment Notice, which designated any benefit covered in the State's EHB-benchmark plan as EHB, would be required to begin defraying the costs of those benefits regardless of whether the benefit is included in its EHB-benchmark plan. We stated that if this proposal is finalized and a State begins defraying costs associated with a State-required benefit and making payments to QHP issuers because it is no longer considered EHB, QHP issuers would be required to update their plan filings accordingly beginning in PY 2027 to reflect that the benefit is no longer covered as an EHB and should not be included in the percentage of premium attributable to coverage of EHB for the purpose of calculating APTC. We clarified in the proposed rule that we would not require States with any such benefits in their EHB-benchmark plans to update their EHB-benchmark plan under Sec. 156.111 to remove the benefit; the proposed revision to Sec. 155.170 would simply render the benefit's inclusion in the

EHB-benchmark plan null and void for purposes of defining the EHB in the State. We also clarified in the proposed rule that a State that wants to avoid defrayal obligations for State-required benefits that are already in the State's EHB-benchmark would be able to do so by repealing the applicable State requirement as being applicable to QHPs. If the State does not repeal or otherwise limit market applicability for the applicable State requirement, we stated that the State would be financially responsible for defraying the costs associated with the State benefit mandate. 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 would be defrayed by the State, we solicited comment on finalizing an effective date of PY 2028 instead of PY 2027.

In the proposed rule, we acknowledged that this proposal, a reversion to the standard that was in place prior to the 2025 Payment Notice, constitutes a change in policy for the treatment of State- required benefits under the Affordable Care Act. We stated that we understand that a small number of States and issuers have taken significant action based on current Sec. 155.170, 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. We stated that if finalized, any State-required benefit that fulfills the four proposed conjunctive elements at proposed 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.\115\

\115\ We stated that if this proposal is finalized as proposed, the policy finalized in the 2025 Payment Notice would remain applicable for PYs 2025-2026. We stated that States would not be required to defray the costs of any State-mandated benefits that are included in the State's EHB-benchmark plan as EHB during PYs 2025- 2026 but would be required to defray such costs beginning in PY 2027.

In turn, we stated in the proposed rule that State-required benefits that are in addition to EHB under this proposed policy would not be subject to the rules applicable to EHB, including the prohibition on discrimination in accordance with Sec. 156.125, limitations on cost sharing in accordance with Sec. 156.130, and restrictions on annual or lifetime dollar limits in accordance with Sec. 147.126. We stated that although we do not take these impacts lightly, these changes are necessary to return to the longstanding read of section 1311(d)(3)(B) of the Affordable Care Act and better balance the cost of the EHB for unsubsidized enrollees. We established our longstanding read of section 1311(d)(3)(B) of the Affordable Care Act in the EHB Rule (78 FR 12838) when we finalized that State-required benefits enacted after December 31, 2011, are not considered EHBs and therefore the costs of these benefits are required to be defrayed by the State. We stated that we believe reverting to this foundational read is warranted to remove the incentive from States to enact more benefit mandates that could in turn increase premiums and negatively impact unsubsidized enrollees to the detriment of overall enrollment by this population. The defrayal requirement in section 1311(d)(3)(B) of the Affordable Care Act prevents States from shifting costs to the Federal government through increased Federal expenditures. Over time, the accumulation of new State-required benefits being treated as EHB (without corresponding defrayal by States) could increase Federal outlays and undermine the purpose of section 1311(d)(3)(B) of the Affordable Care Act. While the availability of such benefits as EHB (with the associated protections) is a consideration, so is the overall affordability of coverage and the impact on overall enrollment. If such coverage is so expensive that it is unaffordable, particularly for unsubsidized enrollees, then the entire market suffers and those that cannot afford to enroll do not enjoy any benefits of coverage whatsoever. Our proposal sought to mitigate that risk.

We stated in the proposed rule that we are aware that this proposed policy reversal, if finalized, could also impact health plans that are not directly impacted by EHB requirements. This includes self-insured group health plans and large-group market fully insured plans that must follow the annual and lifetime dollar-limit restrictions on EHB and annual cost-sharing limitation requirements under Sec. Sec. 147.126 and 156.130.\116\ We stated that this proposal, if finalized, would affect plan sponsors to the extent that a plan sponsor selects a certain State's EHB-benchmark plan for purposes of complying with sections 2707 and 2711 of the PHS Act and that State changes benefits in its EHB-benchmark plan.\117\ We stated that the proposal's impact would also extend beyond these plan sponsors to include BHPs established under Affordable Care Act section 1331 and Medicaid Alternative Benefit Plans (ABPs) implemented under section 1937.

\116\ See parallel requirements to Sec. 147.126 at 26 CFR 54.9815-2711 (https://www.ecfr.gov/current/title-26/chapter-I/subchapter-D/part-54/section-54.9815-2711), and 29 CFR 2590.715-2711 (https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-L/part-2590/subpart-C/section-2590.715-2711). Additionally, section 2707(b) of the PHS Act, as added by the Affordable Care Act, was adopted by reference into section 9815 of the Code and section 715 of the Employee Retirement Income Security Act (ERISA).

\117\ See at Q2 of Affordable Care Act Implementation FAQs--Set 18 at https://www.cms.gov/cciio/resources/fact-sheets-and-faqs/aca_implementation_faqs18.

Finally, we noted in the proposed rule that we are aware of State legislation that includes clauses stating that the requirement to defray the costs associated with State-required benefits is precluded if HHS fails to respond to the State's request for confirmation of whether new mandates require defrayal within a certain time. Such provisions are inconsistent with Sec. 155.170, as they inappropriately put the onus on HHS to decide whether the State-required benefit is in addition to EHB. Failure by HHS to respond to a State's request for a determination of whether new mandates require defrayal by the State does not relieve a State from its defrayal obligation. Under Sec. 155.170, it is the State's responsibility to identify which State- required benefits require defrayal. While States are encouraged to reach out to us concerning State defrayal questions in advance of passing and implementing benefit mandates, HHS does not provide determinations of whether the cost of a State-required benefit requires defrayal by the States.

In summary, we proposed to revise Sec. 155.170(a) to provide that any State-required benefits would 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. We also proposed revisions to the regulatory text at Sec. Sec. 155.170(a)(2) and 156.115(a) to align with this proposal and to have State and issuer responsibilities for State-required benefits appear in a more logical reading order in the CFR. We proposed that these changes would be effective beginning in PY 2027.

We sought comment on these proposals.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our

responses to comments, we are finalizing this policy with a modification to delay the effective date to PY 2028. Accordingly, we are finalizing at Sec. 155.170(a)(1) the defrayal policy that is in place for plan years beginning before January 1, 2028. At Sec. 155.170(a)(2)(i) through (iv), we are finalizing the defrayal policy that will be in place for plan years beginning on or after January 1, 2028. At Sec. 155.170(a)(3), we are finalizing the requirement that was proposed at Sec. 155.170(a)(2), which provides that a State must make payments to defray the cost of any State-required benefits in addition to EHB. We are also finalizing Sec. 156.115(a) as proposed to align with the amendments to Sec. 155.170 and to present State and issuer responsibilities for State-required benefits in a more logical sequence within the CFR.

We summarize and respond to public comments received on the proposed State mandate defrayal policy at Sec. 155.170 below.

Comment: Multiple commenters who supported the proposal stated it clarified State defrayal requirements for benefits that exceed EHB. Commenters supporting the proposal generally agreed that States should bear the cost of newly mandated benefits rather than shifting those costs to consumers through higher premiums or to the Federal Government through increased expenditures. Commenters supporting the proposal expressed concern that, under current policy, States were permitted to incorporate post-2011 mandates into EHB-benchmark plans without defrayal, including by selecting EHB-benchmark plans that already reflect those mandates, thereby circumventing the applicable statutory requirements. These commenters stated that this practice undermines the EHB framework established under section 1311(d)(3)(B) of the Affordable Care Act and weakens fiscal accountability.

Commenters supporting the proposal also highlighted that State benefit mandates can increase premiums, specifically for unsubsidized enrollees who bear the full cost of those increases because they do not receive APTC. These commenters noted that the proposal would help curb this premium growth, improve affordability for unsubsidized individuals, and ensure that Federal subsidies are limited to EHB rather than State mandated benefits.

Response: We appreciate commenters' support for this proposal. We agree with these commenters and with their assertion that this proposal will better promote premium affordability, particularly for unsubsidized enrollees. We further agree with commenters noting that the policy finalized in the 2025 Payment Notice undermines the EHB framework established under section 1311(d)(3)(B) of the Affordable Care Act and weakens fiscal accountability. As stated in the proposed rule, enactment of State benefit mandates generally increases plan premiums to account for the additional coverage. Section 1311(d)(3)(B) of the Affordable Care Act addresses this by permitting a State to require QHPs offered in the State to offer benefits in addition to the EHB, but requires the State to make payments, either to the individual enrollee or to the QHP issuer on behalf of the enrollee, to defray the cost of these additional State-required benefits. This defrayal requirement prevents States from shifting costs of State benefit mandates to the Federal Government through Federal expenditures. However, the policy finalized in the 2025 Payment Notice undermines this Affordable Care Act protection by allowing more State benefit mandates to be considered EHB. Although any associated premium increases of these benefit mandates that are EHB under the 2025 Payment Notice policy may be entirely offset for consumers receiving APTC, they are not offset for unsubsidized enrollees because these enrollees do not receive APTC.

Comment: Many commenters who opposed the proposal urged HHS to retain the existing policy finalized in the 2025 Payment Notice, stating that the existing policy improved clarity and consistency in identifying benefits in addition to EHB and reduced administrative complexity associated with defrayal determinations. These commenters stated that the existing policy preserves the appropriate balance between Federal defrayal standards and State flexibility and allows States to better address local health priorities. These commenters also noted that the existing policy resolved prior inconsistencies in which benefits could be treated as both EHB and “in addition to EHB” for defrayal purposes, an inconsistency that commenters stated this proposal would revive if finalized.

Response: We are not persuaded that the perceived improvement in clarity and reduced administrative complexity offered by the policy finalized in the 2025 Payment Notice is worth the risk it poses to premium affordability and Federal APTC expenditures. We acknowledge that though the policy finalized in the 2025 Payment Notice may have been a preferred process for States in identifying benefits in addition to EHB, the implementation of the policy finalized in the 2025 Payment Notice was at the cost of potentially increasing future Federal outlays by allowing States to avoid Federal obligations by incorporating State- required benefits into their EHB-benchmark plans. The policy we are finalizing aligns with section 1311(d)(3)(B)(ii)(II) of the Affordable Care Act by ensuring that State-required benefits meeting the four conjunctive elements at Sec. 155.170(a)(2)(i) through (iv) require defrayal regardless of whether they are included in the State's EHB- benchmark plan. We believe this reading of the statute is correct and that the improved clarity and reduced administrative complexity associated with the policy finalized in the 2025 Payment Notice does not justify the potential resulting increases in premiums, which would lead to higher APTC outlays and disproportionately burden unsubsidized enrollees in the individual market. Further, we note that States may continue to make determinations on which benefits would be beneficial to enrollees in addressing local health priorities, so long as States adhere to the requirement to defray the costs associated with benefits that would be deemed in addition to EHB under Sec. 155.170(a)(2).

We acknowledge that the policy finalized in the 2025 Payment Notice did resolve the prior classification overlap by providing that a State- mandated benefit incorporated into a State's EHB-benchmark plan would be treated as EHB and therefore not subject to defrayal. However, we do not agree that the 2025 Payment Notice policy was consistent with the underlying statute. Section 1311(d)(3)(B)(ii)(II) of the Affordable Care Act operates independently from the EHB framework at section 1302(b) of the Affordable Care Act. Allowing States to undermine a statutory defrayal obligation through State EHB-benchmark plan design choices conflates the classification of a benefit for EHB purposes with the separate question of whether that benefit triggers defrayal. The four conjunctive elements we are finalizing at Sec. 155.170(a)(2)(i) through (iv) restore the best reading of section 1311(d)(3)(B)(ii)(II) of the Affordable Care Act by ensuring a clear standard for when a benefit requires defrayal, independent from the State's EHB-benchmark plan.

Comment: Numerous opposing commenters noted that the proposal is a complete reversal of the policy finalized in the 2025 Payment Notice and that States that bolstered certain benefit offerings for their enrollees would be forced to make difficult

financial decisions, which would place certain benefits at risk. Many commenters opposing the proposal stated concern about consumer harm and confusion. These commenters stated that the proposed policy would discourage States from adopting innovative benefit mandates, undermine existing coverage relied upon by consumers, and penalize States for expanding access to services. Many commenters noted that the current policy enabled States to better address specific health needs. These commenters stated concern that by broadening which State mandated benefits require defrayal, the proposal would lead to States repealing mandated benefits, thereby weakening consumer access to valuable coverage. These commenters cited many specific areas of coverage that they claim could be impacted by this proposal, including the opioid crisis, fertility services, biomarker testing, diabetes coverage, cancer benefits, nutrition, chronic conditions, mental health and substance use disorder treatment, and preventive care.

Response: We do not agree with the commenter's assertions regarding areas of care that would be impacted, as many are already required to be covered as EHBs. For example, issuers subject to EHB requirements must cover benefits within the categories of mental health and substance use disorder services as well as preventive and wellness services and chronic disease management. We also do not believe that this policy limits States' ability to address State-specific health priorities. States may continue to require coverage of additional benefits beyond EHB in the specific areas of coverage that commenters raised. This policy clarifies that States are responsible for defraying the cost of those additional benefits when they meet the definition we are finalizing at Sec. 155.170. We therefore do not agree that finalizing this policy will impact coverage of the benefit areas mentioned by commenters, such as the opioid crisis, fertility services, biomarker testing, diabetes coverage, cancer benefits, nutrition, chronic conditions, mental health and substance use disorder treatment, and preventive care.

We also do not believe the policy will contribute to consumer confusion or potential consumer harm. The finalized policy does not eliminate or restrict any benefit that States choose to mandate. To the extent States choose to repeal or adjust existing State-required benefits, States will have until PY 2028 to communicate with affected consumers and issuers regarding any changes to how those benefits are classified. As discussed in further detail below, we are finalizing this delayed effective date to better support a smooth transition that minimizes disruption to consumers and States. We also anticipate that States choosing to repeal applicable mandates will most likely do so in circumstances where the benefit is otherwise already covered as EHB under the State's existing EHB-benchmark plan. In such cases, the repeal of the State mandate would not result in any loss of coverage for consumers, as the benefit would continue to be provided as EHB under the State's EHB-benchmark plan.

However, we agree with commenters that Federal defrayal policy can influence State decisions to adopt benefit mandates. To the extent commenters are concerned that the proposal may reduce incentives for States to enact new mandates, we note that this is an intended effect. The existing policy creates an incentive for States to adopt additional State-required benefits, and the change we are finalizing is designed to address that dynamic. The existing policy also incentivizes States to select an EHB-benchmark plan under Sec. 156.111 that includes such State-required benefits so that those benefits are considered EHB. We believe this approach drives up premiums, which in turn increases Federal APTC expenditures, negatively impacts unsubsidized enrollees, and exacerbates low enrollment amongst this population.

We believe these outcomes outweigh the concerns raised by commenters. When State-required benefits are classified as EHB so long as they are in the State's EHB-benchmark plan, the associated premium increases are offset for subsidized consumers through higher APTC but are not offset for unsubsidized enrollees who bear the full cost of those increases. Over time, the accumulation of State-required benefits treated as EHB could substantially increase Federal APTC expenditures and threaten the affordability of coverage in the individual market, particularly for unsubsidized enrollees who do not receive APTC. If coverage becomes so expensive that it is unaffordable for this population, those consumers may exit the market entirely, forgoing any benefits of coverage whatsoever. The policy we are finalizing is designed to address this dynamic by ensuring that the costs of State- required benefits in addition to EHB are defrayed by States, consistent with the statutory defrayal requirement in section 1311(d)(3)(B) of the Affordable Care Act, rather than passed on to consumers through higher premiums or to the Federal Government through increased APTC outlays.

Moreover, we note that the policy we are finalizing neither prohibits States from mandating benefits nor weakens consumers' access to valuable coverage. States retain the authority to mandate benefits that address the health needs of their consumers so long as the State defrays any such benefits in addition to EHB. The defrayal framework determines only who bears the cost of those benefits, not whether States may require them.

Comment: Numerous commenters opposing the proposal noted concern that benefits newly classified as in addition to EHB under this proposal (but that would have been EHB under the existing policy) would lose core consumer protections, including nondiscrimination requirements, cost-sharing limits, and prohibitions on annual or lifetime dollar limit caps. Many of these commenters noted concerns that excluding such benefits from cost-sharing protections could increase out-of-pocket costs for consumers and could result in delayed or forgone care, particularly for individuals with serious or chronic conditions. Some commenters stated concern that, by reducing the scope of EHB in this way, this policy could decrease the amount of financial assistance available to Exchange enrollees and negatively impact enrollment. Commenters further stated that the proposal could erode the comprehensiveness of coverage, weaken consumer protections tied to EHB, and make coverage less affordable. Other commenters acknowledged concerns about affordability and premium impacts under the current policy but cautioned that the proposed approach could instead shift costs to States and consumers.

Response: We acknowledge that, under this policy, certain benefits may no longer be treated as EHB for purposes of the defrayal framework and therefore may not be subject to the consumer protections identified. We note that States may repeal State-required benefits and, if the benefit remains included in the State's EHB-benchmark plan, it will continue to be treated as EHB and subject to applicable consumer protections. In response to commenters stating that the proposed policy could increase out-of-pocket costs for consumers and result in delayed or forgone care, particularly for individuals with serious or chronic conditions, we note that the policy does not prohibit States from making benefit determinations that would provide comprehensive coverage or that require

zero cost-sharing for enrollees with various conditions. States will still be able to make determinations on which benefits would be beneficial for the consumers in their respective States.

For commenters' concerns that this policy could reduce financial assistance available to Exchange enrollees, we note that the policy we are finalizing is designed to achieve the opposite effect. When costs of State-mandated benefits are reflected in premiums, as the policy in the 2025 Payment Notice permitted when a State-mandated benefit was also in the State's EHB-benchmark plan, those higher premiums increase APTC and Federal outlays. For unsubsidized enrollees, this risked directly increasing out-of-pocket premium costs. The policy we are finalizing at Sec. 155.170(a)(2) better helps to moderate premiums and supports the affordability of coverage for subsidized and unsubsidized enrollees alike.

We also do not agree that this policy shifts costs to consumers. To the contrary, the defrayal requirement itself is in part a consumer protection mechanism in that the enrollee is spared the cost in their premiums of State-mandated benefit in addition to EHB that the State defrays. The policy we are finalizing ensures that when a State mandates a benefit that satisfies the four conjunctive elements at Sec. 155.170(a)(2)(i) through (iv), those costs will not be passed through to consumers in the form of higher premiums. This policy ensures that the party responsible for mandating the benefit (the State) is also responsible for defraying its costs.

Comment: Several commenters noted that States relied on the policy finalized in the 2025 Payment Notice to add benefits as EHB expecting they would not trigger defrayal obligations. Many commenters stated that they opposed the proposal because it would unsettle State reliance interests and impose significant financial and operational burden on States, particularly for those that have already updated their EHB- benchmark plans to add certain State-required benefits as EHB. These commenters stated the proposal could require States to revisit or undo prior policy decisions, resulting in additional costs and operational challenges.

Response: We acknowledge commenters' concerns that this policy may impose administrative and financial burdens on States, particularly for those States that have already updated their EHB-benchmark plans to add certain State-required benefits as EHB. However, we note the defrayal requirements at Sec. 155.170 previously required States to operationalize their defrayal responsibilities, including developing payment methodologies and conducting actuarial analyses to determine the cost of State-required benefits in addition to EHB. As such, administrative and financial considerations associated with defrayal are not new requirements introduced by this policy. We also understand that a small number of States and issuers have taken action based on current Sec. 155.170, including that some States have sought or are seeking EHB-benchmark plan changes under Sec. 156.111. While some States may need to revisit prior analyses or approaches, we believe that this change is necessary to align State practices with a defrayal framework that better protects premiums and Federal expenditures. 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 acknowledge this is a reversal from the policy finalized in the 2025 Payment Notice. However, we believe that finalizing this proposal aligns with the original intent of the defrayal policy at section 1311(d)(3)(B) of the Affordable Care Act, which prevents States from shifting costs to the Federal government through Federal APTC expenditures.

Comment: Commenters broadly recommended delaying the effective date of the proposed policy until at least PY 2028. These commenters stated that States need time to assess which benefits would now require defrayal and subsequently coordinate these changes with CMS, issuers, and State Legislatures. The commenters noted that the proposed effective date of PY 2027 would not allow sufficient time to overcome these operational hurdles. Most notably, commenters noted that State legislative calendars and budget processes require additional time to allow for States to consider legislative or regulatory changes and to secure appropriations for defrayal, if necessary. While many commenters supported delaying the effective date of this proposal until PY 2028, some commenters recommended an effective date of PY 2029 or PY 2030 to better align with State legislative cycles, State regulatory processes, and any forthcoming changes to the EHB-benchmark plan update process.

Response: We acknowledge that States may require more time to operationalize their defrayal obligations under this policy, as finalized, to ensure they have sufficient time to collaborate with issuers, legislative bodies, other respective interested parties, and engage in the fiscal planning involved in the defrayal process. We also acknowledge that providing States enough time to plan for and effectuate the new defrayal requirements is necessary. To assist States in operationalizing their defrayal obligations and ensure they have sufficient time to comply with the new defrayal requirements, we are finalizing an effective date of PY 2028 for this policy. To reflect this delayed effective date, we are finalizing Sec. 155.170 such that Sec. 155.170(a)(1) reflects the policy in place for plan years beginning before January 1, 2028, and Sec. 155.170(a)(2)(i) through (iv) reflects the policy that will be in place for plan years beginning on or after January 1, 2028. We are finalizing Sec. 156.115(a) as proposed to align with this rulemaking and to present State and issuer responsibilities for State-required benefits in a more logical sequence within the CFR. Since this revision is organizational in nature and does not alter the substance of existing or new policy, we are not finalizing a delayed effective date with respect to this provision.

Comment: Some commenters stated concern that the proposal would apply new defrayal obligations to past State actions taken under prior regulatory frameworks and requested HHS provide a clearer transition framework to avoid retroactive impacts and ensure States have clear notice when adopting future benefit mandates. Several commenters requested that HHS modify the proposed policy in a manner that would not require States to take additional legislative or regulatory action to avoid defrayal for their current EHB-benchmark plan selections. For example, some commenters suggested finalizing modifications to the proposed policy so that it would only apply prospectively, such that benefits mandated by State action from 2012-2027 would not require defrayal if they were considered EHB under the policy finalized in the 2025 Payment Notice. In addition, some commenters supported establishing a safe harbor for fertility treatment mandates, either broadly or limited to States that have already incorporated such benefits into their EHB-benchmark plans, citing advances in medical care and alignment with Federal priorities for this coverage. Other commenters requested that we clarify that benefits added to EHB- benchmark plans to comply with the Mental Health Parity and Addiction Equity Act (MHPAEA) and its implementing regulations do not require defrayal. Finally, some commenters recommended limiting defrayal requirements to State mandates enacted

after the effective date of this final rule and holding States harmless for benefits included in EHB-benchmark plans prior to the effective date of the final rule to address retroactivity concerns.

Response: We agree that States would benefit from a transition framework that ensures States have clear notice of EHB defrayal requirements when considering which benefits the State will mandate. In response to comments, we are finalizing a modified effective date such that this policy will be effective beginning with PY 2028. We believe this delayed effective date will provide States with adequate notice and time to adopt or revise their benefit mandates in light of this policy change.

In addition, though States relied on the current EHB defrayal policy, we have taken steps to mitigate that reliance. Specifically, we announced in the 2027 Payment Notice proposed rule (91 FR 6368) that we were pausing review of EHB-benchmark plan applications because we are actively conducting a comprehensive review of section 1302 of the Affordable Care Act and considering future rulemaking to revise Sec. 156.111 and other regulations relating to the EHBs. Our notice related to pausing review of EHB-benchmark plan applications in the 2027 Payment Notice proposed rule prevented States from making further updates to their EHB-benchmark plans that would increase reliance on the policy finalized in the 2025 Payment Notice. Any State reliance on the 2025 Payment Notice defrayal policy will also be mitigated by the delayed PY 2028 implementation date of the policy finalized in this final rule. Further, we note that State reliance on the current policy, as is evidenced by State efforts to update EHB-benchmark plans to incorporate State-required benefits, supports the rationale for returning to the longstanding interpretation of section 1311(d)(3)(B) of the Affordable Care Act through the policy we are finalizing. This pattern of State behavior confirms that the 2025 Payment Notice policy created incentives for States to shift the costs of State-required benefits to the Federal government through increased high premiums and increased APTC expenditures. We encourage States to use the period prior to PY 2028 to assess their State-required benefits, identify those that require defrayal under the policy we are finalizing in this final rule, and take any necessary steps to comply with the defrayal framework beginning with PY 2028.

We decline to establish safe harbors or exemptions for specific State-required benefits, exemptions for State-mandated benefits enacted prior to the adoption of the policy in this final rule, or further limits on the scope of this policy. First, we continue to be of the view that a State's ability to avoid defrayal obligations under section 1311(d)(3)(B)(ii)(II) of the Affordable Care Act simply by incorporating a State-required benefit into its EHB-benchmark plan is not consistent with the statutory design, which treats the defrayal determination as a distinct inquiry from the classification of a benefit as EHB. Second, we do not believe these suggested alternatives are necessary when States can take action before PY 2028 to retain specific benefits as EHB in the State's EHB-benchmark plan consistent with section 1302 of the Affordable Care Act (that is, by repealing the State mandate for the benefit or choosing to defray the cost of additional required benefits). We believe States will have adequate time to make any necessary adjustments consistent with their defrayal policy preferences.

Moreover, in response to the comment suggesting a safe harbor for specific services like fertility treatments, we note that the current EHB-benchmark framework utilizes a State-based approach whereby States determine which benefits should be included as EHB. Providing a Federal safe harbor from the defrayal requirement for any specific subset of benefits that do not meet the typicality standard would be at odds with that framework.

Further, we acknowledge comments regarding compliance with MHPAEA. Plans that are required to provide EHBs must cover mental health and substance use disorder services, including behavioral health treatment, as required categories of EHB and must comply with MHPAEA.\118\ We note that under Sec. 155.170(a)(2)(iv), State action taken for purposes of compliance with Federal requirements, which includes MHPAEA, is not considered to be in addition to EHB and will not require defrayal by the State.\119\

\118\ 45 CFR 156.115(a)(3).

\119\ MHPAEA generally does not mandate coverage for mental health or substance use disorder benefits. Rather, if a plan provides medical/surgical benefits and mental health or substance use disorder benefits, it must comply with MHPAEA's parity provisions.

Comment: One commenter requested that HHS withdraw the proposal and stated that finalization of this proposal would create operational and fiscal disruption for States and violate State sovereignty. This commenter stated the policy would interfere with the States' legislative authority by forcing States to repeal existing laws to avoid defrayal obligations. The commenter characterized the proposed policy as inconsistent with principles of State flexibility and autonomy, noting that conditioning defrayal on legislative or regulatory changes could undermine State policymaking processes. Some commenters noted concern that the proposed policy would create uncertainty for States and issuers, undermining their ability to engage in long-term fiscal and operational planning.

Other commenters noted that States are best positioned to determine appropriate benefits for their populations and expressed concern that changes to the Federal defrayal policy could limit States' ability to reflect State-specific needs. One commenter noted their belief that HHS lacks statutory authority to support the proposed policy because in their view, section 1311 of the Affordable Care Act authorizes defrayal for benefits that are in addition to EHB, but it does not authorize HHS to redefine EHB based on the timing of enactment for State-required benefits. Other commenters noted that Congress delegated to the Secretary of HHS the responsibility to define EHB through a stable, employer-based framework designed to promote uniformity, predictability, and nondiscrimination, while preserving State flexibility through EHB-benchmark plan selection, and that the proposed policy undermines the statutory framework for EHB.

Response: We do not agree that the policy as proposed would be unduly disruptive and that it would intrude on State authority or policymaking processes. The policy we are finalizing does not require States to repeal any existing laws. Rather, consistent with section 1311(d)(3)(B) of the Affordable Care Act and Sec. 155.170, States retain the flexibility to determine whether to maintain State-required benefits that are in addition to EHB and defray the associated costs, or to modify or repeal such requirements. This framework reflects the longstanding statutory requirement that States must defray the cost of benefits in addition to EHB. The final policy preserves State flexibility by allowing States to make policy decisions regarding benefit mandates while ensuring that Federal funds are used consistently with statutory intent and limits. Further, in response to the comments noting that changes to the defrayal policy limits States' ability to reflect State-specific needs, we do not agree with these comments. States may require coverage of benefits that are in addition to EHB; however, States must comply with the defrayal requirements at Sec. 155.170 for such benefits. The

defrayal framework we are finalizing does not constrain what benefits States may require. Rather, it determines who bears the cost of those benefits, thereby preserving States' ability to tailor benefits to the health needs of their populations while ensuring that the associated costs are defrayed by the State rather than passed on to consumers through higher premiums or to the Federal government through increased APTC outlays. Further, we do not agree that the proposed policy or the policy we are finalizing would create uncertainty for States and issuers or undermine their ability to engage in long-term fiscal and operational planning. States that mandate benefits subject to defrayal obligations under Sec. 155.170 are already required to engage in ongoing internal and external operational and fiscal planning, including coordinating with issuers, to ensure they are appropriately effectuating defrayal obligations. Because States are already familiar with the planning processes that defrayal obligations entail, and because the responsibility for meeting those obligations rests with the States under Sec. 155.170, we disagree that the finalized policy would create the level of uncertainty noted by the commenters.

In addition, we do not believe this policy change undermines the statutory framework for EHB. Section 1302(b)(1) of the Affordable Care Act grants the Secretary broad authority to define EHB. Under this authority, we have identified the items and services within the ten EHB categories by relying on State-specific EHB benchmark plans under Sec. 156.111. The defrayal requirement in section 1311(d)(3)(B) of the Affordable Care Act is a distinct statutory provision that operates alongside the Secretary's definition of EHB. The change we are finalizing returns the defrayal framework to its longstanding interpretation prior to the 2025 Payment Notice, under which the scope of EHB in each State continues to be defined by the State's EHB- benchmark plan, while ensuring that the costs of State-required benefits in addition to EHB are defrayed by States. Sections 1302(b)(1) and 1311(d)(3)(B) of the Affordable Care Act are complementary, not competing, statutory directives, and finalizing this policy gives full effect to both.

Comment: Some commenters stated their belief that HHS' rationale for the proposed policy is unsubstantiated and does not adequately note how the interpretation of section 1311(d)(3)(B) of the Affordable Care Act set forth in the 2025 Payment Notice was inferior to the interpretation of this section underlying this proposal. Some commenters noted that the proposed rule did not demonstrate meaningful changes in State behavior since finalization of the 2025 Payment Notice to support the proposed policy change. Other commenters noted that affordability is far more complex than solely premiums and stated that ensuring benefit coverage and reasonable cost-sharing are substantial components to overall out-of-pocket affordability.

Several commenters also noted that States act judiciously when adopting benefit mandates, emphasizing that such decisions are infrequent, carefully evaluated, and informed by actuarial and regulatory analysis. Some of these commenters noted that States assess the cost and impact of proposed benefit mandates, often relying on State insurance regulators and Federal statutory requirements, including limits on changes to EHB-benchmark plans (such as actuarial value constraints), to ensure minimal effects on premiums.

Commenters further stated that the proposal would not materially change States' ability to add benefits to EHB-benchmark plans under existing EHB-benchmark requirements and, therefore, would not actually address concerns about premium growth. Some commenters stated that EHB- benchmark plan requirements already limit benefit expansion and associated premium increases, and that State benefit mandates are not a primary driver of rising premiums. Others noted that it is too soon to assess the impact of the policy finalized in the 2025 Payment Notice on premiums or Federal spending.

Response: We do not agree with commenters' allegation that our rationale for this proposed policy is unsubstantiated. Section 1311(d)(3)(B) of the Affordable Care Act provides that, if a State requires a health plan to cover benefits in addition to the EHB, the State shall defray the cost of those additional benefits. This contemplates a distinction between benefits that are EHB and benefits that are in addition to EHB, placing the cost of the latter on the State. We also do not agree that EHB-benchmark plan requirements already sufficiently limit benefit expansion and associated premium increases such that the defrayal framework we are finalizing is unnecessary. The EHB-benchmark plan requirements at Sec. 156.111 do impose constraints on benefit design, including a ceiling on the overall scope of benefits included in the State's EHB-benchmark plan. However, those constraints do not address the cost consequences that arise when a State incorporates State-mandated benefits into their EHB- benchmark plans under the framework established by the 2025 Payment Notice. The interpretation finalized in the 2025 Payment Notice whereby any benefit included in a State's EHB-benchmark plan is automatically considered EHB, effectively allowed States to ignore the distinction between benefits that are EHB and benefits that are in addition to EHB by incorporating State-required benefits into their EHB-benchmark plans. As we stated in the proposed rule, the policy finalized in the 2025 Payment Notice incentivizes accumulation of new State-required benefits as EHB, which increases Federal APTC costs and undermines the purpose of the statutory defrayal policy. The increase in APTC causes premium increases and presents an affordability issue for all enrollees, especially unsubsidized enrollees. To mitigate this risk, we believe that the proposed policy addresses these concerns such that both subsidized and unsubsidized enrollees alike would be shielded from the increase to premiums resulting from State-required benefits. We believe it appropriate to address these concerns proactively.

We do not agree with commenters that stated it is too soon to assess the impact of the policy finalized in the 2025 Payment Notice on premiums or Federal spending. We have observed that a number of States have sought to update their EHB-benchmark plans since finalization of the policy in the 2025 Payment Notice in part to incorporate State- required benefits that would otherwise be subject to defrayal. This pattern of State behavior demonstrates that the 2025 Payment Notice policy did, in fact, influence State decision making regarding EHB- benchmark plan updates and has implications for premium growth. Under the policy finalized in the 2025 Payment Notice, States could incorporate State-required benefits into their EHB-benchmark plans and thereby avoid defrayal obligations entirely, which could effectively shift the cost of those State-required benefits to consumers through higher premiums and to the Federal Government through increased APTC outlays.

We acknowledge commenters' views that affordability is multifaceted and includes factors beyond premiums, such as benefit coverage and cost-sharing. However, premiums remain a primary driver of affordability for many consumers, particularly unsubsidized enrollees, and increases in premiums may also affect Federal spending on APTCs. We also acknowledge commenters' statements that States act judiciously when adopting benefit

mandates and consider cost impacts but believe this policy change is appropriate for the reasons provided in the proposed rule and in this final rule regardless of the frequency or intent of such State actions. Even where individual States carefully weigh the cost implications of benefit mandates, the cumulative effect of State-required benefits being classified as EHB through State EHB-benchmark plan selection, as the 2025 Payment Notice policy allowed, could pose a systemic risk over time to premium affordability and Federal APTC expenditures. Reverting to the pre-2025 Payment Notice standard restores the integrity of the statutory defrayal requirement by ensuring that the costs of State- required benefits in addition to EHB are borne by States and not passed on to consumers through higher premiums or to the Federal government through increased APTC outlays. Regardless of individual State fiscal prudence, the defrayal policy must be designed to align with the statute and to function appropriately across all States.

Comment: Several commenters stated concern that HHS' pause on reviewing State applications to update EHB-benchmark plans, when combined with the proposed changes to the defrayal policy, effectively forces States to choose between defraying new mandates or repealing them, without the ability to add those benefits as EHB through the EHB- benchmark plan update process. One commenter noted that offering States flexibility to remove State-mandated benefits without being able to change their EHB-benchmark plans impinges on States' decision-making and could reduce the actuarial value of EHB provided, potentially below minimum required generosity levels of the EHB package.

One commenter noted that if benefits enacted after December 31, 2011, are reclassified as non-EHB while HHS has paused review of State applications for EHB-benchmark plan updates, some States could temporarily retain EHB-benchmark plans that include benefits no longer treated as EHB for Federal purposes. This commenter stated concern that, in this situation, States could face defrayal obligations for benefits embedded in their EHB-benchmark plans that they are unable to modify during the pause on EHB-benchmark plan updates.

Response: As stated in the proposed rule, we are pausing review of State applications to select EHB-benchmark plans in accordance with Sec. 156.111. We are actively reviewing the statutory and regulatory framework governing EHB, including the EHB-benchmark plan selection and update process, to assess whether additional changes may be appropriate. We recognize that, under these circumstances, States may face tradeoffs in determining whether to defray the cost of such benefits or repeal existing requirements. We emphasize that if a State repeals the underlying State action that requires a benefit, that benefit would no longer be considered a State-required benefit for purposes of Sec. 155.170, and the State would not be required to defray its cost even if that benefit remains in the State's EHB- benchmark plan.

We do not agree that this policy risks reducing the actuarial value of EHB or reducing EHB below required minimum generosity standards. Actuarial value is determined at the plan level under the applicable AV standards, while the scope of EHB is defined by the State's EHB- benchmark plan. To the extent a State repeals a State-mandated benefit but does not modify its EHB-benchmark plan, the benefit remains EHB, and the repeal would not affect a plan's actuarial value.

As discussed above, we are finalizing a delayed effective date for the change to the defrayal policy of PY 2028. We believe this delayed effective date and resulting transition period will provide States with sufficient time to adapt to the revised defrayal policy and sufficient time for us to consider any future updates to the EHB framework that may result from this ongoing review.

Comment: Several commenters stated concern that the proposed policy creates ambiguity regarding whether benefits added or modified through the EHB-benchmark plan selection process at Sec. 156.111 would be subject to defrayal. Other commenters requested that HHS clarify whether a State should repeal a benefit mandate that has already been made EHB through the State's EHB-benchmark plan to avoid defrayal obligations.

One commenter noted that prior HHS guidance distinguished between State-required benefits enacted through separate legislative or regulatory action and those incorporated through the State EHB- benchmark process at Sec. 156.111 and urged HHS to codify this distinction in regulation. This commenter and several other commenters stated that the proposal does not clearly define what constitutes “State action,” making it difficult to determine when updated or expanded benefits would trigger defrayal, particularly given the variety of approaches States have used to update their EHB-benchmark plans. One commenter provided examples from multiple States to illustrate this uncertainty and requested additional clarity to ensure States can continue to update benefits to address local health needs without triggering unintended defrayal obligations.

One commenter requested that HHS collaborate with States to provide clear guidance and technical support on when State benefit mandates require defrayal. Another commenter noted that States vary in their level of engagement with the defrayal process. This commenter noted that some States assess mandate costs or recognize defrayal obligations, but few have a formal defrayal reimbursement process in place. Due to this variation, the commenter noted that HHS should provide a comprehensive document that provides substantive guidance for States in operationalizing their defrayal obligations under the proposed policy.

Response: Under the policy we are finalizing at Sec. 155.170, a State's obligation to defray is not triggered by the selection or update of its EHB-benchmark plan. This has always been true of the defrayal framework since it was first established in the EHB Final Rule (78 FR 12838). Rather, the obligation arises from the existence of a State-required benefit that is external to the EHB-benchmark plan and considered “in addition to EHB” under Sec. 155.170(a)(2), including where such a requirement duplicates benefits included in the EHB- benchmark plan. We believe the regulatory text as finalized at Sec. 155.170, together with this preamble, reaffirms and clarifies the distinction commenters identified.

The EHB-benchmark selection process at Sec. 156.111 is a distinct Federal regulatory framework from the framework governing defrayal under Sec. 155.170. Accordingly, a State's selection or update of an EHB-benchmark plan under Sec. 156.111 does not constitute a “State action” for purposes of defrayal and, by itself, cannot trigger a defrayal obligation. Instead, for purposes of Sec. 155.170, “State action” refers to a State statute, regulation, guidance, or other requirement, separate from the State's selection or update of its EHB- benchmark plan, that requires QHPs to cover a benefit that is in addition to EHB under Sec. 155.170(a)(2).

States with benefit mandates that duplicate benefits included in the State's EHB-benchmark plan and that seek to avoid a defrayal obligation may repeal the applicable State requirement, such that the benefit continues to be covered as EHB under the EHB-benchmark plan or otherwise limit the applicability of the requirement for

QHPs.\120\ Where a State repeals a State-required benefit that is included in the State's EHB-benchmark plan, the corresponding benefit will continue to be treated as EHB for as long as it is included in the State's EHB-benchmark plan, consistent with Sec. 156.111. Absent repealing the duplicative State-required benefit, the State would be responsible for defraying the associated costs as the benefit would not be EHB.

\120\ See 81 FR 12204, 12243-4 (Mar. 8, 2016) (explaining that imposing benefit mandates depending on a plan's status as a QHP or whether it is sold through the Exchange may violate section 1252 of the Affordable Care Act).

Based on our experience working with States, many are actively analyzing their State-mandated benefits for potential defrayal obligations and, where applicable, implementing defrayal. In some cases, States may not have established formal reimbursement processes because they have not identified State-mandated benefits that require defrayal under current standards. The absence of a formal defrayal process is not necessarily indicative of non-compliance or unpreparedness, as it may reflect that no such obligation has yet arisen. Additionally, we have provided technical assistance to several States on how to operationalize defrayal, including approaches to and timing of reimbursement. 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. We intend for this assistance to provide examples and guidance on applying this policy as finalized and how a State could operationalize the defrayal process pursuant to Federal requirements at Sec. 155.170. However, we note that States remain responsible for establishing and maintaining the internal processes and procedures necessary to ensure that defrayal reimbursements to issuers or enrollees are appropriately administered in accordance with Sec. 155.170.

Comment: One commenter recommended that HHS also revisit its interpretation that State rules related to provider types, cost- sharing, or reimbursement methods do not require defrayal and instead require that mandates that limit cost-sharing are appropriately evaluated as subject to defrayal. Another commenter stated that due to State legislatures frequently passing new mandates with unworkable effective dates, HHS should work with States to implement a determination process for mandates subject to defrayal well in advance of the deadline for impacted plans to file rates with the State.

Response: State-required benefits for purposes of defrayal are those that are specific to care, treatment, and services that a State requires issuers to offer to its enrollees.\121\ State rules that do not relate to specific benefits include State rules related to provider types,\122\ cost-sharing, benefit delivery method, or reimbursement methods.\123\ While QHP issuers must comply with these requirements, there is no Federal obligation to defray the costs.\124\ This maintains a clear and administrable distinction between benefit mandates that expand the scope of covered services and other State requirements that affect how benefits are delivered or financed.

\121\ See 2025 Payment Notice (89 FR 26264).

\122\ The exception to this would be when the benefit and the provider type are interchangeable such that only that provider type can provide the service. For example, a mandate requiring inclusion of massage therapists would be tantamount to a mandated benefit for massage therapy.

\123\ EHB Final Rule (78 FR 12838).

\124\ EHB Final Rule (78 FR 12838).

We note that though the identification and implementation of defrayal obligations is the responsibility of the States, we provide States with robust technical assistance to help with analyzing State mandates and defrayal questions. A State may reach out to and communicate with HHS regarding the final policy, including with questions that relate to identifying which State mandates are in addition to EHB in that State.

Comment: Some commenters referenced a recent Government Accountability Office (GAO) report recommending that CMS review its oversight of State defrayal obligations. The commenters noted that CMS had indicated in the 2025 Payment Notice that the current policy would improve State compliance by making identification of non-EHB benefits more straightforward. These commenters noted their belief that the GAO- recommended review might support CMS retaining the current policy, rather than adopting the proposed change and stated concern that the proposed rule did not evaluate how the proposed change would affect State compliance with defrayal requirements.

Response: As noted in the proposed rule, we concurred with GAO's recommendation and are continuing to evaluate our oversight of defrayal requirements. We note that the policy finalized in this rule is not intended to address questions of State compliance with defrayal requirements or HHS oversight. Rather, this policy is grounded in our interpretation of section 1311(d)(3)(B) of the Affordable Care Act and is intended to ensure the appropriate scope of State-required benefits that are considered to be in addition to EHB.

Comment: Some commenters stated concern that the proposal would have impacts beyond the individual and small group markets because EHB- related consumer protections, such as limits on cost sharing and prohibitions on annual and lifetime dollar limits, also apply to fully insured and self-funded plans. These commenters stated that reclassifying certain benefits as being in addition to EHB could remove these protections and therefore allow fully insured and self-funded plans to impose greater restrictions on coverage.

Response: As we stated in the proposed rule, we are aware that this policy reversal could impact plans that are not directly subject to the EHB requirements. This includes fully insured and self-funded group health plans that must follow the annual and lifetime dollar-limit restrictions on EHB and annual cost-sharing limitation requirements under Sec. Sec. 147.126 and 156.130.\125\ The impact would depend on whether a plan sponsor selects a State's EHB-benchmark plan for purposes of complying with sections 2707 and 2711 of the PHS Act. The proposal's impact could extend to other programs that must meet EHB standards, including BHPs under section 1331 of the Affordable Care Act and Medicaid ABPs under section 1937 of the Social Security Act. However, we do not agree that this policy would enable plans to newly impose restrictions on coverage. We note that, to the extent a State repeals a State-required benefit that would otherwise be considered in addition to EHB, and the benefit remains in the State's EHB-benchmark plan, such benefit would continue to be treated as EHB and therefore remain subject to applicable consumer protections.

\125\ 26 CFR 54.9815-2711 and 29 CFR 2590.715-2711.

6. Ability of States To Permit Agents and Brokers and Web-Brokers To Assist Qualified Individuals, Qualified Employers, or Qualified Employees Enrolling in QHPs (Sec. 155.220(j))

Section 1312(e) of the Affordable Care Act directs the Secretary to establish procedures under which a State may permit agents and brokers to enroll individuals and employers in QHPs through an Exchange and to assist individuals in applying for financial assistance for QHPs sold through an

Exchange. In the 2027 Payment Notice proposed rule (91 FR 6335), we proposed new standards of conduct and additional consumer protection standards related to agents, brokers, and web-brokers who assist consumers with enrollments through FFEs and SBE-FPs. These proposals focus on requirements related to consumer consent documentation (Sec. 155.220(j)(2)) and requirements related to marketing activities (proposed redesignation at Sec. 155.220(j)(3)).

In addition, section 1313(a)(5)(A) of the Affordable Care Act directs the Secretary to provide for the efficient and non- discriminatory administration of Exchange activities and to implement any measure or procedure the Secretary determines is appropriate to reduce fraud and abuse. Section 155.220 specifies procedures to support the State's ability to permit agents, brokers, and web-brokers to assist individuals, employers, or employees with enrollment in QHPs offered through an Exchange, subject to applicable Federal and State requirements. This includes processes under Sec. 155.220(g) and (h) under which HHS may suspend or terminate an agent's, broker's, or web- broker's Exchange agreement(s) in circumstances that involve fraud or abusive conduct or where there are sufficiently severe findings of noncompliance. This also includes the FFE standards of conduct for agents, brokers, and web-brokers who assist consumers in enrolling in coverage through the FFEs that we established under Sec. 155.220(j) to protect consumers and ensure the proper administration of the FFEs. Consistent with Sec. 155.220(l), agents, brokers and web-brokers who assist with or facilitate enrollment in States with SBE-FPs must comply with all applicable FFE standards, including the requirements in Sec. 155.220. Similarly, consistent with Sec. 155.220(n), web-brokers who assist with or facilitate enrollment in States with State Exchanges must comply with all applicable FFE standards, including the requirements in Sec. 155.220(c)(3)(i)(A), (G), (I), and (j)(2)(i).

In the proposed rule, we stated that we have observed numerous abusive, misleading, and coercive practices that harm consumers both financially and medically, necessitating these proposed amendments.\126\ For example, some agents, brokers, and web-brokers have been incorrectly attesting to, or failing to ascertain, whether consumers are enrolled in other minimum essential coverage. We stated that we have also observed manipulation of income projections and tax household composition to qualify consumers for QHPs in the FFE. Further observations include agents, brokers, and web-brokers enrolling consumers with inaccurate residence addresses to conceal unauthorized enrollments and enrolling deceased consumers. Given these observations and their potential for consumer harm, we proposed the following amendments to Sec. 155.220(j): separating conduct related to consumer enrollment from conduct related to consumer marketing by relocating marketing requirements to redesignated Sec. 155.220(j)(3); establishing new standards of conduct and additional consumer protection standards for agents, brokers, and web-brokers at Sec. 155.220(j)(2); and introducing new marketing requirements in redesignated Sec. 155.220(j)(3).

\126\ See for example, the GAO report published on December 3, 2025, in which the GAO developed and submitted fictitious applications via brokers and subsequently gained fully-subsidized health insurance coverage through the Federal Exchanges. GAO (2025, Dec. 3). Patient Protection and Affordable Care Act: Preliminary Results from Ongoing Review Suggest Fraud Risks in the Advance Premium Tax Credit Persist. https://www.gao.gov/products/gao-26-108742.

a. Proposals Related to FFE Standards of Conduct and Mandating a Standard Eligibility Application Review Form and Consumer Consent Form (Sec. 155.220(j)(2))

Section 155.220(j)(2) sets forth the standards of conduct for agents, brokers, and web-brokers that assist with or facilitate enrollment of qualified individuals, qualified employers, or qualified employees in coverage in a manner that constitutes enrollment through an FFE or SBE-FP, or that assist individuals in applying for APTC and CSRs for QHPs sold through an FFE or SBE-FP.

Section 155.220(j)(2)(i) requires agents, brokers, and web-brokers to provide consumers with correct information and refrain from marketing or conduct that is misleading. Section 155.220(j)(2)(ii) requires agents, brokers, and web-brokers to document that the consumer (or the consumer's authorized representative) has reviewed and confirmed prior to its submission that his or her eligibility application information is accurate. Under Sec. 155.220(j)(2)(ii), agents, brokers, or web-brokers must also provide the FFEs and SBE-FPs with correct information under section 1411(b) of the Affordable Care Act. Section 155.220(j)(2)(iii) also requires agents, brokers, and web- brokers to document the consumer's consent prior to facilitating enrollments through the FFEs. As explained in the 2017 Payment Notice proposed rule (81 FR 12258 through 12264), these standards are designed to protect against agent, broker, and web-broker conduct that is harmful towards consumers or prevents the efficient operation of the FFEs and SBE-FPs.

In the proposed rule, we stated that we have been conducting documentation reviews to determine compliance with eligibility application review documentation requirements and consent documentation requirements. During these reviews, we have found numerous instances of noncompliance, such as documentation not containing the name of the assisting agent, broker, or web-broker, a missing date, and more. While we have engaged in Technical Assistance (TA) or enforcement, when appropriate, given these findings, we stated in the proposed rule that we have determined that HHS would likely reduce consumer harm by revising the current requirements in Sec. 155.220(j)(2)(ii) and (iii).

We proposed to amend existing regulatory authority under 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 documentation requirements and consent documentation requirements. We stated in the proposed rule that our proposal would eliminate the currently broad allowances on the format for meeting these requirements by mandating that agents, brokers, and web-brokers use only the content in the HHS-approved and - created form. We stated the regulation would also be changed to clarify what types of actions constitute a consumer “taking an action” within the meaning of the regulation.

Currently, agents, brokers, and web-brokers are required to document that a consumer, or the consumer's authorized representative, reviewed and confirmed their eligibility application information prior to the submission of the enrollment information. This language was added to the regulations in the 2024 Payment Notice (87 FR 78206) to help combat fraud and reduce consumer harm caused by application submissions containing inaccurate information. Currently, however, there are no specific requirements regarding the format of this documentation, so long as it meets the minimum regulatory requirements under Sec. 155.220(j)(2)(ii)(A). As a result, we have reviewed documentation submitted in response to enforcement activity in both paper and audio recording formats. During these reviews,

we have found that a substantial amount of this documentation lacked regulatorily required information.\127\ These documentation reviews determine next steps, such as engaging in TA or enforcement activity.

\127\ CMS-10840/OMB Control Number: 0938-1438.

Additionally, paper documentation often contains language and formatting that are generally unique to the specific agent, broker, or web-broker. This language can sometimes be complicated or difficult to follow for consumers, leading to potential consumer harm, as explained below. Based on our experience, we stated in the proposed rule that the documentation submitted by a significant number of agents, brokers, and web-brokers frequently failed to meet the required eligibility application review documentation criteria. These criteria may include but are not limited to: an explanation of attestations; required dates; the name of the agent, broker, or web-broker; an affirmative response from the consumer; a review of all application information; and the name of the consumer or authorized representative. Missing or incorrect information on eligibility application reviews can harm consumers. Inaccurate application information may lead to incorrect eligibility determinations, affect a consumer's tax liability, or result in other negative consequences. For example, if a consumer receives an incorrect APTC determination or is unaware they are enrolled, they may incur an unexpected tax liability or costs associated with obtaining a corrected or voided Form 1095-A. Ensuring that a consumer's income determination has been reviewed and confirmed as accurate can help prevent these issues.

Incorrect consumer information on eligibility application reviews may also affect Exchange operations or HHS' analysis of Exchange trends. For example, a high volume of applications containing erroneous information, such as U.S. citizens attesting to not having an SSN, could hinder the efficient and effective operation of the Exchanges on the Federal platform by requiring HHS to divert time and resources to address these discrepancies. While we have processes in place to investigate and adjudicate complaints, these types of complaints can present challenges when the only available evidence consists of conflicting accounts from the parties involved. We generally do not have access to additional contextual information that could help clarify the circumstances. To help address this, the 2024 Payment Notice (88 FR 25740) revised the standards of conduct at Sec. 155.220(j)(2)(ii) to require agents, brokers, and web-brokers to document prior to the submission of information that the eligibility review information under section 1411(b) of the Affordable Care Act was reviewed and confirmed to be accurate by the consumer or their authorized representative, who has been designated in compliance with Sec. 155.227.

Additionally, under Sec. 155.220(j)(2)(iii), as finalized in the 2024 Payment Notice (88 FR 25740), agents, brokers, and web-brokers are required to document consumer consent on the FFEs and SBE-FPs prior to providing enrollment assistance. This documentation must comply with specific regulatory requirements and show that the consumer took an action that created a record that the agent, broker, or web-broker can maintain and produce to confirm that consent was provided by the consumer or their authorized representative.

Presently, there are no specific format requirements for consumer consent documentation, as long as it meets the minimum regulatory requirements under existing Sec. 155.220(j)(2)(iii)(A), which requires a consumer, or their authorized representative, to “take an action” that produces a record that can be maintained and produced by an agent, broker, or web-broker to confirm that the consumer's consent was documented and confirmed to be accurate. While consent must also be documented, this regulation does not explicitly require an agent, broker, or web-broker to obtain it through the same action. During HHS' investigations, we have found that a substantial amount of the submitted consumer consent documentation either lacked the required information, or presented it unclearly, potentially resulting in consumer harm. HHS has consistently received documentation from agents, broker, and web-brokers that failed to include required information, including, but not limited to: the name of the agent, broker, web- broker, or agency receiving consent; the name of the consumer or their authorized representative; the dates of consent; the scope, duration, and purpose of the consent; and the process through which a consumer or their authorized representative may rescind the consent. There have also been instances where documentation of consumer consent was not provided upon request.

Documentation that omits these regulatory requirements does not adequately demonstrate that the consumer, or their authorized representative, provided consent prior to the agent, broker, or web- broker's facilitation of enrollment or provision of enrollment assistance. Submitting consumers' eligibility application reviews without compliant documented consumer consent is harmful to consumers because the consumers or their representatives may be unaware of their enrollments and the submitted enrollment application may contain incorrect information. This could lead to consumers receiving inaccurate eligibility determinations; not receiving plan correspondence; not being able to access more suitable health coverage for which they may qualify; and unexpected tax liabilities.

Given these findings, we proposed amendments to Sec. 155.220(j) to improve the accuracy of application information and better ensure compliance with consumer consent documentation requirements. First, we proposed amending Sec. 155.220(j)(2)(ii)(A) to further clarify expectations for agent, broker, and web-broker compliance and to make clear that the requirements in this provision are not intended to allow for a broad range of interpretations. Specifically, we proposed to revise Sec. 155.220(j)(2)(ii)(A) to state that documentation by agents, brokers, and web-brokers showing that eligibility application information has been reviewed and confirmed to be accurate by the consumer (or the consumer's authorized representative) must be effectuated by having the consumer or the consumer's authorized representative take an action to execute the HHS-approved and -created consumer consent form.\128\

\128\ Please find the HHS-approved and -created CMS Model Consent Form for Marketplace Agents, Brokers, Web-brokers, and Agencies here: https://www.cms.gov/marketplace/agents-brokers/files/cms-model-consent-form-marketplace-agents-brokers.pdf.

We also proposed redesignating Sec. 155.220(j)(2)(ii)(A)(2) as Sec. 155.220(j)(2)(ii)(A)(3) and amending newly revised Sec. 155.220(j)(2)(ii)(A)(2) to describe acceptable and unacceptable actions that either a consumer (or consumer's authorized representative) can take that would allow the agent, broker, or web-broker to demonstrate their confirmation of the review of eligibility application information. Specifically, we proposed that these actions may include: a hand-written or electronic written signature or initials made directly on a document indicating a person's consent, approval, or agreement; an email from the consumer or the consumer's authorized representative; a recorded verbal conversation; or other clear and

verifiable means. We stated that a signature that is simply typed on the documentation or a filled-in check-box would not clearly indicate the eligibility application information was reviewed and confirmed to be accurate by the consumer or the consumer's authorized representative, as we are unable to verify whether the consumer or their authorized representative personally reviewed and confirmed the accuracy of their information based on such a signature or checked box. We further stated that a handwritten signature or handwritten initials made directly on the HHS-approved and -created consumer consent form indicates a consumer's or a consumer's representative's consent because it would more clearly illustrate that the consumer or the consumer's representative indeed gave their consent as it can be compared against another handwritten signature or handwritten initials. We stated that the proposed amendments aim to reduce confusion among agents, brokers, and web-brokers on what constitutes compliant documentation, reduce consumer harm from noncompliant documentation, and enhance HHS' investigative efficiency.

We proposed revising Sec. 155.220(j)(2)(iii)(A) to require agents, brokers, or web-brokers to demonstrate that the consumer or their authorized representative has obtained and reviewed consent documentation by executing an HHS-approved and -created consumer consent form. We stated that this form would fulfill regulatory documentation requirements related to eligibility application review and consumer consent, ensuring all regulatory requirements are in the documentation provided to and reviewed by the consumer or their authorized representative. We stated that it would also streamline the review of potentially noncompliant agents, brokers, and web-brokers, facilitate the removal of noncompliant agents, brokers, and web-brokers from assisting consumers on the Exchange, and protect consumers from potential harm while safeguarding the integrity of the Exchange. Finally, we stated that it would enable more timely resolution of investigations, benefiting agents, brokers, and web-brokers by generally providing faster final determinations from HHS.

We further proposed redesignating current Sec. 155.220(j)(2)(iii)(C) as Sec. 155.220(j)(2)(iii)(D) and revising Sec. 155.220(j)(2)(iii)(C). We stated that newly proposed Sec. 155.220(j)(2)(iii)(C) would require that the action taken by the consumer or their authorized representative to provide consent demonstrate to HHS that consent was indeed given by the consumer or the consumer's representative. We stated that Sec. 155.220(j)(2)(iii)(C) would provide examples of acceptable actions, which mirror those proposed at Sec. 155.220(j)(2)(ii)(A)(2). We also proposed that a signature that is simply typed on the HHS-approved and -created consumer consent form or a filled-in check-box would not clearly indicate consent was provided, as, based on this information, we are unable to verify whether the consumer or their authorized representative personally typed the name and completed the checkboxes, or if the agent, broker, or web-broker did so without obtaining actual consent from the consumer or their authorized representative. We stated in the proposed rule that a handwritten signature or handwritten initials made directly on the HHS-approved and -created consumer consent form indicates a consumer's or a consumer's representative's consent because it would more clearly illustrate that the consumer or the consumer's representative indeed gave their consent as it can be compared against another handwritten signature or handwritten initials. Although we released an FAQ \129\ in 2024 clarifying the “take an action” requirement, we are formalizing these expectations in regulation to provide greater transparency.

\129\ CMS. (2024, June 12). Frequently Asked Questions: Consumer Consent & Application Review Requirements. https://www.cms.gov/files/document/frequently-asked-questions-consumer-consent-application-review-requirements.pdf.

In summary, we proposed to revise Sec. 155.220(j)(2)(ii)(A) to state that the consumer or their authorized representative must take an action to execute the HHS-approved and -created form, indicating that the eligibility application information has been reviewed and confirmed to be accurate by the consumer (or the consumer's authorized representative). We also proposed redesignating Sec. 155.220(j)(2)(ii)(A)(2) as Sec. 155.220(j)(2)(ii)(A)(3) and amending newly revised Sec. 155.220(j)(2)(ii)(A)(2) to describe the acceptable and unacceptable actions that a consumer (or their authorized representative) can take that would allow the agent, broker, or web- broker to demonstrate the consumer's or the consumer's authorized representative's confirmation of the review of eligibility application information. We also proposed to revise Sec. 155.220(j)(2)(iii)(A) to require agents, brokers, or web-brokers to demonstrate that the consumer or their authorized representative has obtained and reviewed consent documentation by executing an HHS-approved and -created form. Finally, we proposed to redesignate current Sec. 155.220(j)(2)(iii)(C) as Sec. 155.220(j)(2)(iii)(D), and to add new Sec. 155.220(j)(2)(iii)(C). We stated that newly proposed Sec. 155.220(j)(2)(iii)(C) would require that the action taken by the consumer or their authorized representative to provide consent must be clear to HHS on the face of the documentation and would describe acceptable actions.

We sought comment on these proposals.

After consideration of the comments and for the reasons outlined in the proposed rule and this final rule, including our responses to the comments received, we are finalizing these proposals with modifications to delay the effective date of the proposals such that they will apply for all enrollments for plan years beginning on or after January 1, 2028, including enrollments under Sec. 155.335(j). We are also making modifications to clarify that the proposed acceptable and unacceptable actions in proposed paragraphs Sec. Sec. 155.220(j)(2)(ii)(A)(2) and 155.220(j)(2)(iii)(C) are actions that will allow agents, brokers, or web-brokers to demonstrate the consumer or the consumer's authorized representative took an action to execute an HHS-approved and -created consumer consent form to confirm: (1) the eligibility application information has been reviewed and confirmed to be accurate; and (2) the consumer or the consumer's authorized representative took an action to provide consent. As a result, we are keeping the existing standards outlined in Sec. 155.220(j)(2)(ii)(A) and (j)(2)(iii)(A) intact, as these provisions will remain in effect for all enrollments through PY 2027. We are adding language to Sec. 155.220(j)(2)(ii)(A) and (j)(2)(iii)(A) to state that current documentation policies for eligibility application review and consumer consent are effective for enrollments for plan years ending prior to January 1, 2028. We are also finalizing the proposed requirements to document confirmation of the consumer or the consumer's authorized representative's review of eligibility application information and to provide consumer consent using the HHS-approved and -created form as well as the acceptable and unacceptable actions to execute the HHS-approved and -created consumer consent form for enrollments for plan years beginning on or after January 2028, including enrollments under Sec. 155.335(j).

Comment: Many commenters supported the proposal to mandate use of the HHS-approved and created consumer consent form used by agents, brokers, and web-brokers to meet the eligibility application review documentation requirements and the consumer consent documentation requirements. Specifically, many commenters noted that mandating the HHS-approved and created consumer consent form used by agents, brokers, and web-brokers would: help prevent fraudulent, unauthorized enrollments and inappropriate plan switching; reduce errors by providing a clear process for agents, brokers, and web-brokers to utilize; provide additional clarity concerning compliance matters and accountability; improve transparency between agents, brokers, and web- brokers and consumers; streamline investigations benefiting consumers, agents, brokers, and web-brokers; and provide consumer protection measures such as ensuring consumers have reviewed their eligibility application review documentation.

Response: We agree that mandating use of the HHS-approved and - created consumer consent form by agents, brokers, and web-brokers provides many benefits to both consumers and agents, brokers, and web- brokers alike.

Comment: Some commenters noted that this proposal to mandate a standard HHS-approved and -created consumer consent form would impose burdens on agents, brokers, and web-brokers and consumers. Some commenters noted that a previously signed consent form should qualify for ongoing use rather than requiring the consumer to sign a new consent form for each agent, broker, or web-broker interaction. Other commenters noted that requiring a new consent form each time there is an agent, broker or web-broker interaction creates a burden and barrier to customer care. Some commenters stated that agents, brokers, and web- brokers have specifically designed their programs based on the communities they are in, and a mandated HHS-approved and -created consumer consent form would not align with diversified communication strategies employed by agents, brokers, and web-brokers to tailor language and presentations to specific populations of consumers, which could lead to consumer confusion. Some commenters requested HHS to ensure that the HHS-approved and -created consumer consent form is accessible to all consumers, including those with disabilities, limited literacy, or limited English proficiency. Some commenters indicated that this proposal would lead to consumer difficulties and would also unnecessarily target the socio-economically challenged, including those populations who lack digital access, and those populations who would have language barriers, to complete the HHS-approved and -created consumer consent form. Commenters stated that requiring a new HHS- approved and -created consumer consent form with each consumer's application to the Exchanges creates a barrier to consumer care. Commenters noted concern that this proposal applies uniform compliance burdens to all agents, brokers, and web-brokers without distinguishing between lead-driven mass enrollment models and relationship-based agencies that rely on client-initiated contact.

Response: To clarify, as indicated above, due to concerns raised by commenters, we are delaying the effective date of the use of the HHS- approved and -created consumer consent form by agents, brokers, and web-brokers to enrollments for plan years beginning on or after January 1, 2028, including enrollments under Sec. 155.335(j). The HHS-approved and -created consumer consent form must be used by agents, brokers, and web-brokers, for all PY 2028 enrollments, including those enrollments under Sec. 155.335(j), and for all new enrollments thereafter. This will help reduce the burden by allowing agents, brokers, and web- brokers ample time to update their processes to incorporate the HHS- approved and -created consumer consent form and finalize outreach to consumers that occurs prior to open enrollment. The HHS-approved and - created consumer consent form does not add new eligibility application review or consumer consent documentation requirements. Agents, brokers, and web-brokers should familiarize themselves and their consumers with the HHS-approved and -created consumer consent form and may utilize the pre-enrollment verification period, beginning August 1, 2027, as prescribed in section 71303(b) of the WFTC legislation, to have consumers sign this form. While the HHS-approved and -created consumer consent form will not be required until PY 2028, agents, brokers, and web-brokers may use the HHS-approved and -created consumer consent form as soon as it is posted on CMS' website.\130\ We intend to post the HHS-approved and -created consumer consent form prior to the 2027 pre- enrollment verification period. The proposed rule governing the use of the HHS-approved and -created consumer consent form does not bar agents, brokers, and web-brokers from creating supplemental materials to assist their consumers. However, the HHS-approved and -created consumer consent form must be used to document (1) eligibility application review, and (2) consumer consent requirements.

\130\ We plan to have the HHS-approved and -created consumer consent form shown on our agent and broker resource page found here: https://www.cms.gov/marketplace/agents-brokers/general-resources.

As outlined in the proposed rule (91 FR 6335), we stated that the HHS-approved and -created consumer consent form would eliminate the current broad allowances on the format for meeting the eligibility application review requirements and consent documentation requirements. For the reasons stated earlier in this final rule, we believe the HHS- approved and -created consumer consent form to be used by agents, brokers, and web-brokers will: help reduce errors; provide additional compliance clarity for agents, brokers, and web-brokers; streamline investigations; provide additional consumer protections; and ensure that all consumers are being treated equally, reducing discrepancies in how agents, brokers, and web-brokers document eligibility application review and consumer consent.

The HHS-approved and -created consumer consent form will also meet accessibility needs. We intend to make the HHS-approved and -created consumer consent form Section 508 compliant and we plan to translate the HHS-approved and -created consumer consent form into the languages as shown on HealthCare.gov. If agents, brokers, and web-brokers need to translate the HHS-approved and -created consumer consent form outside of the languages appearing on HealthCare.gov, agents, brokers, and web- brokers can translate the form into languages that do not appear on HealthCare.gov, but are prohibited from making any other alterations to the HHS-approved and -created consumer consent form.

To clarify, requirements already exist outlining the substance of what agents, brokers, and web-brokers must document for: (1) eligibility application review requirements, and (2) consumer consent requirements. The only difference, via this rule, is how agents, brokers, and web-brokers must document eligibility application review requirements and consumer consent requirements using the HHS-approved and -created consumer consent form. As a result, we are not adding additional, substantive elements to the HHS-approved and -created consumer

consent form. The effective date of this policy has been delayed one year, so agents, brokers, and web-brokers will be required to use the HHS-approved and -created consumer consent form for all enrollments for plan years beginning on or after January 1, 2028, including those enrollments under Sec. 155.335(j), impacting open enrollment in the fall of 2027 and for all new enrollments thereafter. As a result, agents, brokers, and web-brokers will not be required to use HHS- approved and -created consumer consent form to document (1) eligibility application review, and (2) consumer consent during open enrollment for the fall of 2026. Agents, brokers, and web-brokers may use the HHS- approved and -created consumer consent form, if they wish, during open enrollment during the fall of 2026. The delayed effective date will help reduce the burden by allowing agents, brokers, and web-brokers ample time to update their processes to incorporate the HHS-approved and -created consumer consent form and finalize outreach to consumers that need to happen prior to open enrollment. In addition, previously obtained consent forms and eligibility application review documentation will no longer satisfy the consumer consent documentation and eligibility application review documentation requirements beginning with enrollments and re-enrollments for PY 2028.

Further, we considered commenters' suggestion to allow a previously-signed consent form to remain valid for enrollments after the effective date for this policy. We are not adopting that approach because a core purpose of this policy is to ensure that each consumer action resulting in an application update or enrollment reflects an up- to-date and affirmative expression of the consumer's intent using the standardized HHS-approved and -created form. Allowing prior documented consumer consents and prior documentation of eligibility application review to satisfy this policy could weaken our ability to verify that the consumer took the action associated with each specific transaction, which is central to the program-integrity concerns this policy is designed to address. However, once the consumer or the consumer's representative has taken an action to complete the HHS-approved and - created consumer consent form, the consumer's consent will remain in effect unless the consumer or the consumer's authorized representative revokes consent or if the consent expires as expressly stated on the HHS-approved and -created consumer consent form. This means that for PY 2028, agents, brokers, and web-brokers must use the HHS-approved and - created consumer consent form for all enrollments, including enrollments under Sec. 155.335(j), using the HHS-approved and created consent form to document the consumer's or the consumer's representative's (1) eligibility application review and (2) consumer consent. However, the agent, broker, or web-broker will not need the consumer or the consumer's representative to complete a new HHS- approved and -created consumer consent form for every interaction thereafter if the previously obtained consent is valid and has not been revoked by the consumer or the consumer's representative and the agent, broker, or web-broker's action on behalf of the consumer is within the scope of the consumer consent documentation.

Additionally, we note that the HHS-approved and -created consumer consent form will not be contingent on how an agent, broker, or web- broker obtains a client, as the HHS-approved and -created consumer consent form is used with each consumer regardless of whether an agent, broker, or web-broker's relies on mass lead generation or more personal client relationships. Also, the pre-enrollment verification period will be an optimal time to obtain consumer consent documentation and application eligibility review documentation.

Comment: Some commenters noted that CMS should prioritize system- based authorization controls within the Exchange application process rather than relying primarily on documentation-based consent requirements. Commenters noted that static consent documentation requirements are unlikely to prevent large-scale unauthorized consumer enrollments.

Response: We are continuing to evaluate various system controls to mitigate non-compliant behavior among agents, brokers, and web-brokers. However, we do not agree that system-based controls alone are sufficient to address the concerns raised. In addition to possible system controls being implemented, we believe creating and mandating the HHS-approved and -created consumer consent form is necessary because it ensures that all consumers are treated equally and are properly informed of what they are consenting to, and it reduces discrepancies in how agents, brokers, and web-brokers document: (1) eligibility application review requirements, and (2) consumer consent requirements. Standardized documentation complements, rather than replaces, system-based controls by providing verifiable documentation of consumer intent that supports program integrity and oversight activities.

Comment: Some commenters noted that the HHS-approved and -created consumer consent form would not align well with the diverse communication strategies used by State Exchanges, which tailor language and presentations to their enrollment communities. Commenters indicated that requiring an HHS-approved and -created consumer consent form risks creating confusion by introducing terminology and formats that differ from those consumers encounter elsewhere in the Exchanges' communications.

Response: The proposed policy for the required use of the HHS- approved and -created consumer consent form only applies to agents, brokers, and web-brokers assisting consumers through the Exchanges on the Federal platform; the proposed requirement would not apply to the State Exchanges. States operating State Exchanges retain the authority to establish their own policies and procedures regarding consumer consent and eligibility application review documentation and are not required to adopt the HHS-approved and -created consumer consent form.

Comment: Some commenters recommended that HHS clarify what language in the HHS-approved and -created consumer consent form can vary, which would allow EDE entities to make user experience improvements to the display and revise the language to make it more accessible to consumers. Also, some commenters recommended that HHS allow agents, brokers, and web-brokers to document consent using any verifiable method that clearly demonstrates consumer consent, which could be produced during an audit of an agent, broker, or web-broker.

Response: As outlined in the proposed rule (91 FR 6335), we proposed to require agents, brokers, and web-brokers to use the HHS- approved and -created consumer consent form to limit agents, brokers, and web-brokers discretion in how they meet the eligibility application review and consumer consent documentation requirements to better protect consumers. Requiring agents, brokers, and web-brokers to use the HHS-approved and -created consumer consent form reduces the likelihood of consumer manipulation or fraud because each agent, broker, or web-broker must use and collect the content areas stated on the HHS-approved and -created consumer consent form to

document (1) eligibility application review requirements; and (2) consumer consent requirements.

We clarify that the language in the HHS-approved and -created consumer consent form cannot vary. For the reasons stated earlier in this section of this final rule, we believe the HHS-approved and - created consumer consent form to be used by agents, brokers, and web- brokers will help: reduce errors; provide additional compliance clarity for agents, brokers, and web-brokers; streamline investigations; provide consumer protection measures; and ensure that all consumers are being treated equally, reducing discrepancies in how agents, brokers, and web-brokers document: (1) eligibility application review requirements, and (2) consumer consent requirements. Allowing variation in the form would undermine the goals behind this policy to reduce investigation lengths, reduce discrepancies, and ensure all consumers are treated equally. Standardizing that agents, brokers, and web- brokers are required use the HHS-approved and -created consumer consent form will help improve consistency in how we compare and assess compliance with the documentation requirements. An increased level of consistency will increase the efficiency of our compliance determinations, thus supporting our efforts to ensure consumer protections. The standardized HHS-approved and -created consumer consent form ensures that every agent, broker, and web-broker is collecting the same categories of information in the same way, making it easier for us to investigate, perform audits, detect fraud or omissions, and enforce regulatory requirements uniformly. If agents, brokers, and web-brokers are using different modes to collect the eligibility application review and consumer consent documentation outside of using the HHS-approved and -created consumer consent form, it becomes increasingly more difficult to efficiently compare submissions, undermining our oversight. Requiring consistent use of a uniform consent and eligibility application information review form reduces the likelihood of consumer manipulation or fraud because each agent, broker, or web-broker must use and collect the same content areas as stated on the HHS-approved and -created form. This also makes it more difficult for agents, brokers, or web-brokers to omit required information and/or alter how questions are framed to steer outcomes.

As mentioned earlier, it is our intent to make the HHS-approved and -created consumer consent form Section 508 compliant as well as translating the HHS-approved and -created consumer consent form into the languages as shown on HealthCare.gov. If agents, brokers, and web- brokers need to translate the HHS-approved and -created consumer consent form outside of the languages appearing on HealthCare.gov, agents, brokers, and web-brokers can translate the form, and we clarify that they are prohibited from making any other alterations to the HHS- approved and -created consumer consent form.

Additionally, we clarify in this final rule that recorded telephone calls, in which the agent, broker, or web-broker communicates the entirety of the language in the HHS-approved and -created form to the consumer or the consumers' representative, and the consumer or the consumer's representative provides their verbal consent, is permissible to document: (1) eligibility application review requirements, and (2) consumer consent requirements. Documentation using the whole content of the HHS-approved and -created consumer consent form will be required for all agents, brokers, and web-brokers, for all enrollments for plan years beginning on or after January 1, 2028, including enrollments under Sec. 155.335(j), impacting open enrollment in the fall of 2027. We make similar clarification for documentation of eligibility application review and consent documentation via email: the email chain used to document either eligibility review and the email chain used to document consent, or both if they are one and the same, must contain the entirety of the language in the HHS-approved and -created form. Further, previously obtained consent forms and eligibility application review documentation will no longer satisfy the consumer consent documentation and eligibility application review documentation requirements beginning with enrollments and re-enrollments for PY 2028. Any recordings and documentation must be maintained by agents, brokers, and web-brokers for 10 years, and provided to HHS upon request. See existing Sec. 155.220(j)(2)(iii)(C).

Since we have clarified with further discussion acceptable methods for satisfying eligibility application review and consent documentation requirements, it is no longer necessary to reference “other means” and we are striking the reference from the policy we are finalizing in both revised Sec. Sec. 155.220(j)(2)(ii)(A)(2) and 155.220(j)(2)(iii)(C).

Comment: Some commenters noted that the HHS-approved and -created consumer consent form should also include: listing the issuer's name and plan name in which the consumer is enrolling; the member's premium; subsidies; and financial responsibility; the consumer's income and attestation; an acknowledgement that the consumer does not have or will be losing Medicaid or Medicare; and an internet Protocol (IP) address for digital forms to further strengthen consent documentation.

Response: We appreciate this comment outlining other suggested information that we can consider capturing in the HHS-approved and - created consumer consent form. Some of the commenters' suggested additional elements, such as plan name, premium information, subsidies, and income attestations, are already captured elsewhere in the enrollment process, and therefore it would be duplicative and burdensome to list this information again on the HHS-approved and created consumer consent form. Similarly, requiring agents, brokers, web-brokers, consumers, or consumers' authorized representatives to manually identify and record their own IP address on the HHS-approved and -created consumer consent form would be technically burdensome and impractical. As such, having agents, brokers, and web-brokers collect this additional information would increase burden without providing commensurate value. Requiring agents, brokers, and web-brokers to collect duplicative information may lead to inefficiencies, increased completion time, and a higher likelihood of inconsistent data. For these reasons, we are not adopting these additional data elements to be included in the HHS-approved and -created consumer consent form at this time.

Comment: Some commenters noted that we should clarify that the Federal Electronic Signatures in Global and National Commerce Act (E- Sign Act) allows for the execution of the HHS-approved and -created consumer consent form.

Response: We outline what are acceptable and unacceptable actions that either a consumer or a consumer's authorized representative can take to demonstrate their confirmation of the review of eligibility application information; and the documentation of consumer consent, illustrating that the consumer or consumer's representative indeed gave his or her consent. Specifically, we are finalizing that these actions may include a hand-written or electronic written signature or initials, made directly on the HHS-approved and -created consumer consent form

indicating a person's consent, approval, or agreement; an email from the consumer or consumer's authorized representative; or a recorded verbal conversation.

Additionally, the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001, is the law that gives electronic signatures the same legal effect as paper ones and includes certain consumer-consent and disclosure steps when required information is delivered electronically, see 15 U.S.C. 7001(c)(1)(A) and 15 U.S.C. 7001(c)(1)(B), such as the consumer agreeing to receive the information electronically and being told how to withdraw that consent. E-Sign- compliant methods may be used to sign the HHS-approved and created consumer consent form provided our program integrity requirements are met as set forth above and in this rule.

Comment: Some commenters stated that telephone calls can still be valid supplemental consent documentation and recommended that previously obtained consent forms should be allowed to count for consumer consent in lieu of the HHS-approved and -created consumer consent form. Also, some commenters recommended that HHS allow agents, brokers, and web-brokers to document consent using any verifiable method that clearly demonstrates consumer consent, which could be produced during an audit of an agent, broker, or web-broker.

Response: To clarify, for plan years beginning on or after January 1, 2028, recorded telephone calls, in which the agent, broker, or web- broker communicates the entirety of the language in the HHS-approved and -created form to the consumer or the consumers' representative, and during which the consumer or the consumer's representative provides their verbal consent, are permissible to document: (1) eligibility application review requirements, and (2) consumer consent requirements. As stated in this rule, the agent, broker, and web-broker must use the content of the HHS-approved and -created consumer consent form to document (1) eligibility application review requirements, and (2) consumer consent requirements. There will be verbal scripts included with the HHS-approved and -created consumer consent form that agents, brokers, and web-brokers can use for recorded telephone calls, which will contain the content of the HHS-approved and -created consumer consent form.

Previously obtained consumer consent and eligibility application review documentation and other methods used to document consumer consent and eligibility application review prior to PY 2028 will no longer be valid to satisfy consumer consent documentation and eligibility application review documentation requirements beginning with enrollments and re-enrollments for plan years starting January 1, 2028. Agents, brokers, and web-brokers must exclusively use the HHS- approved form for future enrollments (i.e., those beginning on or after January 1, 2028).

Any recordings and consent or eligibility documentation must be maintained by agents, brokers, and web-brokers for 10 years and provided to HHS upon request. See Sec. 155.220(j)(2)(iii)(C).

Comment: A commenter requested HHS clarify enforcement, accountability, and the respective responsibilities for issuers and carriers \131\ with respect to the HHS-approved and -created consumer consent form.

\131\ Some States define “carriers” as an entity authorized to provide health insurance, benefits, or services, including health maintenance organizations (HMOs), nonprofit health service plans, and authorized insurers. These are essentially insurance companies that offer health benefit plans regulated by the States.

Response: To clarify, issuers and carriers will not be required to use the HHS-approved and -created consumer consent form; only agents, brokers, and web-brokers will be required to use the HHS-approved and - created consumer consent form to document: (1) eligibility application review documentation and (2) consumer consent documentation, for enrollments for plan years beginning on or after January 1, 2028.

Comment: A commenter recommended that consent should be made available at both the (1) agent, broker, and web-broker, and (2) the agency level to ensure a good consumer experience in allowing an agency to service the consumer. The commenter also recommended that HHS should allow consumers to authorize an agency via an agency identifier such as an agency name and agency National Producer Number (NPN), while still recording the acting agent, broker, or web-broker's NPN for each enrollment/servicing action to preserve for auditing purposes and accountability.

Response: Like the current Model Consent Form,\132\ the HHS- approved and -created consumer consent form will be available for use by agents, brokers, web-brokers, and agencies. We will continue to allow an agency, using the agency's identifier such as the agency's name and agency's NPN, to complete the HHS-approved and -created consumer consent form. Further, the agency's name appearing on the HHS- approved and -created consumer consent form does not prohibit an assisting agent's name and NPN from also appearing on the form.

\132\ See https://www.cms.gov/marketplace/agents-brokers/files/cms-model-consent-form-marketplace-agents-brokers.pdf.

However, we want to emphasize that even if the name of an agency is used on the HHS-approved and -created consent form, it remains the responsibility of the assisting agent, broker, or web-broker to maintain the documentation for 10 years and produce it to HHS, upon request, even when the agency's name or NPN number appears on the HHS- approved and -created consumer consent form. See Sec. 155.220(j)(2)(iii)(C).

Comment: We received out of scope comments relating to mandating use of the HHS-approved and -created consumer consent form. For instance, commenters indicated that HHS holds the perception or belief that agents, brokers, and web-brokers are engaging in fraudulent applications for the Exchanges. Commenters also indicated that nobody could accurately project their Adjusted Gross Income (AGI) 16 months ahead of time when doing applications. Commenters also indicated that some agents, brokers, and web-brokers call the Marketplace call center and impersonate consumers, engaging in unauthorized plan switching.

Response: These comments are outside the scope of this proposal, and therefore we did not consider them for this final rule. We will keep them in mind for future rulemaking or sub-regulatory guidance.

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 at revised Sec. Sec. 155.220(j)(2)(ii)(A)(2) and 155.220(j)(2)(iii)(C) that agents, brokers, and web-brokers are required to use the HHS-approved and -created consumer consent form to meet the eligibility application review documentation requirements and consent documentation requirements, effective for enrollments, including enrollments under Sec. 155.335(j), for plan years beginning on or after January 1, 2028. We are also finalizing the acceptable and unacceptable actions that will allow agents, brokers, and web-brokers to demonstrate the consumer or the consumer's authorized representative took an action to execute the HHS-approved and -created consumer consent form. 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 review and review and consent are effective for enrollments for plan years ending prior to January 1, 2028. Please note that we may consider future updates to these regulatory provisions through rulemaking, if appropriate, to support implementation. b. Proposals Related To Creating Standards of Conduct Related to Marketing (Sec. 155.220(j)(3))

In the 2027 Payment Notice proposed rule (91 FR 6337), we proposed to redesignate current Sec. 155.220(j)(3) to Sec. 155.220(j)(4) and add language at Sec. 155.220(j)(3) to create standards of conduct by which agents, brokers, and web-brokers must adhere when engaging in marketing practices related to assisting or facilitating enrollment of qualified individuals, qualified employers, or qualified employees in FFE coverage, or applying for APTC or CSRs for QHPs sold through an FFE or SBE-FP. We clarify in this final rule that these marketing standards apply to agents, brokers, and web-brokers assisting consumers through FFEs and SBE-FPs. State Exchanges may adopt these standards at their discretion, but they are not required to do so. This proposal would establish marketing requirements and provide a non-exhaustive illustrative list of prohibited marketing practices. The marketing practices we identify and prohibit through the final rule are the most common misleading advertisement types we have discovered on social media websites to date. We identified these prohibited practices based on patterns observed through our monitoring of publicly available advertisements and the types of misleading marketing most frequently reported through the Agent Broker Helpdesk.

In the Patient Protection and Affordable Care Act; Program Integrity: Exchange, SHOP, and Eligibility Appeals final rule (78 FR 54076 through 54081), we established a framework for terminating an agent's, broker's, or web-broker's Exchange agreement(s) for cause in situations in which, in HHS' determination, a specific finding of noncompliance or pattern of noncompliance is sufficiently severe.\133\ Section 155.220(g)(2)(i) states that agents, brokers, or web-brokers may be determined noncompliant for violations of “[a]ny standard specified under this section,” which would include marketing violations under Sec. 155.220(j)(2)(i). Under this existing framework, HHS can terminate an agent's, broker's, or web-broker's Exchange agreement(s) for cause to protect consumers and the efficient and effective operation of Exchanges in cases of sufficiently severe violations or patterns of violations. In such situations, under Sec. 155.220(g)(3), HHS provides the agent, broker, or web-broker with 30 calendar days' notice and an opportunity to resolve and address the finding(s) of noncompliance during that 30 day notice period.\134\ If after 30 calendar days the noncompliance is not addressed to HHS' satisfaction, HHS may terminate the Exchange agreement(s) for cause. Once their Exchange agreement(s) are terminated for cause under Sec. 155.220(g)(1), the agent, broker, or web-broker is no longer registered with the FFE, is not permitted to assist with or facilitate enrollment of a qualified individual, qualified employer, or qualified employee in coverage in a manner that constitutes enrollment through the Exchange, and is not permitted to assist individuals in applying for APTC and CSRs for QHPs.135 136 Consistent with Sec. 155.220(h)(1), an agent, broker, or web-broker whose Exchange agreement(s) are terminated can request reconsideration of such action. Reconsideration requests submitted to HHS are handled by a division separate and independent from the one that imposed termination. Section 155.220(h)(2) provides the agent, broker, or web-broker with 30 calendar days to submit their request (including any rebuttal evidence or information) and Sec. 155.220(h)(3) requires HHS to provide agents, brokers, or web-brokers with written notice of HHS' reconsideration decision within 60 calendar days of receipt of the request for reconsideration.

\133\ See 45 CFR 155.220(g)(1)-(4). Also see, for example, 78 FR 37047 through 37048 and 78 FR 54076 through 54081.

\134\ See 45 CFR 155.220(g)(3)(i). The one exception is for situations where the agent, broker, or web-broker fails to maintain the appropriate license under applicable State law(s). See 45 CFR 155.220(g)(3)(ii). In these limited situations, HHS may immediately terminate the agent, broker, or web-broker's Exchange agreement(s) for cause without any further opportunity to resolve the matter upon providing notice to the agent, broker, or web-broker. Ibid.

\135\ 45 CFR 155.220(g)(4).

\136\ The agent, broker, or web-broker must continue to protect any PII accessed during the term of their Exchange agreements. See, for example, 45 CFR 155.220(g)(4) and 45 CFR 155.260.

In the 2017 Payment Notice (81 FR 12204), we added section Sec. 155.220(j)(2) to require agents, brokers, and web-brokers to provide consumers with correct information, without omission of material fact, regarding FFEs, QHPs offered through the FFEs, and insurance affordability programs, as well as refrain from marketing or conduct that is misleading, coercive, or discriminatory.

In the proposed rule, we stated that we have found many instances of advertisements that mislead consumers during our reviews of existing advertisements. We stated that we intend to prioritize taking enforcement actions against agents, brokers, and web-brokers who engage in misleading marketing. Complaints regarding misleading marketing can be sent to the Agent Broker (AB) Helpdesk,\137\ and we also intend to increase our monitoring of social media sites and other sources to root out misleading marketing. We explained that if we discover what we believe is misleading marketing, we may begin enforcement by engaging in TA or directly move to following the termination process established in Sec. 155.220(g)(1). We currently use a misleading marketing- specific evaluation method we created to help us determine whether it is appropriate to engage in TA or take an enforcement action in response to an agent's, broker's, or web-broker's marketing practices. This evaluation method utilizes a scoring system, based on the number of ads used in public marketing and number of violations within each ad, to determine which response path to take, with higher scores generally indicating more egregiously noncompliant behavior that would lead to enforcement action. More egregious noncompliant behavior could be related to a large volume of ads being posted or ads containing multiple regulatory violations. We clarified that applying such a universal standard would help ensure all agents, brokers, and web- brokers are treated fairly.

\137\ The Agent Broker (AB) Helpdesk can be contacted at [email protected].

Furthermore, in the proposed rule, we stated that there are instances when it can be difficult or impossible for HHS to determine who is responsible for posting the misleading marketing, hindering HHS' ability to take enforcement actions in those instances. To take an enforcement action, our investigation would need to find information linking the misleading

marketing to a specific agent, broker, or web-broker. We could make this link by receiving contractual information regarding the posting of the marketing, finding agent, broker, or web-broker contact information in the metadata of the posted marketing, or through other reliable means. We stated that we plan to engage in TA to explain our approach when determining misleading marketing, and we would provide guidance to agents, brokers, and web-brokers to bring their materials into compliance with HHS' marketing requirements. While we anticipate each investigation would be different depending on the facts of the case, we stated in the proposed rule that we propose to utilize two mechanisms for agents, brokers, and web-brokers who have engaged in misleading marketing to become compliant. First, we stated that the agent, broker, or web-broker would need to remove the misleading marketing in a timely fashion. This would help ensure no additional consumers would see the advertisement and be misled. Additionally, we stated that we would ask that agents, brokers, and web-brokers review CMS-provided materials on what constitutes compliant marketing practices. This would help educate agents, brokers, and web-brokers to prevent future incidents of noncompliance.

In the proposed rule, we stated that we have found emerging patterns of misleading marketing and have been engaging in TA and enforcement actions when appropriate. We have found numerous examples of misleading marketing, with common issues ranging from guaranteeing zero-dollar enrollment to misrepresenting enrollment timelines. We stated that we believe these misleading marketing practices warrant additional HHS oversight and believe more robust marketing standards of conduct under Sec. 155.220(j) are needed. Although our current regulations provide ample authority to begin our new TA program as described above and take enforcement action against misleading marketing, we proposed to amend our regulations to add more specific language on certain marketing prohibitions so that agents, brokers, and web-brokers know what is and is not permitted in their marketing.

Therefore, we proposed to amend Sec. 155.220(j)(2) to remove “marketing or” from Sec. 155.220(j)(2)(i); separate conduct related to enrollment from conduct related to marketing in newly redesignated paragraph Sec. 155.220(j)(3); expand marketing requirements for agents, brokers, and web-brokers; and codify a non-exhaustive list of prohibited practices, requirements for responding to HHS requests related to marketing, and responsibilities related to marketing conducted by third parties with whom an agent, broker, or web-broker contracts. We also proposed to remove language from Sec. 155.220(j)(2)(i) that defines the term “sex” to include sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity; and sex stereotypes. We stated that this proposed change would recognize a person's sex as referring to an individual's immutable biological classification as either male or female, consistent with Executive Order 14168 (90 FR 8615) that reflects the current policy of the United States. HHS is of the view that because the sexes are not changeable and one's sex is grounded in fundamental and incontrovertible reality, it is not necessary to address ancillary issues of gender ideology in a regulation governing the activities of State-licensed agents, brokers, and web-brokers. Based on our experience overseeing agents, brokers, and web-brokers as they assist consumers with enrollment through the FFE, we stated that we do not believe this change would result in or facilitate any discrimination against consumers.\138\

\138\ In the May 6, 2024 Federal Register, we finalized the Nondiscrimination in Health Programs and Activities final rule (89 FR 37522) (hereinafter referred to as the “2024 Final Rule”), which interpreted prohibited discrimination on the basis of sex to include, inter alia, discrimination on the basis of sex characteristics, including intersex traits, gender identity, and sex stereotypes. Several district courts vacated or stayed certain provisions of the 2024 Final Rule and preliminarily enjoined HHS from enforcing certain provisions of the 2024 Final Rule--primarily those prohibiting discrimination on the basis of gender identity. See Florida. v. Dep't of Health & Hum. Servs., 739 F. Supp. 3d 1091 (M.D. Fla. 2024); Tennessee v. Kennedy, 807 F. Supp. 3d 613, 630 (S.D. Miss. 2025); Texas v. Becerra, No. 6:24-CV-211-JDK, 2024 WL 4490621 (E.D. Tex. Aug. 30, 2024). Although the Secretary filed appeals in these cases, the United States Court of Appeals for the Fifth and Eleventh Circuits subsequently dismissed all appeals pursuant to motions filed after the change in administration, and certain sections of the 2024 Final Rule relating to an expanded interpretation of sex discrimination remain vacated or stayed.

At Sec. 155.220(j)(3), we proposed that an individual or entity described in paragraph (j)(1) is required to comply with the standards set forth at Sec. 155.220(j)(3).

We proposed at new paragraph Sec. 155.220(j)(3)(i) to require that all conduct involving marketing must comply with the standards of conduct described within Sec. 155.220(j)(2).

We also proposed, at Sec. 155.220(j)(3)(ii), that all agents, brokers, and web-brokers must provide consumers with correct information about FFEs, QHPs offered through the FFE, and insurance affordability programs that does not omit any material facts. We proposed that agents, brokers, and web-brokers must refrain from marketing that is misleading, materially inaccurate, coercive, or discriminates based on race, color, national origin, disability, age, or sex. For purposes of the proposed rule, and consistent with the proposed revisions to Sec. 155.220(j)(2)(i), we stated that the term “sex” refers to an individual's immutable biological classification as either male or female, consistent with Executive Order 14168 (90 FR 8615). This definition applies to all marketing materials and all consumer-facing communications subject to this section.

At Sec. 155.220(j)(3)(iii), we proposed seven examples of prohibited marketing practices. We proposed at Sec. 155.220(j)(3)(iii)(A) that agents, brokers, and web-brokers may not provide cash, monetary rebates, gift cards, travel vouchers, or cash equivalents to induce consumers to enroll or for any enrollment-related inducement.

At Sec. 155.220(j)(3)(iii)(B), we proposed that agents, brokers, and web-brokers may not offer gifts to consumers unless such gifts are: of nominal value; offered to similarly-situated consumers without regard to whether the consumer enrolls; and are not in the form of cash or cash equivalents.\139\ We stated in the proposed rule that nominal value would have the meaning provided by the HHS Office of Inspector General \140\ and our review of nominal gifts would utilize the same prohibitions and allowances currently used in the Medicare Advantage (MA) Program.\141\ Many of these prohibitions on gifts associated with enrollments, excluding permissible nominal gifts, are also prohibited under State law and we stated that our proposals would not attempt to supersede State laws on these topics. We stated that any termination stemming from a violation of one of these finalized standards would be shared with the State(s) where the agent,

broker, or web-broker is licensed, as required under Sec. 155.220(g)(6).

\139\ The OIG definition of “cash equivalents” will be used, which can be found here: https://oig.hhs.gov/faqs/general-questions-regarding-certain-fraud-and-abuse-authorities/.

\140\ OIG. (2016, December 7). Office of Inspector General Policy Statement Regarding Gifts of Nominal Value To Medicare and Medicaid Beneficiaries. https://oig.hhs.gov/documents/special-advisory-bulletins/887/OIG-Policy-Statement-Gifts-of-Nominal-Value.pdf. We recommend visiting the OIG's website to determine whether this policy statement is still in effect or has been updated.

\141\ CMS. (2022, February 9). Medicare Communications and Marketing Guidelines (MCMG). Pp. 9-10. https://www.cms.gov/files/document/medicare-communications-and-marketing-guidelines-3-16-2022.pdf.

We proposed at Sec. 155.220(j)(3)(iii)(C) to prohibit agents, brokers, and web-brokers from falsely asserting or suggesting that consumers will always qualify for zero-dollar insurance or zero-dollar premiums. This type of advertisement may confuse or mislead consumers into providing an agent, broker, or web-broker their PII based on a false assumption of what they would qualify for. This PII may then be used by the agent, broker, or web-broker to enroll the consumer in a plan without authorization or for other unauthorized purposes. We stated that this proposed language would therefore aim to prevent consumers from providing their PII to agents, brokers, or web-brokers based on a false assumption.

At Sec. 155.220(j)(3)(iii)(D), we proposed to prohibit agents, brokers, and web-brokers from falsely using identical or facsimiles of government or other official logos and notations. We stated in the proposed rule that this proposal is related to providing consumers with correct information and builds on existing language in Sec. 155.220(j)(2)(i) that prohibits having a “. . . direct enrollment website that HHS determines could mislead a consumer into believing they are visiting HealthCare.gov . . .” We stated that our proposal would extend this requirement to advertisements and broaden its scope to include government websites beyond HealthCare.gov. We stated that we wish to prevent consumers from visiting a website they believe is an official government website or is approved by the government when it is not. We stated that such false assumptions may lead to consumers who otherwise would not give their PII to a private entity to mistakenly believe they are providing their PII to a government entity, increasing the risk that they share sensitive information under false pretenses.

At Sec. 155.220(j)(3)(iii)(E), we proposed to prohibit agents, brokers, and web-brokers from providing inaccurate or misleading information about enrollment timelines and deadlines. In the proposed rule, we stated that this proposal would include actions such as providing false, inaccurate, or misleading information related to SEP deadlines. Inaccurate timelines or misreporting of SEP deadlines may coerce consumers to enroll prematurely, believing they are about to miss an SEP or other enrollment deadline. This may cause consumers to enroll in a plan they may not have chosen otherwise if they realized they had more time to consider their options.

At Sec. 155.220(j)(3)(iii)(F), we proposed to prohibit the misconstruing of legislation, regulations, or Executive Orders, including listing references or citations to fake or incorrect legislation, regulations, or Executive Orders. We stated in the proposed rule that this proposal would encompass advertisements using fictional citations, using misleading characterizations of specific citations, or other deceptive practices related to legislation, regulations, or Executive Orders. We stated that this proposal would help reduce misinformation and disinformation in advertisements, helping to ensure consumers are not misled before providing their PII to an agent, broker, or web-broker.

We also proposed at Sec. 155.220(j)(3)(iii)(G) to prohibit the use of an image, likeness, or quote from a notable figure, such as a celebrity or politician, in an advertisement claiming that the figure has endorsed the agent, broker, web-broker, or their agency when that endorsement is not truthful. We stated in the proposed rule that this would include using artificial intelligence-generated videos, such as, but not limited to, deep fakes, or falsely attributing a quote to the public figure. This behavior may lure consumers into clicking on an advertisement or providing their PII based on a false assumption a public figure has endorsed the product or the person promoting the product. An endorsement would not be truthful if the figure in the advertisement did not actually endorse the product, did not actually speak the words the advertisement says they stated, or other similar behaviors. Furthermore, this behavior may violate State or Federal law on using someone's name, image, or likeness without permission.

The language we would use in proposed Sec. 155.220(j)(3)(ii), and the behaviors we proposed to list in new Sec. 155.220(j)(3)(iii), would better align Exchange requirements with MA requirements and help protect consumers. We stated in the proposed rule that aligning marketing rules for agents, brokers, and web-brokers across the Exchanges would ensure uniformity in enforcement and enhance regulatory compliance, thus creating consistent consumer information. We also stated that we believe these proposals would help ensure advertisements about the Exchanges are accurately providing consumers information about the Exchanges prior to providing their PII and enrolling in a health plan. Accurate advertisements help ensure more consumers enroll on time and provide required supporting documentation in a timely manner, leading to more consumers being enrolled in coverage. We stated that the integrity of the Exchange would be improved by reducing the amount of misleading information being provided to consumers, helping foster an environment where enrollees trust the agents, brokers, and web-brokers providing Exchange enrollment support, as they play an integral role in facilitating enrollments and providing consumers information about the Exchange.

Current Sec. Sec. 155.220(j)(2)(ii)(A)(2) and 155.220(j)(2)(iii)(C) state HHS or our designee may periodically monitor and audit an agent, broker, or web-broker to assess their compliance with applicable requirements. These requirements allow HHS to request and review eligibility application information and consent documentation to determine compliance with applicable regulations. Therefore, consistent with these other standards of conduct and documentation requirements, we proposed to include the same language in new proposed Sec. 155.220(j)(3)(iv) that agents, brokers, and web- brokers must produce any marketing material upon request in response to monitoring, audit, and enforcement activities conducted consistent with paragraphs (c)(5), (g), (h), and (k) of this section. We stated in the proposed rule that we do not believe a record retention requirement, similar to what is in place in Sec. Sec. 155.220(j)(2)(ii)(A)(2) and 155.220(j)(2)(iii)(C), is necessary because we would already have access to the marketing materials.

In the proposed rule, we stated that we believe it is the responsibility of all agents, brokers, and web-brokers to ensure advertisements bearing their name or directing consumers to them for Exchange enrollment assistance do not contain misleading information and follow all regulatory requirements. Accordingly, at Sec. 155.220(j)(3)(v), we proposed that an individual or entity described in paragraph (j)(1) of this section would be responsible for ensuring that all marketing-related materials created, written, released, or otherwise produced by the individual or an entity with whom the agent, broker, or web-broker has contracted or engaged to perform marketing on their behalf adhere to the requirements of Sec. 155.220(j)(3)(ii)- (iii) and to make all such marketing-related materials available to HHS upon request in accordance with Sec. 155.220(j)(3)(iv). We stated that an entity working on an agent, broker, or web-broker's behalf under Sec. 155.220(j)(3)(v) could be an agent, broker, or web-broker working for

another agent or broker that has been tasked with creating marketing materials, a third-party marketing organization with whom an agent, broker, or web-broker has contracted to create marketing materials on the agent, broker, or web-broker's behalf, or other similar parties. We stated that this proposal would support HHS compliance actions against agents, brokers, and web-brokers whose marketing materials do not comply with Sec. 155.220(j)(3)(ii)-(iii) when necessary.

In summary, we proposed to redesignate Sec. 155.220(j)(3) as Sec. 155.220(j)(4) and at new Sec. 155.220(j)(3), to clarify standards of conduct for marketing. We also proposed at Sec. 155.220(j)(3)(iv) to require that an individual or entity described in Sec. 155.220(j)(1) must produce marketing materials to HHS upon request in response to monitoring, auditing, or enforcement activities. Finally, we proposed at Sec. 155.220(j)(3)(v) to establish that an individual or entity described in paragraph (j)(1) of this section is responsible for ensuring that all marketing-related materials created, written, released, or otherwise produced by the individual or entity or on their behalf adhere to the requirements of Sec. 155.220(j)(3)(ii)-(iii) and, at Sec. 155.220(j)(3)(iv), to produce to the HHS any marketing-related materials upon request in response to monitoring, audit, and enforcement activities.

We sought comment on all aspects of these proposals. Specifically, we sought comment on additional marketing standards of conduct we should consider for agents, brokers, web-brokers, and third-party marketing organizations to address deceptive marketing practices while minimizing administrative burden. We summarize and respond to public comments received on the proposed marketing standards of conduct below.

Comment: Many commenters stated these changes would protect consumers by helping avoid confusion and misinformation. They also believed consumers would be less likely to be enrolled in plans that were not suited for their needs and would reduce likelihood of tax liability due to an incorrect application of APTC.

Response: We agree with commenters who felt the updated standards of conduct on misleading marketing will protect consumers. We believe this will mitigate confusion and misinformation, helping consumers make informed decisions that align with their individual needs. We believe also assisting consumers make informed decisions can reduce the number of consumers who face tax liability, which may happen when misleading marketing leads a consumer to believe they qualify for a $0-premium plan and results in an inadvertent misapplication of APTC. We expect these protections to be effective because the updated standards prohibit misleading marketing practices and require agents, brokers, and web-brokers to ensure the accuracy of materials created directly by them or on their behalf.

Comment: One commenter stated we should not expand oversight of agents, brokers, and web-brokers as they already are required to comply with numerous Federal and State laws.

Response: We do not believe these proposals will be overly burdensome on agents, brokers, and web-brokers and are necessary as the existing requirements have not fully prevented misleading or deceptive marketing practices. These proposals do not mandate agents, brokers, or web-brokers create new advertisements to replace existing ones, unless the existing ads are noncompliant, or create advertisements in general. Instead, we are merely providing guidelines and identifying certain prohibitions if an agent, broker, or web-broker were interested in advertising their services. These new standards reinforce current requirements to not engage in marketing that is misleading, coercive, or discriminatory but provide a more detailed explanation of prohibited marketing practices and better clarifies our expectations surrounding marketing. We also believe the consumer protections these standards of conduct will provide would outweigh the minimal burden placed on agents, brokers, and web-brokers.

Comment: One commenter stated these new standards of conduct would punish those acting in good faith.

Response: We do not agree that the new standards of conduct for misleading marketing would punish those acting in good faith. Under sections 1311(e)(1), 1311(k), and 1321(a) of the Affordable Care Act and Sec. 155.220(j) and (g), agents, brokers, and web-brokers control the content of advertisements they create, either by creating the ads themselves or by hiring an entity to do so on their behalf. Prior to contracting with a third party, an agent, broker, or web-broker should perform due diligence to help ensure the third party is compliant with all Federal and State laws. The new marketing standards of conduct clearly discuss prohibited behaviors to support compliance and deter misleading marketing practices.

In addition, the enforcement process under Sec. 155.220(g) provides agents, brokers, and web-brokers an opportunity to respond to our findings and submit information to rebut those findings before any termination of an agent's, broker's, or web-broker's FFE Agreements. This process helps ensure that enforcement actions are directed toward noncompliant conduct.

We did not expand the good faith provision in newly redesignated Sec. 155.220(j)(4) (formerly Sec. 155.220(j)(3)) to include the marketing provisions because marketing activities are fully within the control of the agent, broker, or web-broker. The good faith exception primarily applies to circumstances outside the agent's, broker's, or web-broker's control. For example, agents, brokers, and web-brokers rely on consumers to provide accurate household income information. This situation is not relevant to the marketing regulations because, as indicated earlier, these regulations apply only to activities fully within the agent's, broker's, or web-broker's control.

Comment: Several commenters supported the proposals but worried that they do not address the major contributors of misleading marketing and we should instead focus our efforts on Third-party Marketing Organizations (TPMOs), Field Marketing Organizations (FMOs), agencies, and other large-scale distributors of misleading marketing. These commenters also noted allowing agents, brokers, and web-brokers to report entities engaging in misleading marketing.

Response: Our proposals focused on individual agents, brokers, and web-brokers because these are the entities with which we enter into Exchange Agreements and, therefore, the entities over which we have enforcement authority. We do not enter into Exchange Agreements with TPMOs, FMOs, agencies, or other entities. However, we encourage individuals with information about any entity engaging in misleading marketing to report such conduct to HHS, their State Department of Insurance, the Department of Justice, or another appropriate Federal or State law enforcement agency.

Comment: A few commenters stated we need to ensure the new marketing requirements do not have a chilling effect on agents, brokers, and web-brokers trying to legitimately reach and educate consumers.

Response: We do not wish for the new marketing standards of conduct to discourage agents, brokers, or web-brokers who are complying with the regulations and attempting to help consumers. Our enforcement efforts will focus on agents, brokers, and web-

brokers who create or disseminate misleading marketing materials. Any investigation into misleading marketing would focus on whether a connection exists between the advertisement and the agent, broker, or web-broker who created or disseminated it. We would not take enforcement action against an agent, broker, or web-broker without such a connection. Additionally, our enforcement procedures under Sec. 155.220(g) help prevent any chilling effect by ensuring the agent, broker, or web-broker has the opportunity to respond and provide information to rebut a finding of noncompliance before any termination of an agent's, broker's, or web-broker's Exchange Agreements.

Comment: Multiple commenters stated we need to protect agents, brokers, and web-brokers acting in good faith, by ensuring we differentiate good faith errors from intentional misconduct, ensure only the advertisement's originator is held responsible, and reducing liability for materials agents, brokers, or web-brokers did not produce themselves. One commenter recommended we change our proposed language to materials “produced under their direction and control.”

Response: The good-faith discussion in the previous response, including references to the existing good-faith exception in newly redesignated Sec. 155.220(j)(4) and the rebuttal process under Sec. 155.220(g), is applicable here and provides additional information on how we distinguish good faith errors from intentional misconduct. Our investigations of misleading marketing ensure only the person responsible for creating a misleading advertisement is held responsible. As part of our investigation, we review each advertisement, determine who created it, and conduct outreach as needed. If we are unable to determine with certainty who made the advertisement, we would not engage in enforcement.

Our proposal stated that agents, brokers, and web-brokers would be responsible for advertisements created, written, released, or otherwise produced by the individual or an entity acting on their behalf. We believe the “on their behalf” language in our regulations is sufficiently similar to “produced under their direction and control” and, therefore, no change to the language is required. For clarity, we consider an agent, broker, or web-broker responsible for marketing created by a third party only when that third party is contracted, directed, or compensated by the agent, broker, or web-broker. We reiterate that we will not pursue agents, brokers, or web-brokers without sufficient knowledge that they are responsible for their own marketing materials. Additionally, as we do not have oversight authority over TPMO's or lead generators, we could not pursue enforcement against them even if we knew they created an advertisement on an agent's, broker's, or web-broker's behalf. We encourage all agents, brokers, and web-brokers to carefully vet any TPMO, FMO, lead generator, or other third-party entity they collaborate with to ensure they are following all Exchange rules and regulations.

Comment: Several commenters stated CMS should provide more guidance to agents, brokers, and web-brokers. Several suggestions were made, including that CMS should produce sub-regulatory guidance on misleading marketing, review advertisements prior to publication, create a centralized website with approved materials entities may use, conduct training on misleading marketing, note where this language will be codified, and pair the standards with clear accountability mechanisms, meaningful penalties, and standardized training.

Response: We will likely create sub-regulatory guidance related to misleading marketing, similar to how we have handled agent, broker, and web-broker proposals in the past. This would likely be a Frequently Asked Questions (FAQ) document. The questions in the FAQ would likely be generated by comments and questions we received during this comment submission window, from questions received during agent, broker, and web-broker webinars, from issues raised when we engaged in technical assistance with agents, brokers and web-brokers over misleading marketing, and through other methods. The webinars we host detail Exchange requirements, emphasizing new requirements, security and privacy, consent, and other topics we want to reinforce. Much of the material, including that related to misleading marketing, is also included in trainings that all agents, brokers, and web-brokers are required to take annually.

At this time, we do not plan to review advertisements prior to publication. With over 100,000 registered agents, brokers, and web- brokers, preliminary review would be too burdensome and would reduce our ability to engage in enforcement actions against noncompliant agents, brokers, and web-brokers in other areas. We believe reducing our ability to investigate noncompliance would be more harmful to consumers than the benefits that advertisement review prior to publication would provide. We believe our new regulations on prohibited marketing practices will sufficiently inform agents, brokers, and web- brokers on what language and tactics should not be included in advertisements such that preliminary review is unnecessary.

We do not plan on creating and maintaining a repository of approved advertisements for general use. Individual agents, brokers, web- brokers, and agencies are free to create their own advertisements. This allows maximum creativity and flexibility when entities create their own marketing campaigns. We also do not want to create a perception that we are endorsing a particular agent, broker, or web-broker, which may happen if an entity were using CMS-created and approved marketing materials.

Comment: One commenter stated we should be clearer about where the new marketing requirements will be within the regulations.

Response: The misleading marketing language was proposed, and we are finalizing, the standards of conduct at Sec. 155.220(j). Our proposal discussed the enforcement process as it relates to misleading marketing, including the two pathways: technical assistance or Enforcement. We will also apply the enforcement procedures in Sec. 155.220(g)(1)-(3), which govern notice, the opportunity to respond, and the process for terminating an agent's, broker's, or web-broker's Exchange Agreements, for misleading marketing enforcement, which have been comprehensively detailed in past notice and comment rulemaking, and in the proposed text.

Comment: Many commenters provided feedback on how misleading marketing should apply to States. Namely, commenters stated we should not apply these requirements to State Exchanges, they should not supersede State laws, and we should share information we gather on misleading marketing, such as terminations related to misleading marketing, with States.

Response: We do not intend for these requirements to apply to State Exchanges, only to FFEs and SBE-FPs, consistent with Sec. 155.220(j)(1). A State Exchange may choose to adopt similar requirements at their discretion. As required under Sec. 155.220(g)(6), State Departments of Insurance, or the equivalent licensing authority, will be notified of Exchange Agreement suspensions or terminations related to misleading marketing enforcement.

Comment: One commenter stated that CMS should implement a record- retention period to ensure items requested under audits are available.

Response: We intentionally did not impose a record-retention period for marketing. We believe it would be unnecessary to require agents, brokers, and web-brokers to maintain their advertisements for 10 years. This is because we actively search for misleading marketing on publicly-facing websites and timely engage in technical assistance or take enforcement actions when appropriate, and we typically have copies of the advertisements in question and do not require the agent, broker, or web-broker to submit the advertisement as part of the investigation. We included this language to ensure agents, brokers, and web-brokers can provide marketing materials they still have at the time of a request in the rare instances when we do not already have the advertisement or when we are conducting an investigation initiated by other means. We believe including this language is prudent to ensure our investigations have the information needed to proceed effectively.

Comment: One commenter suggested that CMS add a prohibited practice to the list in Sec. 155.220(j)(3). This commenter stated we should restrict marketing of non-QHP coverage that does not distinguish between QHP plans and may lead to consumer confusion.

Response: We selected the marketing prohibitions in the proposal because they were the most common forms of misleading advertising we discovered during our research. As such, we believed listing these as prohibited practices was paramount. As this is not a static or exhaustive list of prohibited practices, we appreciate this comment and may take it into consideration in future rulemaking.

Comment: Several commenters opposed the proposed removal of parenthetical language from Sec. 155.220(j)(2)(i) that adds specificity to the interpretation of discrimination “on the basis of sex,” objecting that its removal undermines the enforcement of Section 1557 of the Affordable Care Act and is not in accordance with the interpretation of the 2024 Nondiscrimination in Health Programs and Activities final rule (89 FR 37522 (May 6, 2024)) (hereinafter referred to as the “2024 Final Rule”). Another commenter noted that the footnote 78 in the proposed rule appeared to misinterpret the scope of section 1557, specifically as it applies to all HHS-administered programs and activities, citing the 2024 Final Rule which states, “every health program or activity administered by the Department ensures that nondiscrimination standards are interpreted and applied as consistently and as broadly as possible and provides for application of nondiscrimination standards to the Department consistent with the entities to which it provides Federal financial assistance.”

Other commenters did not accept HHS' statement in the proposed rule that addressing matters related to gender ideology was not necessary in a regulation focused on agents, brokers, and web-brokers, with commenters citing academic literature and Centers for Disease Control and Prevention findings that transgender populations are particularly vulnerable to discrimination. Other commenters stated concern for consumers who may not receive appropriate, non-discriminatory assistance with enrollment into QHPs by agents and brokers if they are not held to the same standards required by other covered entities.

Other commenters agreed with the proposal to remove the language on the grounds that sex is “an immutable, biological binary.” They further noted that the change would better conform with the text of the Affordable Care Act and would be more consistent with the enforcement of President Trump's Executive Order 14168 (90 FR 8615), “Restoring Biological Truth to the Federal Government.” Another commenter noted that the proposal respects the biological differences of men and women “to ensure clarity in law and protect individual privacy.”

Response: We appreciate commenters' views and note at the outset that this rulemaking does not address Section 1557 of the Affordable Care Act or its enforcement. This finalized policy is adopted pursuant to independent HHS authority under Sections 1312(e) and 1321(a)(1)(A), (B), and (D) of the Affordable Care Act. For more information about enforcement of Section 1557 and its scope, we refer commenters to 45 CFR part 92, the regulations implementing that statute, and to the HHS Office for Civil Rights, which enforces Section 1557. As we noted in footnote 99 of the proposed rule, (91 FR 6292-6486) several court orders affect the implementation of Section 1557's prohibition on sex discrimination. We do not address them here. HHS enforces Section 1557's prohibition on discrimination on the basis of sex stereotypes consistently with the Executive Order 14168 (90 FR 8615) and well- established case law on sex stereotypes. See, e.g., Pederson v. La. State Univ., 213 F.3d 858, 880-81 (5th Cir. 2000) (holding that under Title IX, “classifications based on archaic assumptions are facially discriminatory” and perpetuate stereotypes) (internal quotations omitted). The removal of the parenthetical language from State-licensed agents, brokers, and web-brokers standards of conduct under Sec. 155.220 does not affect HHS' enforcement of Section 1557 and its implementing regulations. Any question of whether Section 1557 applies to certain entities is a fact-specific analysis conducted under that law.

We appreciate the commenter's concerns and the evidence provided regarding vulnerabilities of certain populations to discrimination. However, as we stated in the proposed rule, based on our direct experience in overseeing agents, brokers, and web-brokers and our familiarity with the State licensing and oversight frameworks that govern these entities, they are already subject to an array of professional requirements that provide meaningful accountability and make additional regulatory action unnecessary and could potentially create undue burden and confusion.

We agree with commenters that cited language from Executive Order 14168 (90 FR 8615) as the rationale to remove the parenthetical language would be more consistent with the enforcement of Executive Order 14168 (90 FR 8615). We agree with these commenters that the removal of the language is more consistent with Executive Order 14168 (90 FR 8615).

We are finalizing the removal of nondiscrimination language from Sec. 155.220(j)(2)(i) as proposed. For the reasons we previously stated, we do not believe this change would result in or facilitate any discrimination against consumers. We believe this revision effectively implements Executive Order 14168 (90 FR 8615).

After consideration of comments, we are finalizing the standards of marketing conduct policy as proposed. Specifically, we are finalizing the revision of Sec. 155.220(j)(2) to remove “marketing or” from Sec. 155.220(j)(2)(i); the redesignation of Sec. 155.220(j)(3) to separate standards of conduct related to enrollment from standards of conduct related to marketing; the expanded marketing requirements for agents, brokers, and web-brokers at Sec. 155.220(j)(3)(ii); and the codification of a list of prohibited practices, requirements for responding to HHS requests related to marketing, and responsibilities related to marketing conducted by third parties with whom an agent, broker, or web-broker contracts at Sec. 155.220(j)(3)(iii)(A) through Sec. 155.220(j)(3)(iii)(G). Accordingly, we are also finalizing the redesignation of Sec. 155.220(j)(3) as Sec. 155.220(j)(4). We are also finalizing at

Sec. 155.220(j)(3)(iv) to require that an individual or entity described in Sec. 155.220(j)(1) must produce marketing materials to HHS upon request in response to monitoring, auditing, or enforcement activities; and at Sec. 155.220(j)(3)(v) to establish that an individual or entity described in paragraph (j)(1) of this section is responsible for ensuring that all marketing-related materials created, written, released, or otherwise produced by the individual or entity or on their behalf comply with the requirements of Sec. 155.220(j)(3)(ii)-(iii). We are also finalizing as proposed the removal of language from Sec. 155.220(j)(2)(i) that defines the term “sex” to include sex characteristics, including intersex traits; pregnancy or related conditions; sexual orientation; gender identity; and sex stereotypes. 7. Removal of the Vendor Program (Sec. 155.222)

In the 2027 Payment Notice proposed rule (91 FR 6340), we proposed to remove Sec. 155.222, which currently governs the vendor program to provide agent and broker training on an annual basis for a given plan year. Removal of this regulation effectively discontinues the vendor program.

The vendor program was established through Sec. 155.222 to be implemented in PY 2016 and beyond to allow the possibility for certain training and information verification functions to be provided by HHS- approved vendors. In the 2016 Payment Notice (80 FR 10749), we outlined in Sec. 155.222(a) the application and approval process for vendors seeking recognition as HHS-approved vendors for FFE training and information verification for agents and brokers. Section 155.222(b) outlines the standards that an entity must meet to be approved by HHS as a vendor and to maintain their status as an approved vendor, and Sec. 155.222(c) provides that the approved list of vendors will be published on an HHS website. Section 155.222(d) describes how vendors will be monitored for ongoing compliance with the standards outlined in Sec. 155.222(b). Section 155.222(e) describes the appeals process available to vendors whose applications are denied, or whose approvals to offer training and information verification are revoked.

The vendor program has low participation rates and has not seen significant growth. Since the program's inception in PY 2016, only six entities have participated as vendors, with only two or three participating in any given plan year. Additionally, agents and brokers who utilize the program only account for 9.3 percent (9,138) of registered agents and brokers in PY 2025. Moreover, since 2015, training completions by agents and brokers through vendors have never surpassed 10 percent. This data indicates consistently low demand for the program. Importantly, eliminating the vendor program would save the Federal Government approximately $300,000 each plan year.

We stated in the proposed rule that if this proposal to discontinue the vendor agent/broker training program is finalized, it would affect neither the quality of nor access to agent/broker annual training. We stated that agents and brokers would continue to have the ability to access training through CMS' existing Marketplace Learning Management System (MLMS) platform. The proposal to discontinue the vendor agent/ broker training program only proposed to remove the option of this alternate training platform, one that, as noted, has been historically underutilized.

In summary, we proposed to terminate the vendor program, which allows approved third-party entities to facilitate the annual agent and broker training and registration process for the Exchange, through removal of Sec. 155.222.

We requested comment on the proposal to remove Sec. 155.222 and eliminate the vendor program.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. We summarize and respond to public comments received on the proposed removal of the vendor program below.

Comment: Commenters stated concerns that discontinuing the vendor training program for agents and brokers would change agent and broker training requirements. Comments additionally stated concerns that this change would impact the processes for enrollment functionality of the vendors that also facilitate enrollments via Enhanced Direct Enrollment.

Response: To clarify, we proposed to discontinue delivery of annual FFE agent and broker training through external training vendors only. The FFE Agent & Broker Training Vendor Program was created to provide existing and prospective FFE agents and brokers an opportunity to fulfill annual requirements to complete training for continuing education credit while enabling us to maintain oversight of the program. To ensure that agents and brokers are able to meet Exchange requirements and receive the latest information on assisting consumers in the Exchange, we will continue to offer free FFE training to agents and brokers annually through CMS' MLMS. We are confident that training hosted on CMS' MLMS platform has sufficient capacity to absorb demand from an increasing number of agents and brokers for annual FFE agent and broker training and registration. Other processes, such as enrollment through EDE platforms, are not impacted by this proposal.

Comment: We received a comment suggesting changes to the vendor program in lieu of discontinuing it.

Response: In support of our ongoing priority to identify and eliminate fraud, waste, and abuse from FFE programs, it is critical that we retain direct control of the training program's operational integrity and compliance, including providing final course curriculum and redirecting agents and brokers back to the CMS platform to sign agreements upon completion of the course. To ensure that agents and brokers are able to meet Exchange requirements and receive the latest information on assisting consumers in the Exchange, we will continue to offer free FFE training to agents and brokers annually through CMS' MLMS. 8. Limit APTC Eligibility to “Eligible Noncitizens” (45 CFR 155.20; 45 CFR 155.305(f)(1); 45 CFR 155.320(c)(3), and 42 CFR 600.5)

Section 71301 of the WFTC legislation established new eligibility requirements for the PTC. Specifically, section 71301 of the WFTC legislation amends 26 U.S.C. 36B(e) to provide that a PTC is allowed for the coverage of a lawfully present noncitizen only if he or she is an “eligible alien.” Section 71301 of the WFTC legislation defines “eligible alien” as an individual who is either lawfully admitted for permanent residence (sometimes referred to as a “lawful permanent resident” or “green card holder”); an individual who has been granted the status of Cuban and Haitian entrant as defined in section 501(e) of the Refugee Education Assistance Act of 1980; or an individual who is lawfully residing in the United States in accordance with the Compacts of Free Association (COFA) as defined at 8 U.S.C. 1612(b)(2)(G) (sometimes referred to as a “COFA migrant”). Section 71301 of the WFTC legislation also makes conforming amendments to sections 1411(a)(1), 1411(a)(2), 1411(b)(3), 1411(c)(2)(B)(ii), and 1412(d) of the Affordable Care Act. These amendments require Exchanges to collect attestations regarding “eligible alien” status for applicants applying for APTC, to verify such attestations with the Secretary of the Department of

Homeland Security, and to determine eligibility for APTC under section 36B of the Code based on whether an applicant is an “eligible alien.” Section 1402(g)(2) of the Affordable Care Act specifies that CSRs are only allowed for applicants who are also eligible for PTC. While section 71301 of the WFTC legislation does not amend section 1402(g)(2) of the Affordable Care Act, because section 71301 limits PTC eligibility for applicants who are “eligible aliens,” section 1402(g)(2) requires that CSR eligibility also be limited to only those who are “eligible aliens.”

In the 2027 Payment Notice proposed rule (91 FR 6341), to align Exchange eligibility and verification rules with section 71301 of the WFTC legislation's amendments to sections 1411 and 1412 of the Affordable Care Act, we proposed to add a new definition of “eligible noncitizen” at Sec. 155.20, providing that the term “eligible noncitizen” would have the same meaning as the term “eligible alien,” as defined in 26 U.S.C. 36B(e)(2)(B), which was newly defined in section 71301 of the WFTC legislation.

We further proposed a technical update to Sec. 155.305(f)(1)(ii) to cross-reference 26 CFR 1.36B-1(d). Currently, Sec. 155.305(f)(1)(ii) states that a tax filer may be eligible for APTC if the Exchange determines that one or more applicants for whom the tax filer expects to claim a personal exemption deduction on his or her tax return for the benefit year, including the tax filer and his or her spouse, meets QHP enrollment eligibility requirements and is not eligible for MEC during the coverage month. We proposed to amend this section to state that a tax filer is eligible for APTC if the Exchange determines that one or more applicants who is a member of the tax filer's family, as defined at 26 CFR 1.36B-1(d), meets QHP enrollment eligibility requirements and is not eligible for MEC during the coverage month. In the proposed rule, we stated that this proposed change better aligns with existing Treasury regulations regarding PTC eligibility and provides a clearer description of the individuals on whose behalf a tax filer may be allowed APTC, given that taxpayers can no longer claim personal exemptions on their Federal income tax returns.\142\

\142\ The personal exemption amount was reduced to zero for tax years 2018 through 2025 by Section 11041 of the Tax Cuts and Jobs Act (Pub. L. 115-97). This reduction was made permanent by Section 70103 of the WFTC legislation.

Additionally, we proposed to add Sec. 155.305(f)(1)(ii)(C) to provide that an Exchange must grant eligibility for APTC to individuals who are U.S. citizens, U.S. nationals, or eligible noncitizens provided they meet the other APTC eligibility requirements. To align with the new eligibility requirements for APTC for “eligible noncitizens” established by section 71301 of the WFTC legislation, we proposed to add verification regulations at Sec. 155.320(c)(3)(ix). We stated in the proposed rule that this proposal would establish Exchange verification requirements for applicants who attest to having an eligible noncitizen immigration status as defined at Sec. 155.20. Specifically, we stated that it would require Exchanges to attempt to verify eligible noncitizen immigration status using data from the Department of Homeland Security's Systematic Alien Verification for Entitlements (SAVE) program and proceed with the inconsistency process outlined in Sec. 155.315(f)(1) through (4) when the Exchange cannot verify the information using SAVE data.

As part of this regulatory update, we also proposed to remove duplicative language and correct the lack of headings in Sec. 155.320(c)(3) by removing the first occurrence of Sec. 155.320(c)(3)(viii) and adding headings to Sec. 155.320(c)(3)(vii) and (viii). We stated in the proposed rule that we believe the redundancy resulted from an oversight in previous rulemaking, as both provisions were intended to define “family size” to align with definitions in the Code and related Treasury Regulations. The first provision referenced 26 CFR 1.36B-1(d), while the second referenced section 36B(d)(1) of the Code. We stated that we believe that the regulatory definition in 26 CFR 1.36B-1 is more appropriate for use in our regulations.

Additionally, we noted in the proposed rule that section 71301 of the WFTC legislation will impact Federal payments to States that operate BHPs for individuals enrolled in the BHP who are lawfully present noncitizens but who are not “eligible aliens,” as defined in 26 U.S.C. 36B(e)(2)(B). To align BHP program regulations with this statutory change, we proposed to add a definition of “eligible noncitizen” at 42 CFR 600.5, cross-referencing the definition of the same term at 45 CFR 155.20. The underlying statutory provisions at section 71301 of the WFTC legislation apply to plan years beginning on or after January 1, 2027. We stated that our proposed regulatory amendment would be effective beginning with plan years starting on or after January 1, 2027.

Under section 1331(d)(3)(A)(i) of the Affordable Care Act and 42 CFR 600.605(a), Federal BHP payments to States include 95 percent of both the PTC under section 36B of the Code and the CSR that would have been provided for the fiscal year to eligible individuals enrolled in BHP standard health plans in the State if such eligible individuals had been enrolled in QHPs through an Exchange. Currently, Congress does not fund CSR payments. Therefore, CMS assigns a value of zero to the CSR portion of the BHP payment rate calculation and States receive no BHP funding attributable to that portion.

We proposed to update Sec. Sec. 155.20, 155.305(f)(1), and 155.320(c)(3)(ix) to align Exchange regulations with section 71301 of the WFTC legislation. Section 71301 of the WFTC legislation amended section 36B of the Code to provide that a PTC is allowed for the coverage of a lawfully present noncitizen only if he or she is an “eligible alien” and made conforming amendments to section 1411 of the Affordable Care Act requiring Exchanges to verify applicants' “eligible alien” status. Accordingly, we proposed to add a new definition in Sec. 155.20, update our APTC eligibility regulations at Sec. 155.305(f)(1), and add to our verification regulations in Sec. 155.320(c)(3)(ix) to align Exchange eligibility and verification rules with section 71301 of the WFTC legislation.

In the proposed rule, we also stated that while sections 71301 and 71302 of the WFTC legislation eliminates eligibility for PTC for certain lawfully present noncitizens, such individuals remain eligible for enrollment in the BHP, provided they meet the eligibility requirements of section 1331(e) of the Affordable Care Act and 42 CFR 600.305. Upon further consideration during the comment period, we are continuing to review how the WFTC legislation impacts the BHP.

We sought comment on these proposals.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing these policies as proposed. We summarize and respond to public comments received on the proposed changes to the definition of “eligible noncitizen,” PTC eligibility for eligible noncitizens, and corresponding verification requirements below.

Comment: Several commenters noted support for these proposals, stating that these policies will strengthen program integrity, reduce reliance on attestations, help streamline the eligibility verification newly required by the WFTC legislation, and restore the intent of the Medicaid waiting period.

Response: We agree that finalizing the policy as proposed will strengthen

program integrity and will ensure that we comply with the WFTC legislation by granting PTC eligibility for only eligible noncitizens as described under section 71301.

Comment: One commenter stated that they understood the requirement to align CMS regulations with the WFTC legislation and requested CMS to clearly communicate these policy changes to interested parties, including agents, brokers, and assisters, and to evaluate the resulting impacts on the Exchange population, regional risk pools, and premium stability.

Response: We acknowledge this comment and plan to communicate with impacted interested parties as we prepare to implement this rule in the FFE. We remain committed to continuous evaluation of Exchange implementation, including evaluating the impacts of this and other policy changes on enrollment, risk pools, and premiums.

Comment: Many commenters stated concern with the proposal to define eligible noncitizen and to limit eligibility for APTC to U.S. citizens, U.S. nationals, and eligible noncitizens. Commenters raised concerns about the health and well-being of affected individuals, families, and communities, including anticipated reductions in access to affordable health coverage, increased rates of uninsurance and coverage losses, impact on the Exchange risk pool, and cost shifts from preventive care to emergency services. Commenters stated concern that restricting APTC eligibility to only eligible noncitizens would negatively impact populations including people living in rural communities, people with chronic conditions including asthma and blood cancer, women and especially pregnant women, people with low incomes, and young people. By restricting APTC eligibility to only eligible noncitizens, commenters stated concern that younger and healthier people would be disproportionately barred from APTC and may no longer enroll in the Exchange, which could destabilize the Exchange risk pool and increase health insurance costs for other enrollees.

Commenters also stated concerns that many of the noncitizens who will lose their APTC eligibility are low income and may be unable to afford full price health insurance, which could lead to an increased rate of uninsurance and reverse previous gains in coverage of individuals including H-2A visa holders, refugees, and asylees. Commenters noted that with more people becoming uninsured, more people would lack access to preventive care, which could increase overall health care costs and further burden emergency rooms and hospital systems that frequently provide care to patients without health insurance. Commenters also noted that this would reduce provider access, and that uncompensated care will increase healthcare costs and limit access to health coverage, with a commenter noting the particular impact on children. Commenters stated that restricting PTC eligibility to only eligible noncitizens undermines the Affordable Care Act's goal of expanding access to affordable health care services. A commenter stated concern that, due to prioritizing restricting eligibility for noncitizens, HHS was not sufficiently focused on making coverage more affordable for eligible enrollees.

Response: We acknowledge these commenters' concerns and reiterate that while one of the goals of the Affordable Care Act is to expand access to affordable health coverage, the WFTC legislation restricts PTC eligibility to only eligible noncitizens. We believe the proposal as finalized best aligns with the statutory requirements of the WFTC legislation by only providing APTC for eligible noncitizens.

Comment: A few commenters stated that the changes made under the proposed rule at Sec. 155.320(c)(3) are duplicative of existing verification rules at Sec. 155.315(c)(2). Commenters stated concern that the new verification requirements at Sec. 155.320(c)(3) create confusion by referencing Sec. 155.315(f)(1)-(4) rather than citizenship-specific procedures at Sec. 155.315(c)(3). Commenters stated concern that the changes at Sec. 155.320(c)(3)(ix) create unnecessary administrative burdens for States as they are duplicative of Sec. 155.315(c)(2).

Response: We clarify that the changes under Sec. 155.320(c)(3) are not duplicative of the existing rules under Sec. 155.315(c)(2). Section 155.315(c)(2) provides that, for applicants who attest to having a lawfully present status, the Exchange must verify their lawful presence through the Department of Homeland Security (DHS) to determine eligibility for enrollment in a QHP. The new regulations at Sec. 155.320(c)(3) provide that, for applicants who attest to having an eligible noncitizen status, the Exchange must verify their eligible noncitizen status through DHS to determine eligibility for APTC. These requirements are handled in separate sections of our regulations because Sec. 155.315 addresses verification requirements for criteria related to eligibility for enrollment in a QHP through an Exchange, while Sec. 155.320 addresses verification requirements related to eligibility for APTC. For Exchanges that use the Verify Lawful Presence (VLP) Hub service, the requirements of Sec. Sec. 155.315(c)(2) and 155.320(c)(3) can be met by submitting a single verification request to the service. For Exchanges that do not use the VLP Hub service, we still expect that these requirements can be fulfilled via a single transaction. Finally, we note that Sec. 155.320(c)(3) cross-references Sec. 155.315(f) since if there is a data matching issue (DMI) related to eligible noncitizen status, the Exchange will apply DMI procedures explained there.

Comment: Some commenters stated concern regarding the use of the DHS's Systematic Alien Verification for Entitlements (SAVE) program, while other commenters supported the use of DHS SAVE. Commenters stated concerns about the quality of DHS SAVE, citing bad data and high error rates, and declared that SAVE is not an efficient process for verifying immigration status, which would place people at risk of not enrolling in health coverage or delayed access to coverage. Commenters also stated concern that this rule expands data transmission requirements, which will heighten fears about information sharing. State Exchanges also stated concern about the feasibility of States establishing new connections to SAVE data as required under the proposed regulation at Sec. 155.320(c)(3)(ix)(A). Commenters also encouraged CMS to provide State-based flexibility in implementing these regulations wherever possible. Some commenters supported using SAVE as they believe it strengthens program integrity and reduces reliance on unsupported immigration attestations.

Response: We acknowledge these comments. The provision at Sec. 155.320(c)(3) implements the changes that the WFTC legislation made to section 1411 of the Affordable Care Act, which require verification of an individual's eligible noncitizen status with DHS. To conform with these changes, we are finalizing the updates at Sec. 155.320(c)(3)(ix)(A) to verify eligible noncitizen status through DHS SAVE. We clarify that there is no way to verify immigration status through DHS that does not use SAVE.

This proposal does not expand data transmission requirements nor does it require State Exchanges to establish new connections to SAVE. We currently provide a connection to DHS through the VLP Hub service, which connects to DHS SAVE. For Exchanges that already use the VLP Hub service to verify applicants' lawful presence, Exchanges can meet the requirements in this rule

by continuing to submit requests to the VLP Hub service in the same way they do today, and the VLP Hub service will be updated to indicate whether an applicant's eligible noncitizen status is verified. There are some Exchanges that currently meet the requirement to verify lawful presence with DHS through methods other than the VLP Hub service, such as through a direct connection to SAVE's web service or through the SAVE Graphical User Interface (GUI). While these Exchanges will need to establish new processes to determine whether applicants' eligible noncitizen status is verified, they will not need to submit additional data to DHS beyond what is required to verify lawful presence today, and they will not need to establish any new connections to SAVE. Using the VLP Hub service or having a direct connection to DHS SAVE is sufficient to meet the regulatory requirements in this rule and we believe this provides sufficient State-based flexibility to comply with this finalized rule.

Comment: A few commenters emphasized the importance of providing States with technical assistance for the implementation of this provision stating that the provisions lack sufficient detail for implementation. Other commenters emphasized the importance of communicating clearly with agents, brokers, and assisters to help prevent consumer confusion. Commenters stated that CMS should provide transition protections, provide multilingual notices, and monitor for coverage losses during the implementation since many lawfully present individuals will lose coverage, experience confusion, or become part of the turnover between Medicaid-Exchange coverage. Commenters believe operational guardrails, both at the Exchange level and at the consumer level, that reduce the risk of coverage loss in addition to plain language notices, would help reduce the number of individuals who might mistakenly lose coverage or APTC as a result of these provisions.

Response: We acknowledge the concerns that commenters expressed about providing assistance to States, agents, brokers, assisters, and consumers, and we will provide technical assistance in response to these concerns in the form of webinars and technical documentation. We plan to leverage existing channels for outreach and education during the individual Exchange Open Enrollment Period, including multilingual channels, to ensure impacted consumers are aware of the changes happening because of this final rule. We intend to monitor changes in enrollment for the impacted population. We are committed to both providing clear and accurate guidance to our partners, and to ensuring compliance with section 71301 of the WFTC legislation such that APTC for noncitizens is limited to only eligible noncitizens, while allowing all lawfully present individuals to remain QHP eligible (if they satisfy all other eligibility requirements). Again, we clarify that the use of the VLP Hub Service is sufficient to meet the verification requirements of this rule.

Comment: Some commenters stated concern about the impact this proposal will have on the BHP. These commenters were concerned about the potential for coverage loss and churn between insurance affordability programs, the impact on coverage affordability and uncompensated care, and the impact on State government finances and State policy flexibility. Relatedly, several commenters requested that HHS consider providing future guidance relating to transition periods and operational safeguards, as well as provide States with data analysis to minimize coverage loss.

Response: We acknowledge the commenters' concerns regarding the impact to coverage availability, State finances, and providers. As stated previously, we are implementing these provisions as directed in the WFTC legislation, and we believe this proposal is best aligned with the statute. We intend to monitor changes in enrollment for the impacted population and to BHP funding to States generally. We will be available to provide individual technical assistance to States operating BHPs. We are committed to both providing clear and accurate guidance to our partners, and to ensuring compliance with section 71301 of the WFTC legislation such that Federal BHP funding to States for noncitizens is calculated based only on eligible noncitizens.

Comment: One commenter stated concern that the changes to the BHP in the proposal add administrative burdens for rural health systems without improving rural access.

Response: We acknowledge the commenter's concerns and reiterate that the WFTC legislation restricts PTC eligibility for noncitizens, and by extension, Federal payments to States that operate a BHP to only eligible noncitizens. We believe the proposal as finalized best aligns with the statutory requirements of the WFTC legislation by limiting APTC for noncitizens to only those who are eligible noncitizens. Specifically regarding rural health access, we are currently administering the $50 billion Rural Health Transformation Program, which was authorized by section 71401 of the WFTC legislation.

Comment: One commenter stated concerns about the impact of this proposal on State finances and on changes to BHP data reporting requirements, including systems changes.

Response: We appreciate the commenter's concerns and will seek to minimize additional reporting burden and systems changes on States that operate BHP programs. Further guidance will be provided regarding reporting changes, and we are committed to providing individual technical assistance to States that operate a BHP. 9. Disallow 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))

Section 71302 of the WFTC legislation amended 26 U.S.C. 36B(c)(1) by striking subparagraph (B), which provided that an individual could be considered an applicable taxpayer, and therefore eligible for PTC, if they had household income under 100 percent of the FPL and were a noncitizen lawfully present in the United States who was ineligible for Medicaid due to their immigration status. Because 26 U.S.C. 36B(c)(1)(B) was repealed, such noncitizens are no longer eligible for PTC. Under section 1402(g) of the Affordable Care Act, which provides that an individual is only eligible for CSRs if they are also eligible for PTC for that month, such noncitizens are also no longer eligible for CSRs. This provision is effective for plan years beginning after December 31, 2025.

In the 2027 Payment Notice proposed rule (91 FR 6342), we proposed to remove Sec. 155.305(f)(2) to align regulations with section 71302 of the WFTC legislation. Section 155.305(f)(2) currently requires an Exchange to determine a tax filer eligible for APTC if the Exchange determines that the tax filer is expected to have household income of less than 100 percent of the FPL for the benefit year for which coverage is requested, the tax filer or one or more applicants for whom the tax filer expects to be eligible for a personal exemption is lawfully present and ineligible for Medicaid due to their immigration status, and the tax filer otherwise meets APTC eligibility requirements. Section 71302 of the WFTC legislation amended section 36B of the Code such that PTC is no longer allowed for this population. We stated in the proposed rule that removing

Sec. 155.305(f)(2) would align Exchange APTC eligibility rules with the Code's PTC eligibility rules, as required by section 1411(a)(2)(A) of the Affordable Care Act.

We also proposed conforming amendments to the verification regulations at Sec. 155.320(c)(3)(iii)(A) and to SEP regulations at Sec. 155.420(d)(13), to remove references to Sec. 155.305(f)(2) and to the population described in that provision.

Additionally, we noted in the proposed rule that section 71302 of the WFTC legislation will impact Federal payments to States that operate BHPs for individuals enrolled in the BHP who are ineligible for Medicaid due to their immigration status and with incomes below 100 percent of the FPL. As stated previously, under section 1331(d)(3)(A)(i) of the Affordable Care Act and 42 CFR 600.605(a), Federal BHP payments to States include 95 percent of the PTC under section 36B of the Code. Following the repeal of 26 U.S.C. 36B(c)(1)(B) by section 71302 of the WFTC legislation, noncitizens who are lawfully present, ineligible for Medicaid due to immigration status, and have household income below 100 percent of the FPL are no longer eligible for PTC. Therefore, States will no longer receive Federal BHP payments attributable to members of this population who are BHP enrollees beginning January 1, 2026.\143\

\143\ CMCS Informational Bulletin, December 10, 2025, “Basic Health Program; Federal Funding Methodology for Program Year 2026,” available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib12102025.pdf.

Section 71302 of the WFTC legislation is applicable beginning January 1, 2026. Section 71302 is self-effectuating, and Exchanges are required to operationalize the changes required to implement these new statutory requirements beginning with eligibility determinations for the PY 2026 even though conforming changes to Exchange regulations will not yet have been finalized.

We proposed to remove Sec. 155.305(f)(2) and make conforming updates to Sec. Sec. 155.320(c)(3)(iii)(A) and 155.420(d)(13) to align Exchange regulations with section 71302 of the WFTC legislation. We stated that removing Sec. 155.305(f)(2) and updating Sec. 155.320(c)(3)(iii)(A) would align Exchange APTC eligibility and verification rules with the statutory changes enacted by section 71302 of the WFTC legislation. We further proposed conforming amendments to Sec. 155.420(d)(13) to remove the SEP triggering event for individuals with household income under 100 percent of the FPL who did not enroll in coverage while waiting for HHS to verify their citizenship or immigration status, as the intent of this SEP was to provide an enrollment opportunity for individuals described at Sec. 155.305(f)(2) who were not able to verify their eligibility for APTC within their original enrollment window.

We sought comment on this proposal.

After consideration of comments, and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. Section 71302 of the WFTC legislation, which no longer allows PTC for lawfully present noncitizens who are ineligible for Medicaid due to their immigration status and have household income under 100 percent of the FPL, was effective January 1, 2026. The provisions in this section of the rule, which align HHS regulations with this new statutory requirement, are effective upon enactment. We summarize and respond to public comments received on the proposed change below.

Comment: A few commenters stated support for the proposals and were specifically supportive of front-end verification measures and reduced reliance on self-attestation in the Exchange context, stating these measures will strengthen program integrity. The commenters requested CMS to take more decisive action to eliminate self-attestation entirely for the purpose of improving program integrity.

Response: We appreciate the comment and acknowledge that finalizing the policy as proposed will strengthen program integrity and will ensure that we comply with the WFTC legislation.

Comment: One commenter stated concern about the lack of updated guidance, citing risks to uniform enforcement and inconsistent application of Federal law.

Response: We acknowledge the comment and clarify that since this provision is already in effect per the WFTC legislation, we are updating our regulation to align with the legislation. We acknowledge and recognize the need for updated and timely guidance, and wish to clarify that on December 22, 2025, we published guidance related to this proposal.\144\

\144\ CMS. December 22, 2025. Working Families Tax Cuts Act (WFTCA), Section 71302: Guidance for Plan Year 2026. Available at https://www.cms.gov/files/document/wftca-section-71302-faq-final.pdf.

Comment: Many commenters stated concern regarding the proposal to no longer allow APTC for noncitizens who are ineligible for Medicaid due to their immigration status and who have household incomes under 100 percent of the FPL, in alignment with section 71302 of the WFTC legislation. Commenters raised concerns about the health and well-being of affected individuals, families, and communities, including anticipated reductions in access to affordable health coverage, increased rates of uninsurance, impacts to the Exchange risk pool, and cost shifts from preventive care to emergency services. Commenters stated concerns that these provisions would negatively impact populations including people living in rural communities, people with chronic conditions including asthma and blood cancer, women and especially pregnant women, people with low incomes, and young people. A commenter stated concern that, due to prioritizing restricting eligibility for noncitizens, HHS was not sufficiently focused on making coverage more affordable for U.S. citizens.

Commenters stated concern that by disallowing APTC for consumers ineligible for Medicaid because of their immigration status, who have income below 100 percent of the FPL, many immigrants who lose their APTC eligibility are already low income and would be unable to afford full price health insurance, leading to gaps in coverage, an increased rate of uninsurance, and financial strain on immigrant families. Commenters noted that with more people becoming uninsured, more people would lack access to preventive care that could increase overall health care costs and further burden emergency rooms and hospital systems, which frequently serve patients without health insurance. Commenters additionally stated concerns about the increased burden of verification of immigration status, potentially deterring those eligible for coverage due to concerns about how their immigration status data may be used.

Response: We acknowledge the commenters' concerns and reiterate that the WFTC legislation prohibits PTC for this population. We believe the proposal properly implements the statutory requirements of the WFTC legislation.

Comment: One commenter stated support for the proposal, stating it would close existing loopholes that allow lawful permanent residents, parolees, and those granted conditional entry to receive the PTC if their income is below the FPL in non-expansion States or below 138 percent of the FPL in expansion States. The commenter noted that under the previous law, noncitizens in the aforementioned groups were able to access premium

subsidies that were unavailable to U.S. citizens in the same income categories.

Response: We agree that finalizing this proposal will prevent certain noncitizens with incomes below 100 percent of the FPL from receiving APTC and will therefore better align with the PTC eligibility rules that apply to U.S. citizens.

Comment: A few commenters opposed the proposal, stating it would harm low-income lawfully present individuals by eliminating a pathway to affordable coverage. The commenters also stated this proposal would undermine the Affordable Care Act's goal of expanding coverage, and they requested HHS support policies that expand access to coverage rather than limit it.

Response: We acknowledge commenters' concerns regarding the potential impacts on access to coverage for individuals who will no longer be eligible for APTC because of this change. As noted in section III.D.8. of this rule, while one of the goals of the Affordable Care Act is to expand access to affordable health coverage, section 71302 of the WFTC legislation eliminates PTC eligibility for this population. We have interpreted section 1411(a)(2)(A) of the Affordable Care Act to require an Exchange to align its APTC eligibility rules with the Code's PTC eligibility rules, and we are therefore proposing to follow these rules for APTC eligibility. We are therefore finalizing this policy to align with the statutory requirements.

Comment: One commenter stated that eliminating Federal BHP funding for lawfully present noncitizens with income below 100 percent of the FPL who are ineligible for Medicaid due to their immigration status exceeded the requirements of the WFTC legislation.

Response: We do not agree that these changes exceed the requirements of the WFTC legislation. Section 71302 of the WFTC legislation eliminates eligibility for PTC for lawfully present noncitizens who are ineligible for Medicaid due to their immigration status and have household income below 100 percent of the FPL. Because Federal BHP payment amounts are based in part on the PTC that would have been provided to eligible individuals, these individuals will no longer be included in the calculation of Federal funding to States that operate a BHP. Accordingly, we are finalizing this policy as proposed. See the above preamble for additional discussion of the impact of section 71302 of the WFTC legislation on Federal BHP payments.

Comment: Some commenters stated concern for the impact this proposal will have on the BHP. These commenters were concerned regarding the potential for coverage loss and churn between insurance affordability programs, the impact on coverage affordability and uncompensated care, and the impact on State government finances and State policy flexibility. Relatedly, several commenters requested that CMS make certain considerations regarding the transition period, such as additional guidance and operational safeguards, and make additional data analysis available to States to minimize coverage loss.

Response: We acknowledge commenters' concerns. As discussed in detail in our response to comments in section III.D.8. of this final rule, we are finalizing these proposals to conform with the WFTC legislation. We note that per the CMCS Informational Bulletin issued December 10, 2025, “Basic Health Program; Federal Funding Methodology for Program Year 2026,” CMS will exercise enforcement discretion for a period of 3 years and will not take compliance action against any State that does not provide BHP coverage to this population between January 1, 2026, through December 31, 2028. We also will be available to provide individual technical assistance to States operating BHPs.

Comment: One commenter stated concern that the changes to the BHP in this proposal add administrative burdens for rural health systems without improving rural access.

Response: As discussed in detail in our response to comments in section III.D.8, while we appreciate the commenter's interest in this issue, we are finalizing these proposals to conform with the WFTC legislation. 10. Failure To File and Reconcile (FTR) Policy (Sec. 155.305)

In the 2027 Payment Notice proposed rule (91 FR 6342), we proposed 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 1 year for which tax data would be utilized for verification of household income and family size, and (2) the tax filer, or the tax filer's spouse if the tax filer files jointly, 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 proposed that, at the option of the Exchange, an Exchange may choose to early adopt the 1-tax year FTR policy in PY 2027 if it has the resources and capability to do so, or it can continue to administer a 2-tax year FTR process until PY 2028. We stated that if this proposal is finalized, Exchanges on the Federal platform would adopt the 1-tax year FTR process in PY 2027, as HHS has the resources available to do so.

As background, consumers who receive APTC are required to file an income tax return for the year of coverage pursuant to section 6011(a) of the Code and regulations prescribed by the Secretary of the Treasury. Section 36B(f) of the Code requires taxpayers to reconcile their APTC under section 1412 of the Affordable Care Act with their PTC allowed under section 36B of the Code. FTR regulations, implemented pursuant to the Secretary of HHS' general rulemaking authority under section 1321(a) of the Affordable Care Act, facilitate compliance with those requirements and were implemented as part of the 2012 Exchange Establishment Rule (77 FR 18352 through 18353). Exchange enrollees whose tax filer fails to comply with the requirement to file an income tax return and reconcile APTC as described in Sec. 155.305(f)(4) are referred to as having failed to “file and reconcile.” These individuals are referred to as having an FTR status, and the Exchanges conduct the FTR process to identify such individuals.

In the Exchange Establishment Rule, we finalized the FTR policy in part to prevent a primary tax filer or spouse who has failed to comply with tax filing rules from accumulating additional Federal tax liabilities due to overpayment of APTC. FTR was originally finalized and implemented as a 1-tax year FTR policy and HHS began FTR operations in late 2015. FTR continued as a 1-tax year policy until it was paused in 2021 during the COVID-19 public health emergency (PHE). FTR operations were paused due to concerns that consumers who had filed and reconciled would lose APTC due to IRS processing delays resulting from IRS processing facility closures and a corresponding processing backlog of paper filings.\145\

\145\ Please see, CMS. (2021, July 23). Failure to File and Reconcile (FTR) Operations Flexibilities for Plan Years 2021 and 2022--Frequently Asked Questions (FAQ). Available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/FTR-flexibilities-2021-and-2022.pdf. See also, CMS. (2022, July 18). Failure to File and Reconcile (FTR) Operations Flexibilities for Plan Year 2023. Available at https://www.cms.gov/cciio/resources/regulations-and-guidance/ftr-flexibilities-2023.pdf.

During the PHE pause, we amended the FTR process such that an Exchange could not determine a tax filer or their enrollee ineligible for APTC until they

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

When we adopted this 2-tax year FTR process, we acknowledged it could place consumers at risk of increased tax liability. To mitigate this concern, in the 2025 Payment Notice (89 FR 26298 through 26299), we required Exchanges to issue FTR warning notices for enrollees in Exchanges who have not filed and reconciled for 1-tax year. We further mitigated this concern when, in the 2026 Payment Notice (90 FR 4424), we also required Exchanges to issue associated warning notices for enrollees in Exchanges who have been identified as not filing and reconciling for 2 consecutive tax years. When we implemented the 2-tax year FTR policy, we also acknowledged the risk for improper enrollment by consumers who know they can ignore their FTR status for an additional year but concluded these instances would be limited as the majority of enrollees comply with FTR. Despite the potential for large tax liabilities and the risk of improper enrollment, we concluded that this policy would have a positive impact on consumers, while still ensuring program integrity as it would provide better continuity of coverage for consumers who may not be aware of the requirement to file and reconcile. We noted that we would continue to monitor the implementation of this new policy, including whether certain populations continue to experience large tax liabilities, and would consider whether additional guidance, or any additional policy changes in future rulemaking, are necessary.

In the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), we finalized a return to the 1-tax year FTR process. Specifically, we finalized at Sec. 155.305(f)(4)(iii) that, through the end of PY 2026, Exchanges would be required to find tax filers (or their enrollees) ineligible for APTC if they had a 1-tax year FTR status for PY 2026 only. The finalized regulation provided that Exchanges would revert to the 2-tax year FTR process beginning in PY 2027. We did so for a number of reasons. First, we stated in the 2025 Marketplace Integrity and Affordability final rule that we believe the prior 2-tax year FTR process places a substantially higher number of tax filers at a greater risk of accumulating increased tax liabilities when filing their Federal income taxes. Second, we stated that we believe that the 2-tax year FTR process could incentivize tax filers to not file and reconcile because they would be allowed to keep APTC eligibility for an additional year without filing their Federal income tax return and reconciling APTC. This policy was stayed by the District Court for the District of Maryland in City of Columbus et al. v. Kennedy et al., on August 22, 2025. The judge stayed this particular provision after concluding the plaintiffs were likely to succeed in arguing the 1-tax year FTR policy is contrary to law. Due to the Court's decision, the 2-tax year policy remained in place for PY 2026 for all Exchanges.

Under section 36B(b)(1) of the Code, no PTC is allowed for any month that is not a “coverage month.” On July 4, 2025, Congress passed and President Trump signed the WFTC legislation which, under section 71303, amended the definition of “coverage month” under section 36B(c) of the Code for taxable years after December 31, 2027, to provide that a “coverage month” will not include, for any individual enrolled in a QHP through an Exchange, any month for which the Exchange does not meet the requirements of Sec. 155.305(f)(4)(iii), as added by the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074). Section 155.305(f)(4)(iii) reflects the 1-tax year FTR policy proposed in this rule. Thus, under section 71303 of the WFTC legislation, for taxable years beginning after December 31, 2027, no APTC is payable on behalf of any enrollee in an Exchange for any month in which the Exchange has not implemented a 1-tax year FTR policy.

We proposed that for PY 2028 and beyond, an Exchange must determine a tax filer or their enrollee ineligible for APTC, and that, at an Exchange's option, an Exchange may make such a determination for PY 2027 if: (1) HHS notifies the Exchange that APTC was paid on behalf of the tax filer, or their spouse if the tax filer is married, for a year for which tax data would be utilized for verification of household income and family size; and (2) the tax filer, or their spouse if the tax filer is married, did not comply with the requirement to file a Federal income tax return and reconcile APTC payments with PTC the tax filer is allowed to claim on their tax return for that year. If the Exchange does not choose to adopt the 1-tax year FTR policy for PY 2027, they must determine a tax filer or their enrollee ineligible for APTC if: (1) HHS notifies the Exchange that APTC was paid on behalf of the tax filer, or their spouse, if the tax filer is a married couple, for 2 consecutive tax years for which tax data would be utilized for verification of household income and family size; and (2) the tax filer, or their spouse if the tax filer is a married couple, did not comply with the requirement to file a Federal income tax return and reconcile APTC payments with PTC the tax filer is allowed to claim on their tax return for those 2 consecutive years.

We proposed to amend the language at Sec. 155.305(f)(4) to clearly reflect an Exchange's option to implement either the 1-tax year FTR policy or 2-tax year FTR policy for PY 2027 and the 1-tax year FTR policy for PY 2028 and beyond. We proposed to reorganize paragraph (f)(4) to include three sections--Definitions, APTC eligibility, and Notices. We also proposed to revise the language to ensure that notices are sent to consumers that reflect whether the Exchange is implementing the 1-tax year or 2-tax year FTR policies for PY 2027 coverage, and that the Exchange will implement the 1-tax year FTR policy for PY 2028 coverage. In addition, we stated that we are making non-substantive changes to improve the readability and clarity of the regulatory text. We stated that we believe this change is important because it would be imprudent for Exchanges to implement the 2-tax year FTR policy in PY 2028 and thereafter due to the impacts on the definition of coverage month under section 36B(c) of the Code, and allowing Exchanges to voluntarily adopt the 1-tax year policy for PY 2027 gives Exchanges the operational flexibility they need to navigate the vast pre-enrollment verification changes also imposed in section 71303 of the WFTC legislation.

While the revised definition of coverage month that compels Exchanges to implement the 1-tax year FTR policy

is scheduled to take effect for PY 2028 under the WFTC legislation, it is important to exercising existing authorities under the Affordable Care Act and its implementing regulations to implement a 1-tax year FTR policy beginning with enrollments for PY 2027 to protect enrollees from accumulating tax liabilities. Until 2026, the amount of APTC that some consumers were required to repay when filing their Federal income tax return and reconciling their APTC was limited by section 36B(f)(2)(B) of the Code based on their income level as a percentage of the FPL. Section 71305 of the WFTC legislation eliminated those excess APTC recapture limits for tax years beginning after December 31, 2025. As a result, consumers with excess APTC will have their tax liability increased by the entire amount of the excess APTC. Given this, we stated in the proposed rule that we are even more concerned about the potential for high tax liabilities that could accumulate if consumers do not file their Federal income tax returns and reconcile APTC. The current 2-tax year FTR process potentially provides up to 18 months after an initial FTR notice is received for a tax filer to comply with the requirement to file and reconcile APTC received, which would expose the tax filer to up to 18 additional months of excess APTC if the tax filer does not file and reconcile. We previously concluded in the Marketplace Integrity and Affordability final rule (90 FR 27074) that this does not provide reasonable protection against accumulating tax liabilities.\146\ By switching from a 2-tax year FTR process to a 1-tax year FTR process for PY 2027, we stated in the proposed rule that our hope is that consumers would not inadvertently be responsible for repaying the entirety of 18 months of excess APTC if they do not file and reconcile, which is likely a significant financial hardship for many consumers receiving APTC.

\146\ Marketplace Open Enrollment Period Public Use Files, https://www.cms.gov/data-research/statistics-trends-reports/marketplace-products/2024-marketplace-open-enrollment-period-public-use-files.

The 2025 Marketplace Integrity and Affordability final rule reinstated the 1-tax year FTR policy, but to balance competing concerns, the rule sunset the policy automatically after the end of PY 2026. At the time, we concluded that the 1-tax year FTR policy was needed immediately to reduce the number of improper APTC payments in Exchanges on the Federal platform. However, we also considered that the policy's utility could be less apparent in the context of the expiration of the expanded subsidies and fully-subsidized benchmark plans, which removes much of the incentive for unscrupulous agents, brokers, and web-brokers to fraudulently enroll consumers into Exchange coverage who then may not know they need to file Federal income taxes and reconcile APTC. While we have made progress in reducing improper unauthorized enrollments over the past year, there remains a substantial number of unauthorized enrollments on the Federal platform, and there remains significant risk that persons enrolled without their knowledge will be subjected to surprise tax liability. Finalizing the 1-tax year FTR will mitigate the risk that individuals enrolled in Exchange coverage without their knowledge will amass unintended tax liabilities for 2 years.

When we finalized the sunset of the 1-tax year policy in the finalized 2025 Marketplace Integrity and Affordability final rule, commenters also expressed the following concerns: (1) that the 1-tax year FTR process may result in coverage losses because the tax filing process is complex and consumers are not fully aware of the requirements to file and reconcile, (2) that the 1-tax year FTR process could have a negative impact on the risk pool, and (3) that the 1-tax year process negatively impacts low-income consumers who have a more difficult time predicting and verifying income due to the unpredictable nature of their income. While we acknowledged these concerns in the proposed rule, we stated that we believe that for PY 2027, the overriding policy need for the Federal Exchange is to be able to remove unauthorized enrollments from the Exchange, and the 1-tax year FTR policy enables us to do that better than a 2-tax year FTR policy. As for State Exchanges, which do not all face the same problem for unauthorized enrollments, we stated that we believe that the flexibility to be able to nimbly respond to whatever the Court decides for the final decision in City of Columbus et al. v. Kennedy et al., as well as during the implementation of all the other requirements imposed by the WFTC legislation, is the utmost policy goal for PY 2027. However, for PY 2028, our previously stated concerns, which are still valid, become secondary to the goal of ensuring that consumers are eligible for APTC, because APTC is essential for the Exchanges to function as designed in the Affordable Care Act. This is due to the requirement of Exchanges to operate the 1-tax year FTR policy in order for a month to be considered a “coverage month,” thereby ensuring that consumers are eligible for APTC.

In the proposed rule, we stated that we also understand that State Exchanges and other interested parties may have planned their FTR operations based on the sunset of the 1-tax year policy as finalized in the 2025 Marketplace Integrity and Affordability final rule. However, due to the stay imposed by the Court, State Exchanges have not implemented the 1-tax year FTR process for 2026. If the stay continues through PY 2026, they would have nothing to sunset in PY 2027 (that is, the 2-tax year FTR policy would continue). Alternatively, if HHS prevails in City of Columbus et al. v. Kennedy et al. during PY 2026 and the 1-tax year FTR policy is reinstated for the remainder of the plan year, it would be a burden for Exchanges to revert to a 2-tax year FTR policy in PY 2027 and then revert back to a 1-tax year FTR policy again in PY 2028, if that component of this proposal is finalized. Taking both these potential scenarios into account, we stated in the proposed rule that we believe it would be most prudent to allow State Exchanges the option to choose between a 1- and 2-tax year FTR process for PY 2027. Additionally, as State Exchanges do not report the same problems with unauthorized enrollments as those currently facing the FFEs, there is less reason to require the 1-tax year policy in 2027. Further, we stated that it could be overburdensome to require State Exchanges to implement the 1-tax year FTR policy due to limited operational resources while they implement other requirements of the WFTC legislation.

A review of plan selections during the 2026 open enrollment period shows 29 percent of people enrolled in fully subsidized plans through the Federal platform.\147\ Thus, there remains an opportunity for unscrupulous agents, brokers, and web-brokers to enroll people without their knowledge. In addition, HHS removed APTC from an estimated 430,000 enrollees as of January 1, 2026 for failing to file their Federal tax return and reconcile APTC for 2 consecutive tax years (2023 and 2024 tax years) in accordance with the 2-tax year FTR policy.\148\ This population is already larger than the 235,000 enrollees who lost APTC

eligibility as part of FTR operations for PY 2025 \149\ and this is just the first stage in the process for PY 2026. In the 2025 Marketplace Integrity and Affordability proposed rule, we stated that we believe that FTR status may be an indicator that a current enrollee entering the OEP has income that makes the household ineligible for APTC. This is because, for some households, the income requirement to file a tax return is approximately 100 percent FPL which is the minimum household income to qualify for APTC.\150\ People who inflate their income to qualify for APTC will often have an income low enough to, absent the receipt of APTC, not require them to file taxes. In this case, the FTR status likely reflects a lack of understanding of the need to file taxes based on the receipt of APTC which, if they still think they do not meet the filing requirement based on their income, means they are likely to have an income too low to meet the APTC eligibility threshold. In addition, someone improperly enrolled entirely without their knowledge would also not know to reconcile. Considering our prior analyses that suggest FTR status is a strong indicator that a current enrollee is ineligible for APTC and the growth in enrollees with a 2-tax year FTR status for PY2026, we stated in the proposed rule that we remain very concerned about the number of consumers in the Exchange that were potentially improperly enrolled and remain enrolled.

\147\ CMS. (2026, April 22). Health Insurance Exchanges 2026 Open Enrollment Report. Available at https://www.cms.gov/files/document/health-insurance-exchanges-2026-open-enrollment-report.pdf.

\148\ CMS. (2026, January 28). CMS Actions to Protect Consumers and Strengthen Exchange Program Integrity. Available at https://www.cms.gov/newsroom/fact-sheets/cms-actions-protect-consumers-strengthen-exchange-program-integrity.

\149\ CMS. Failure to File and Reconcile (FTR) Methodology available at https://www.cms.gov/files/document/failure-file-and-reconcile-data-plan-year-2025.xlsx.

\150\ Information regarding the income amount that requires one to file is available on the IRS website at https://www.irs.gov/individuals/check-if-you-need-to-file-a-tax-return#amount-to-file.

Though the enforcement of the 1-tax year policy for PY 2026 was stayed after the District Court concluded it would likely be found contrary to law, we stated in the proposed rule that we continue to believe we have a strong statutory basis for applying the 1-tax year policy. In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12961), we stated HHS' belief that the Affordable Care Act does not allow HHS to determine someone eligible for APTC if they failed to meet the requirement to file a tax return. Sections 6011 and 6012 of the Code, as implemented under 26 CFR 1.6011-8, require enrollees who receive APTC to file a tax return and reconcile the APTC. Notwithstanding, the District Court reasoned that the policy was likely unlawful because nothing in the statute expressly conditions eligibility on reconciling tax credits. However, our analysis of the statute has focused on the importance of filing a tax return, not reconciling APTC. That's because the tax return is a critical element of the income verification process to qualify for APTC under the statute. As such, filing a tax return is a means of verifying a condition of eligibility and not itself a condition of eligibility. As we explained in the Marketplace Integrity and Affordability proposed rule, the statute requires APTC to be set on the basis of the individual's household income for the most recent taxable year for which information is available. Therefore, the income reported on the tax return for the most recent taxable year establishes the starting point for verifying whether an applicant's income meets the requirements to qualify for APTC. As discussed previously, when the IRS does not have tax return information to verify an applicant's income, section 1412 of the Affordable Care Act requires HHS to establish alternative procedures to determine APTC when there is a change in circumstances or “in cases where the taxpayer was not required to file a return . . .” Because section 1412(b)(2)(B) only references cases where a tax filer was not required to file a return, we stated in the proposed rule that we do not believe an applicant who fails to meet the requirement to file a return qualifies for this alternative process for determining APTC. Therefore, to determine and verify household income, it is imperative that consumers file a Federal income tax return when they are required to do so.

While we had previously intended to sunset the 1-tax year policy in PY 2026, due to both the inability to implement it in PY 2026 due to a judicial stay in City of Columbus et al. v. Kennedy et al., as well as the WFTC legislation preventing consumers from receiving APTC in any Exchanges not implementing the 1-tax year policy beginning in PY 2028, we stated in the proposed rule that we believe it is best to implement the 1-tax year policy for PY 2028 for all Exchanges, with the option for Exchanges to early adopt for PY 2027 or continue operating the 2- tax year policy for PY 2027. As mentioned previously, we are giving Exchanges the option to continue operating the 2-tax year policy during PY 2027 because, while the Federal Exchange has the resources to early adopt the 1-tax year FTR policy in 2027, many State Exchanges face different financial constraints. This may be particularly true in 2027 when States will have to also implement the other pre-enrollment verification changes required by the WFTC legislation. Therefore, in light of these considerations, we proposed to revise Sec. 155.305(f)(4) to require Exchanges to find consumers ineligible for APTC after they or their tax filer have been determined to have failed to file and reconcile for 1 tax year beginning in PY 2028, or in PY 2027 at the option of the Exchange. We also proposed in Sec. 155.305(f)(4) that an Exchange must operate the 2-tax year FTR process in PY 2027 if they do not elect to operate the 1-tax year FTR process.

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. We summarize and respond to public comments received on the proposed updates to the FTR policy below.

Comment: Many commenters opposed the proposed policy to revert to the 1-year FTR policy as an option for PY 2027, stating that the 2-year policy strikes a better balance between ensuring that enrollees file their Federal income taxes and reconcile APTC, while also allowing for the fact that the IRS data is often delayed due to long processing times, especially for paper filers and amended Federal income tax returns.

Response: While we agree that the IRS has previously suffered from long IRS processing times of Federal income tax returns, particularly during the Covid-19 public health emergency, and especially for those filing paper and amended income tax returns, we do not believe this is a sufficient reason to maintain the current 2-year FTR process for an additional year due to the need to protect consumers who are unknowingly enrolled from accruing 3 years of tax liability rather than just 2 years. For example, a low-income consumer below the tax filing threshold could have been fraudulently enrolled in coverage with APTC for year 1, year 2, and year 3 by a third party, but have an offer of affordable employer coverage that disqualifies them from PTC. Under the 2-year policy, the consumer could potentially accrue an unknown tax liability of APTC received in years 1, 2, and 3 before losing APTC either through the strip process at the end of December or the FTR Recheck process during the following spring. They would need to undertake a process to demonstrate that they were fraudulently enrolled in this coverage and have their Form 1095-A voided by an Exchange to demonstrate that they do not owe excess APTC. We also note that, as of May 2, 2026,

electronically filed returns are generally processed within 21 days according to the current timeline on irs.gov. Additionally, as of the same date, original paper filed returns received in March of 2026 were being processed, while amended paper filed returns received in February 2026 were being processed.\151\ Further, we attempt to mitigate the IRS processing times with the FTR Recheck process, which allows enrollees who have filed later in the year to attest that they did in fact file and reconcile, while maintaining eligibility for APTC for the following coverage year until FTR status is then rechecked early in the coverage year. While we are unsure whether all State Exchanges provide the same FTR Recheck process that Exchanges on the Federal platform provide, due to the way that some State Exchanges integrate the FTR process into other periodic data matching processes to obscure FTI, we are providing flexibility for State Exchanges to delay the implementation of the 1- year FTR process until PY 2028. During that FTR Recheck process, Exchanges on the Federal platform compare attestations with more recently updated IRS data to verify whether an enrollee did in fact file and reconcile. If the IRS data indicates that the tax filer did not file and reconcile, then the tax filer or their enrollee receives a notification before a final check of FTR status before the Exchange terminates APTC. Consumers who believe they have erroneously been found ineligible for APTC should contact the Marketplace Appeals Center.

\151\ https://www.irs.gov/help/processing-status-for-tax-forms. Last accessed May 2, 2026.

Comment: Many commenters who are State Exchanges thanked CMS for the flexibility to implement a 1-year FTR policy beginning in PY 2028 because they do not have the operational resources to do so beginning in PY 2027. Conversely, one commenter noted that we should finalize the requirement for State Exchanges to align with the one-year FTR policy in the WFTC legislation in PY 2027, along with the Federal Exchanges.

Response: We continue to believe that flexibilities for State Exchanges to still conduct the 2-year FTR process in FY 2027 is necessary as we are aware that making the operational changes required for the 1-year policy, including eligibility logic changes and updating notices, is contingent on State budgets and States having the capacity to update their Exchange eligibility logic to shift back to a 1-year FTR policy.

Comment: Many commenters stated concern that the proposed 1 year policy in PY 2027 would increase coverage loss, especially among those who are lower-income and homeless as they would no longer be able to afford their monthly Exchange premium after APTC is terminated, as well as having a negative impact on the risk pool as those who are sicker are more motivated to navigate administrative burdens to get coverage versus healthier individuals, and thus raising premiums. Relatedly, many commenters supported ensuring that consumers can maintain coverage and also were concerned about the potential increase in IRS delays and the impact that delayed data could have on the 1 year process. Many commenters also believed that a larger tax bill for consumers who faced repayment of excess APTC is preferable over a loss of healthcare coverage. Some commenters also noted that it is much harder for consumers who lack stability in their lives (that is, lack of stable income or a lack of stable housing) to provide documentation to fulfill verification requirements such as FTR compared to consumers who do have stable income and stable housing.

Response: We understand commenters' concerns about the risk of coverage losses among lower-income individuals. However, we believe that the continued program integrity concerns stemming from improper enrollments merit the need for the option of the early adoption of the 1-year FTR policy. Recently, two executives were sentenced to 20 years in prison for fraudulently enrolling vulnerable consumers experiencing homelessness and mental health and substance abuse disorders.\152\ Consumers enrolled through this type of fraud are more likely to have not filed taxes due to their lower income and vulnerable position, and a 1-year FTR policy would remove them from subsidized coverage more quickly. While we acknowledge that it is harder for consumers who are struggling to file their taxes, we firmly believe that the tax return is the basis of determining a consumer's eligibility for APTC and thus is crucial to the program integrity of Exchanges. Having the consumer's most recent tax return increases the likelihood that the Exchange can verify their income using a trusted data source from another government agency, thereby driving down verification costs and helping to ensure that consumers are eligible for their Exchange coverage. We do not agree with commenters who believe that a larger tax bill for consumers who face repayment of excess APTC is preferable over a loss in healthcare coverage. We also note that for those who have lost coverage, many hospitals have charity care programs where consumers can apply to reduce their medical debt. We further note that, if an enrollee believes that they lost APTC erroneously due to FTR, they can file an appeal with the Marketplace Appeals Center.

\152\ Press Release, U.S. Department of Justice, “President of Insurance Brokerage Firm and CEO of Marketing Company Sentenced in $233M Affordable Care Act Enrollment Fraud Scheme that Preyed on Vulnerable Consumers,” February 18, 2026, https://www.justice.gov/opa/pr/president-insurance-brokerage-firm-and-ceo-marketing-company-sentenced-233m-affordable-care.

Comment: Many commenters stated concern that HHS does not have the statutory authority to require any failure to file and reconcile process until PY 2028 due to the stay in the City of Columbus v. Kennedy litigation. A few commenters also stated disagreement with HHS' argument regarding its statutory authority to conduct FTR at all until PY 2028. They noted that there is nothing included in section 1411(b) of the Affordable Care Act that conditions eligibility for APTC on filing a Federal income tax return and reconciling APTC. They also noted that they believe that CMS should be able to look at any year's tax return to determine eligibility, and thus that not filing 1 year's return should not be the basis for denying APTC. One commenter also noted that FTR status affects a consumer's future PTC.

Response: As we stated in the proposed rule, we believe that we have a statutory basis for applying the 1-year FTR policy before PY 2028. In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12961), we stated that we believe that the Affordable Care Act allows HHS to determine someone ineligible for APTC if they failed to meet the requirements to file a Federal income tax return as the tax return provides a main basis for establishing an accurate income estimate. Sections 6011 and 6012 of the Code, as implemented under 26 CFR 1.6011-8, require enrollees who receive APTC to file a tax return and reconcile the APTC. Notwithstanding, the District Court in City of Columbus v. Kennedy reasoned in the stay that the policy was likely unlawful because nothing in the statute conditions eligibility on filing a Federal income tax return and reconciling tax credits. However, our analysis of the statute has focused on the importance of filing an income tax return, not reconciling APTC. That is because the income tax return is a critical element of the income verification process to qualify for APTC under the statute. As we stated, filing a Federal income tax return is a means of verifying a

condition of eligibility for APTC, and is not, in itself, a condition of eligibility. As we previously noted in the 2025 Marketplace Integrity and Affordability proposed rule, the statute requires APTC to be set on the basis of the individual's household income for the most recent taxable year for which information is available. Therefore, the income reported on the Federal income tax return for the most recent taxable year establishes the starting point for verifying whether an applicant's income meets the requirements to qualify for APTC. As discussed previously, when the IRS does not have tax return information to verify an applicant's income, section 1412 of the Affordable Care Act requires HHS to establish alternative procedures to determine APTC when there is a change in circumstances or “in cases where the taxpayer was not required to file a return . . .” Because section 1412(b)(2)(B) of the Affordable Care Act only references cases where a tax filer was not required to file an income tax return, we stated in the proposed rule that we do not believe an applicant who fails to meet the requirement to file an income tax return qualifies for this alternative process for determining APTC. Therefore, to determine and verify household income for APTC eligibility, it is imperative that consumers file a Federal income tax return when they are required to do so.

Furthermore, we believe that the impact of the stay is only to invalidate the 2025 Marketplace Integrity and Affordability final rule, thereby reverting Exchanges to the 2-year FTR policy that was previously in effect prior to the stay.

For additional clarification, even if a consumer is determined by HHS to have an FTR status during the FTR process, they or their tax filer can still claim their PTC for the months that they did not receive APTC when they do file their Federal income tax return and reconcile APTC for the applicable tax year. The proposed rule only applies to APTC eligibility, not PTC eligibility.

Comment: Many commenters stated concern that the Federal tax filing process is complex, and many consumers are not fully aware of the requirements to file and reconcile, especially for the population that is more transient, as well as those not as financially or technologically literate. They noted that many of these consumers are simply unaware of how the tax system works, and consumers are not trying to purposefully game it and potentially incur criminal penalties from not filing Federal income taxes. They recommended States partner with healthcare providers who serve those who are experiencing homelessness to ensure consumers are aware of the need to file and reconcile. Commenters also noted concern about the staffing capacity at the IRS and being able to ensure that consumers who do file and reconcile do not lose their APTC eligibility due to IRS delays.

Response: We note that we do not have authority over the Federal income tax rules in the Code, nor do we have authority over the IRS budget and staffing levels. We note that the IRS's Volunteer Income Tax Assistance (VITA) curriculum includes information on the requirement to file and reconcile and that through VITA,\153\ IRS-certified volunteers are available to help individuals who need assistance in preparing their own tax returns, including people who make $69,000 or less, persons with disabilities, and limited English-speaking taxpayers.\154\ Information about filing taxes is available at www.healthcare.gov/taxes. We will continue to educate consumers about the requirement to file and reconcile using notices throughout the FTR process and also encourage State Exchanges to work with homeless service providers in their States to ensure consumers are aware of the need to file and reconcile.

\153\ https://www.irs.gov/pub/irs-pdf/p4491.pdf.

\154\ https://www.irs.gov/filing/individuals/how-to-file.

Comment: Some commenters noted that HHS did not explicitly mention the change that IRS made regarding e-filing Federal income tax returns. Specifically, they noted that consumers should not be able to file their Federal income tax return and not reconcile their APTC due to the IRS's more recently implemented e-filing rejection code. This e-filing rejection code rejects an e-filed return if IRS records show that that the tax filer's SSN indicates they have received APTC and failed to attach Form 8962 to their tax return. These commenters believed that this should have effectively reduced the number of consumers who attempt to file their Federal income taxes without reconciling APTC.

Response: We agree with commenters that this e-filing rejection code should have decreased the number of consumers who have filed their Federal income taxes without reconciling their APTC. However, prior to Open Enrollment for PY 2026, consumers who filed but did not reconcile made up almost 15 percent of the total 1-year FTR population. Prior to Open Enrollment for PY 2025, the percentage of consumers who filed but did not reconcile made up 13.3 percent of the total 1-year FTR population.\155\ Since e-filed income tax returns made up 93.3 percent of all individual income tax returns according to IRS data,\156\ it is likely that the percentage of those who filed but did not reconcile bypassed the e-file rejection by attaching a written explanation titled “ACA Explanation,” explaining why the Form 8962 should not be required.\157\ However, it is also possible that a percentage of these tax returns were paper-filed returns, which tend to include a larger percentage of those who encounter e-filing rejections. In sum, the e- filing rejection error does not eliminate the problem of some consumers filing their return but failing to reconcile their APTC.

\155\ Internal CMS data.

\156\ https://www.irs.gov/statistics/returns-filed-taxes-collected-and-refunds-issued.

\157\ https://www.irs.gov/newsroom/how-to-correct-an-electronically-filed-return-rejected-for-a-missing-form-8962.

Comment: Some commenters stated the need to provide plain language notices to consumers to ensure they are aware of the need to file and reconcile. Commenters noted concern about the fact that IRS privacy rules prevent Marketplace Call Center Representatives from informing consumers directly that the reason they have lost APTC is because they have failed to file and reconcile.

Response: For applications in which the consumer and the tax filer are the same person, they receive two plain language notices alerting them to the need to file and reconcile. Furthermore, “direct” FTR Recheck notices, which are FTR notices that are sent to the tax filer and can disclose FTI, directly inform tax filers of the need to file and reconcile to remain APTC eligible. They state: “Our records show you (or others in your household) used advance payments of the premium tax credit in 2023 and 2024, but didn't file a Federal income tax return or include IRS Form 8962 “Premium Tax Credit (PTC)” to reconcile the advance payments of the premium tax credit for those years.” In contrast, the “indirect” notices (sometimes called “combined” notices) are sent to the consumer and cannot disclose FTI; and therefore they cannot directly state that somebody has failed to file and reconcile. They provide the following more general information: “Our records show you (or others in your household) used advance payments of the premium tax credit in 2023 and 2024. Every year your household has Marketplace coverage and uses advance payments of the premium tax credit, you or your household's tax filer must file Federal income taxes and reconcile the

premium tax credit you qualified for with the amount you used . . . . If you haven't filed a Federal income tax return with IRS Form 8962 for 2023 and 2024, file now or everyone in your household may lose financial help starting as early as [date].” If a consumer is also the tax filer on their application, they receive both the direct and the indirect notices.

While we are unable to change the privacy requirements at the IRS related to the ability to disclose FTI to anyone besides the tax filer, we believe that our workarounds provide sufficient notice to the consumer of the requirement to file and reconcile. Furthermore, the notices created by HHS are created with plain language guidelines in mind, while also conveying the implications of not filing and reconciling.

Comment: Some commenters noted that they believe that it is important for consumers to have access to streamlined reinstatement mechanisms to regain eligibility for APTC after consumers file and reconcile.

Response: Consumers who file their Federal income taxes and reconcile APTC can update their Exchange application and attest to filing and reconciling to regain their APTC eligibility, provided that a check of IRS data verifies that the consumer did in fact file and reconcile. If these consumers remain enrolled in a full cost QHP after their APTC is terminated, then they may qualify for an SEP under Sec. 155.420(d)(6)(i) (for being determined newly eligible for APTC) after IRS data verifies that they did file and reconcile. However, if a consumer terminates their coverage due to inability to pay their full premium after their APTC is terminated, they will need to independently be eligible for an SEP to re-enroll in the Exchange outside of the open enrollment period. Furthermore, when a consumer files their Federal income taxes and reconciles APTC for the current year, they would be eligible for PTC for any months they did not receive APTC if they were otherwise eligible. If a consumer believes they have incorrectly lost their APTC under the failure to file and reconcile process, they can file an appeal at the Marketplace Appeals Center. While ease of restoring APTC is important, we also believe that preventing improper access to APTC is also important. Finally, we are actively monitoring agent, broker, and web-broker behavior for the FTR process.

Comment: A few commenters stated support of the proposal to align policy with the required legislation as implemented by the WFTC legislation. A few commenters also agreed that reinstating the 1-year look-back will improve program integrity by ensuring enrollees do not remain in subsidized QHPs they do not realize they have or for which they are ineligible.

Response: We agree that it is best to align the FTR policy with the coverage month requirements under section 71303 of the WFTC legislation when they take effect. We also believe that the 1-year FTR rule is essential to program integrity efforts by the Exchanges to ensure that those who are enrolled in coverage with APTC without their authorization do not face unexpectedly large tax liabilities. This is due to two parts of the FTR process--the removal of APTC as well as the FTR notices. By promptly removing APTC from consumers who do not file and reconcile, we can remove APTC from consumers enrolled without their knowledge or consent. Consumers who have no knowledge of their enrollment are unlikely to pay any portion of plan premiums that are not covered by APTC. Once these consumers do not pay their portion of premium, issuers will be required to cancel coverage for such enrollees no later than the third month the enrollee's portion of the premium remains unpaid, removing the risk that improperly enrolled consumers remain enrolled and amass a large tax liability. In addition, if a tax filer is enrolled without their knowledge and APTC covers the entire premium, the tax filer may be alerted to their enrollment by a notice warning that they need to file a tax return and reconcile past APTC. This notice could prompt the tax filer to contact the Exchange, report the unauthorized enrollment, and cancel their coverage, further reducing risk that the improper enrollment will persist. As a result, program integrity is strengthened by helping improperly enrolled consumers avoid surprise tax liabilities, saving them the burden of unwinding tax liability they did not knowingly incur. Program integrity is also supported and strengthened by ceasing the flow of Federal tax dollars to QHP issuers for persons who did not intend to enroll and saving tax dollars that would be expended by Federal government agencies in investigating and unwinding consumer tax liability flowing from improper enrollments and reconciling APTC paid for improper enrollments.

Comment: One commenter requested HHS to consider sunsetting the rule after PY 2027.

Response: If we did not require Exchanges to conduct the 1-year FTR policy in PY 2028, all Exchanges operating anything beside the 1-year FTR policy would be statutorily prohibited from providing APTC. This is because section 71303 of the WFTC legislation provides that, beginning in PY 2028, a month may not be a coverage month, and therefore no PTC may be paid for such month, for an individual if an Exchange does not implement a 1-year FTR policy. Because APTC is essential for the Exchanges to function as designed in the Affordable Care Act, we have determined it is important to impose a 1-year FTR policy beginning in PY 2028.

Comment: One commenter stated that the text of the WFTC legislation that provides the statutory authority for the 1-year FTR process beginning in PY 2028 points to the 2025 Marketplace Integrity and Affordability final rule's invalidated rule text as being the basis for the statutory requirement. The commenter stated that the statute will be meaningless unless the District Court rules otherwise in City of Columbus v. Kennedy or Congress acts to specifically require 1-year FTR without reliance on an unenforceable Federal regulation or specifically grants HHS rulemaking authority to require 1-year FTR.

Response: We do not agree with this interpretation of the statute and believe that we have the authority to conduct the 1-year FTR policy beginning in PY 2027 under section 1412 of the Affordable Care Act, in addition to the express statutory authority provided in the WFTC legislation for PY 2028 and beyond.

Comment: Some commenters questioned whether this proposal was appropriate given the stay on the 1-year FTR policy for PY 2026 issued by the court in the City of Columbus v. Kennedy litigation.

Response: The City of Columbus v. Kennedy court's stay on the 1- year FTR policy for PY 2026 that was finalized in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) has no impact on the 1-year FTR policy for PY 2027 that is proposed and finalized in this rulemaking. While the 1-year FTR policy for PY 2026 is currently under litigation, as a general matter, Federal agencies are free to engage in further notice-and-comment rulemaking on a policy previously stayed in litigation. Moreover, as discussed previously, circumstances have changed since the finalization of the 2025 Marketplace Integrity and Affordability final rule that provide greater justification for the 1-year FTR policy. In particular, Section 71305 of the WFTC legislation eliminated excess APTC recapture limits which increases the risk for accumulating high tax liabilities if consumers do not file their

Federal income tax returns and reconcile APTC.

Comment: Some commenters requested that HHS provide more demographic information about the consumers who lose APTC through the FTR process.

Response: We will consider providing more demographic information about consumers who lose APTC as part of the FTR process. However, we note that these data will be at the aggregate level in order to protect FTI. We also want to note that we are working to provide additional data about FTR consumers. For example, we provided a State by State FTR population breakdown during the past year, which can be found at https://www.cms.gov/files/document/failure-file-and-reconcile-data-plan-year-2025.xlsx.

Comment: One commenter supported the 1-year FTR policy and noted that without the FTR policy, consumers would have an incentive to misrepresent their income so that they qualify for the largest subsidy available. They also noted that the FTR process would help address the issues of multiple enrollments across modes of coverage.

Response: While we appreciate the intent of the comment, we believe that we have more targeted solutions to help with these issues compared to the FTR process. While the tax return should be the primary basis for verifying a consumer's income, we have multiple other methods for annual income verification that would prevent a consumer from qualifying for the largest subsidy available by not filing their Federal income taxes and reconciling APTC. Without IRS documentation, the Exchange would attempt to verify income based on either other trusted data sources or by requiring a consumer to submit documentation to verify their income. If neither of these methods could verify the consumer's income, and the consumer did not have IRS data to use, their APTC would be set at zero. In addition, we run both Medicaid/CHIP periodic data matching (PDM) and Medicare PDM operations twice a year to identify consumers who are dually enrolled and to notify them and either terminate their QHP enrollment or APTC depending on their preference. These processes are more effective and timely than FTR at identifying and notifying consumers enrolled in multiple modes of coverage. While a consumer may receive an FTR notice alerting them of their Exchange coverage, FTR notices inform consumers of the need to reconcile APTC for a previous tax year, whereas Medicare PDM and Medicaid/CHIP PDM notices speak to current enrollment and are thus better suited to identify consumers who are dually enrolled in QHP coverage with APTC and Medicare or Medicaid/CHIP. In addition, Medicare PDM and Medicaid/CHIP PDM notices would directly identify for the consumer that they are dually enrolled in multiple modes of coverage, whereas FTR notices do not speak to that issue. 11. Comment Solicitation on Eligibility Verification Provisions of the WFTC legislation, Section 71303

Section 71303(a) and (b) of the WFTC legislation imposes new requirements on Exchanges related to eligibility verification effective with PY 2028.

Section 71303(a) of the WFTC legislation adds a new paragraph (5) to section 36B(c) of the Code, establishing that a month is not a coverage month for an applicant, and therefore no PTC is allowed for the applicant's coverage for that month, if the month begins before the Exchange verifies the applicant's eligibility to enroll in a QHP and for APTC, “using applicable enrollment information that shall be provided or verified by the applicant.” Section 71303(a) of the WFTC legislation also:

Specifies a minimum set of “applicable enrollment information”;

Clarifies that a past month may be treated as a coverage month if an Exchange later verifies the applicant's eligibility;

Specifies that these verification requirements do not impact eligibility to enroll in a QHP;

Permits the Secretary of the Department of the Treasury to waive these verification requirements when an individual qualifies for an SEP based on a change in family size; and

States that Exchanges are permitted to use “any data available to the Exchange and any reliable third-party sources in collecting information for verification by the applicant.”

Section 71303(b) of the WFTC legislation amended section 36B(c)(3)(A) of the Code such that any plan enrolled in through an Exchange is not considered a QHP, and therefore no PTC is allowed for enrollment in the plan, unless, no later than August 1 of the year before the plan year, Exchanges provide “a process for pre-enrollment verification” that permits any applicant to verify their household income and eligibility for enrollment in such plan for the upcoming plan year.

In the 2027 Payment Notice proposed rule (91 FR 6345), we stated that we plan to issue regulations, guidance, technical assistance, and educational materials in the future to facilitate implementation of these provisions of section 71303 of the WFTC legislation. In the proposed rule, we sought comment on considerations for future policy development and implementation of these provisions of section 71303 of the WFTC legislation. We sought comment on topics including, but not limited to, operational considerations for State Exchanges, issuers, agents and brokers, navigators and assisters, and consumers; and effective rollout and communications. We sought input from interested parties regarding the required timelines to comply with the law, including the requirement that Exchanges establish a pre-enrollment verification process no later than August 1, 2027. We also sought input on the anticipated complexity, costs, burden, enrollment impacts, and any State-specific considerations. We thank commenters for their feedback and will take comments into consideration in future guidance, technical assistance, educational materials, and rulemaking.

Section 71303 of the WFTC legislation also adds new paragraph (6) to section 36B(c) of the Code, regarding failure to file and reconcile; please see section III.D.10. of this final rule for further discussion regarding failure to file and reconcile. 12. Income Verification Policy When Data Sources Indicate Income Less Than 100 Percent of the FPL (Sec. 155.320(c)(3)(iii))

To support improved payment integrity measures throughout the Exchanges, we finalized a series of income verification provisions in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27121), including revisions to Sec. 155.320(c)(3), to require the submission of documents to verify income when an applicant's attested projected household income is at or above 100 percent of the FPL and trusted data sources indicate the consumer's household income is below 100 percent of the FPL. This policy was a resumption of the requirement to verify income for this subset of consumers that was first finalized in the 2019 Payment Notice (83 FR 16985), a regulation that was later vacated by the U.S. District Court for the District of Maryland in City of Columbus v. Cochran.\158\ Following our discovery of a massive volume of improper enrollments in 2023 and 2024, we re-proposed and finalized this policy in the 2025 Marketplace Integrity and Affordability Rule based on its assessment that additional eligibility

verifications were necessary to prevent improper enrollments and payments of APTC, and to guard against improper enrollment behaviors by agents, brokers, and web-brokers. Based on commenters' concerns, we finalized this rule to sunset at the end of PY 2026 to provide further opportunities to monitor the policy's effects instead of codifying it to be applicable indefinitely. This policy was also sunset with the expectation that the reduction in fully subsidized plans resulting from the expiration of the enhanced PTC would reduce the urgency of its program integrity features and in response to commenter feedback that the measure was not necessary in State Exchanges that had not experienced high levels of improper enrollments. We believed that implementing this policy through the end of PY 2026, when paired with existing program integrity measures and additional measures finalized in the 2025 Marketplace Integrity and Affordability final rule, would strike the right balance between urgent program integrity concerns and long-term enrollment efficiencies. In August 2025, the U.S. District Court for the District of Maryland stayed enforcement of the regulation based on its conclusion that HHS did not meaningfully engage with challenges to the data and reports it used to justify the regulation.\159\

\158\ City of Columbus v. Cochran, 523 F. Supp. 3d 731 (D. Md. 2021).

\159\ See City of Columbus v. Kennedy, 796 F. Supp. 3d at 168.

Since the finalization of the 2025 Marketplace Integrity and Affordability final rule and the issuance of the August 2025 court stay, we have continued to focus on finding and stopping improper enrollments, including those supported by inaccurate income estimations. Without the implementation of the stayed income verification regulation requiring documentation of income when an applicant attests to household income above 100 percent FPL and trusted Federal data sources indicate household income is below 100 percent FPL, the use of inflated incomes could have resulted in consumers being improperly enrolled in Exchange coverage, oftentimes without their knowledge. Since October 2025, the Federal Exchange has continued to detect improper enrollments that included suspect attestations of income. For example, we stated in the proposed rule that the Federal Exchange has received reports that agents, brokers, and web-brokers may be using artificial intelligence to impersonate consumers and falsely attest to household income that could potentially qualify the consumers for APTC and CSR benefits they may not be eligible for, something that we were not aware of when we finalized the 2025 Marketplace Integrity and Affordability final rule. Inaccurate household attestations can lead to consumers experiencing hardship when they go to use health coverage and find out they are enrolled in a plan they were unaware of.

Verifying an applicant's household income could result in HHS detecting improper enrollments before APTC can be paid. We stated in the proposed rule that we continue to uncover improper enrollments through reports from consumers, agents, brokers, and web-brokers, and, in particular, issuers. As mentioned in the fact sheet on CMS actions to strengthen program integrity and protect consumers,\160\ in 2025, the Federal Exchange cancelled 250,000 unauthorized enrollments. Additionally, the Federal Exchange stopped APTC for 500,000 enrollees who were found to be concurrently enrolled in Exchange coverage with APTC and other coverage. In the proposed rule, we stated that the proposed policy, if finalized, could go far in protecting Federal funds from being paid to support improper enrollments for those who do not qualify for APTC or those who never intended to enroll in Exchange coverage, especially those who are already enrolled in Medicaid coverage and therefore did not need coverage through the Exchange. We stated that we are of the view that these circumstances present sufficient risk to Exchanges' ability to accurately verify eligibility determinations for APTC. We also stated that we are of the view that we cannot continue to ignore the obvious risk presented by circumstances under which APTC and CSR eligibility is granted, notwithstanding that trusted data sources indicate that an applicant's household income is below 100 percent FPL, making them ineligible for receiving APTC or CSRs. We stated that we believe it is reasonable, necessary, and not unduly burdensome to require individuals to submit documentation to resolve these inconsistencies.

\160\ CMS. (2026, January 28). CMS Actions to Protect Consumers and Strengthen Exchange Program Integrity. Available at https://www.cms.gov/newsroom/fact-sheets/cms-actions-protect-consumers-strengthen-exchange-program-integrity.

Moreover, submitting documentation to verify income is now even more important to protect applicants from accumulating tax liabilities due to misestimating or misreporting their income. As we explained in relation to the FTR policy in section III.D.10. of this final rule, the WFTC legislation was enacted after the finalization of the 2025 Marketplace Integrity and Affordability final rule removes limitations on repayment of the APTC beginning with PY 2026. Under section 71305 of the WFTC legislation, repayment caps on excess APTC payments discontinued starting in PY 2026. We stated in the proposed rule that under this proposed policy, households would likely receive an income DMI that would require them to submit documents to verify their annual household income and, if they do not verify with documents, would result in the loss of APTC after the 90-day DMI period and protect them from accumulating substantial tax liabilities. The Federal Exchange does have a process that allows consumers to report an unauthorized enrollment, which will allow them to avoid tax liabilities, but this requires the consumers to be aware of the improper enrollment and take actions to correct it. The Federal Exchange also permits issuers to report improper enrollments to HHS, which has the same effect of allowing the consumer to avoid tax liability for an enrollment they were unaware of and did not authorize.

We noted in the proposed rule that Congress did not limit HHS' authority under section 1411 of the Affordable Care Act to verify income under the circumstances targeted by the policy, but granted HHS broad authority and discretion to design verification procedures the HHS Secretary determines appropriate. Section 1411(c) of the Affordable Care Act provides that applicants' previous taxable year household incomes reported on an Exchange application must be submitted to the Secretary of the Treasury for verification. Section 1411(d) of the Affordable Care Act directs HHS or an Exchange to verify the accuracy of information that is not required to be submitted to Treasury, Homeland Security, and Social Security. Income information provided to verify eligibility when there are “changes in circumstances” is not required to be submitted to Treasury. Therefore, under 1411(d), HHS or Exchanges must verify this income information, which includes verifying income through other trusted data sources. If no trusted data source can verify income, section 1411(e)(4) of the Affordable Care Act requires the HHS Secretary to notify the Exchange of the inconsistency and the Exchange to take reasonable steps to resolve the inconsistency, including by contacting the applicant or by taking any additional actions as the HHS Secretary may identify through regulation or other guidance.

If the inconsistency remains unresolved, the Exchange must give the applicant an opportunity to either

present satisfactory documentary evidence or resolve the inconsistency with the Secretary of the Treasury. The policy we proposed in this rulemaking reflects Congress' directives in section 1411(e)(4) of the Affordable Care Act. Given Congress' directive under section 1411(e) of the Affordable Care Act to collect documentation of applicant income in appropriate circumstances, as well as the discretion it granted to the HHS Secretary under the same section, it is difficult to pinpoint circumstances under which a requirement to verify or reconcile inconsistent data would be deemed unreasonable. Accurate income attestation and verification from households has long-ranging implications for payment integrity in the Exchange, with impacts to consumer protection, appropriate agent/broker/web-broker compensation, data integrity, and the expenditure of tax dollars. Increased repayment responsibilities now make these further verifications an essential protection against accumulating tax liabilities. Given HHS' authority, the ongoing need to strengthen program integrity and protect enrollees from accumulating tax liabilities, we proposed to require Exchanges to comply with the requirement in 1411(e)(4) of the Affordable Care Act to set a 90-day inconsistency period for instances where the applicant's attested annual household income cannot be verified by data sources for verifications of eligibility for 2027 coverage and beyond. While we acknowledged in the proposed rule that such a change may impose a burden to State Exchanges and other interested parties, particularly in consideration of work that may have been done to support the 2025 Marketplace Integrity and Affordability final rule, we stated that we believe this proposal is a reasonable exercise of the authority and discretion that Congress vested in the HHS Secretary under section 1411 of the Affordable Care Act and is necessary given the payment integrity and tax liability issues noted above. Furthermore, we stated that we believe that the long-term program integrity savings of this change outweigh the operational costs to the Exchanges, as outlined in the Collection of Information Requirements in section IV of this final rule.

With this in mind, section 1412 of the Affordable Care Act describes the process for determining eligibility for APTC using the process described in section 1411 of the Affordable Care Act. Specifically, section 1412(b)(2) of the Affordable Care Act gives the Secretary authority to define additional verification procedures where a consumer's application reflects a change in the consumer's circumstances when compared to data for the most recent taxable year that is available from the Secretary of the Treasury. In cases, as described previously, where an applicant attests to annual household income at or above 100 percent of the FPL but the IRS indicates it is below 100 percent of the FPL, we stated in the proposed rule that the Exchange would use this authority to determine whether they may be eligible for APTC using their attested annual income amount, given the `changes in circumstances' from their tax data. In cases where trusted data sources cannot verify their income under these circumstances, we proposed to specify that Exchanges on the Federal platform would follow the procedures established under 1411(e)(4) and implemented in Sec. 155.315(f)(1) through (4) to create an annual income DMI for these consumers.

Beyond statutory authority, we stated in the proposed rule that there are concerns regarding program integrity that continue to validate enhanced scrutiny for consumers whose annual household income is indicated by tax data as below 100 percent of the FPL. As we noted in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27121), a GAO study on improper payments determined our control activities, such as income verification policies, related to the accuracy of APTC calculations were not properly designed.\161\ While we originally proposed temporarily instituting this policy in part due to lack of new data around this problem, a more recent GAO study published after the 2025 Marketplace Integrity and Affordability final rule (90 FR 27121) illustrates that this continues to be a problem. This recent GAO study described issues that persist in the payment integrity protections of the Exchange, including vulnerabilities related to potential SSN misuse as well as negative impacts resulting from unauthorized enrollment changes from agents, brokers, and web- brokers.\162\ Specifically, the study identified at least 160,000 applications in PY 2024 that likely had unauthorized changes, which further illustrates the continued problem of some agents, brokers, and web-brokers making changes without the consumer's consent to the consumer's application. The study utilized 20 fictitious applicants to identify program integrity control issues, of which 18 remained improperly enrolled as of September 2025. The GAO argued that, although the results cannot be generalized to the overall population, these cases highlighted vulnerabilities in verification processes that can contribute to APTC reconciliation issues. Specifically, they stated that they highlighted weaknesses in income verification, which we seek to strengthen by finalizing this proposal. We stated in the proposed rule that we find that continued issues on the Exchange with accurately determining APTC eligibility as highlighted in this study present ongoing risks to the financial integrity for the Exchanges and create opportunities for agent, broker, and web-broker driven improper conduct. We stated that this gives further weight to the necessity of the continuation of this income verification policy beyond 2027.

\161\ GAO. (2016 Nov.). Patient Protection and Affordable Care Act: Results of Enrollment Testing for the 2016 Special Enrollment Period, GAO-17-78. https://www.gao.gov/products/gao-17-78.

\162\ GAO. (2025 Dec.) Patient Protection and Affordable Care Act: Preliminary Results from Ongoing Review Suggest Fraud Risks in the Advance Premium Tax Credit Persist, GAO-26-108742. https://www.gao.gov/products/gao-26-108742.

A notable driver of these continued payment integrity concerns, as evidenced by the 2025 GAO findings, is agent, broker, and web-broker behavior. In the 2025 Marketplace Integrity and Affordability final rule (90 FR 27121), we provided evidence connecting agent, broker, and web-broker actions to consumers misrepresenting or overestimating their income and the rise in unauthorized enrollments. We observed that some agents, brokers, and web-brokers and applicants are taking advantage of weaknesses in the Exchanges' eligibility framework to enroll consumers in coverage with APTC without their knowledge, even when the consumers are not eligible. We stated in the proposed rule that the persistence of agent, broker, and web-broker actions to undermine payment integrity highlight the need for continued changes to address improper enrollment and improve the accuracy of income attestations. In recently identified internal data, we found that nearly 80 percent of income DMIs were generated for households who worked with an agent, broker, and/or web- broker in PY 2024. Additionally, we found for PY 2025 that enrollees who worked with an agent, broker, and/or web-broker in PY 2025 generated DMIs at a rate three times higher compared to enrollees who did not work with anyone. This could be indicative of continued agent, broker, and web-broker misconduct including broad miscalculations in household income

attestation for applications assisted by agents, brokers, and web- brokers across Exchanges on the Federal platform, which would result in inaccurate APTC assessments for those households. Overall, as we stated in the proposed rule, the additional income verification outlined within this provision would help address these concerns.

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed with one minor edit to Sec. 155.320(c)(3)(vi)(C)(2) to cite paragraph (c)(3)(vi) instead of paragraph (c)(3)(iii)(D) for information on the reasonable threshold. Below, we summarize and respond to public comments received on 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.

Comment: A few commenters supported the proposal, stating it would improve program integrity and help prevent fraud, especially regarding improper enrollments. One commenter stated this regarding evidence illustrating overall fraud growing in the Exchanges. One commenter stated that it would help prevent improper subsidy payments to insurance companies. One commenter stated this policy would reduce income manipulation and helps avoid `pay and chase' recovery models.

Response: We agree that this policy will improve program integrity and help prevent potential fraud. Given the large amount of improper enrollments cited in the proposed rule and in this final rule, we agree that this policy may help limit associated improper enrollments. We also agree that this will help reduce instances of agents, brokers, and web-brokers purposely attesting to an incorrect income amount when assisting consumers through Enhanced Direct Enrollment channels for agents, brokers, and web-brokers, and help prevent improper payments of APTC associated with incorrect income attestations.

Comment: Some commenters stated support for how the proposal could save taxpayers money by helping prevent the overpayment of APTC.

Response: We agree that this policy may help ensure accurate income amounts and corresponding APTC determinations, resulting in fewer consumers being subject to large tax liabilities. Without the implementation of this income DMI, Exchanges would provide APTC for households for an entire plan year based on a household income attestation that may not be accurate. Instead, households who cannot verify their household income attestation and who receive this income DMI will only receive APTC during the DMI period as opposed to the entire plan year if their income DMI expires. In addition, this is potentially protecting these households from large tax liabilities due to APTC overpayment in cases where the DMI flags incorrect income information for someone who, instead of earning a lower income as the DMI suggests, ends up expecting to earn a higher income after the DMI is resolved. This will help protect taxpayer dollars as these households with annual household income below 100 percent FPL when they file their taxes may not be required to repay APTC per current IRS rules at 26 CFR 1.36B-2(b)(6). Households who receive this DMI will not necessarily have annual household income below 100 percent FPL when they file their taxes, but we estimate that this population is more likely to fall into this category.

Comment: One commenter recommended that we should first complete verifications for income before providing APTC payments.

Response: We acknowledge the comment and understand the desire to complete verifications for income before providing APTC payments. However, as a part of this final rule, we are not proposing or finalizing to deny APTC and CSRs during an income DMI period for this policy. Making that change would conflict with section 1411(e)(4)(B)(i) of the Affordable Care Act, which requires Exchanges to make APTC determinations based on attestation information during an inconsistency period.

Comment: Some commenters noted the need to ensure that this additional income verification process is accessible and includes clear communication. One commenter stated that it needs to include clear consumer notices, reasonable documentation standards, and accessible assistance pathways.

Response: We agree that Exchanges need to ensure clear communication and make the process as easy as possible for consumers. Currently, the Federal Exchange sends multiple notices to consumers while a DMI is open, including notices and phone calls when a consumer submits a document to resolve an income DMI, but that document is not sufficient to resolve it. Additionally, consumers can access information on open DMIs and which documents to submit in both their Eligibility Determination Notice and their HealthCare.gov account. We will also ensure all notices and other communications are updated in relation to this change. While we still believe we should finalize this proposal given the important program integrity concerns, we continue to understand the need for clear communication to make it easier for consumers to understand their DMIs and next steps.

Comment: Many commenters stated concerns that this proposal would negatively impact consumers' ability to enroll, and stay enrolled, in affordable coverage and recommended that CMS not finalize the proposal. Specifically, commenters noted that the administrative burden of submitting documents to resolve their income inconsistency is a barrier to enrollment and effectively creates a `red tape' that adds friction and delays that discourage consumers from staying enrolled. Additionally, commenters noted how the expiration of an annual income DMI in this scenario would lead to a loss of APTC, which means consumers would be forced to either drop coverage or pay unaffordable premiums. Overall, commenters believe this would make it harder for people to access and maintain affordable, quality health care.

Response: We understand that some consumers may end up having their financial assistance reduced or removed, resulting in coverage loss and financial burden. However, the income DMI process allows 90 days to submit documents, including submitting new documents if their previously submitted documents were deemed insufficient to resolve the DMI, and we previously estimated that submitting documentation will only take 1 hour based on historical document submission. Therefore, we believe that the administrative burden of submitting documents is minimal. We also emphasize the importance of consumers receiving accurate APTC eligibility to help protect households from large tax liabilities due to overpayment of APTC, which is why we believe it is important to have this income DMI in place even if some consumers unintentionally lose APTC, and as a result, QHP coverage.

Comment: Most commenters stated concerns that this will negatively impact specific consumer groups. Commenters stated that low-income consumers will be disproportionately impacted, which is compounded by the fact that they have a more difficult time than other consumers in predicting and verifying income. Commenters noted

how these consumers tend to be self-employed, small business owners, hourly and seasonal workers, farmers, and gig workers, all of which tend to have income that may make it more difficult to both estimate for the future plan year and substantiate their estimate through documentation. Additionally, some commenters noted that these lower income consumers typically are not required to file taxes, so they are more likely to not have tax data available to verify their income.

Response: We acknowledge that consumers with more unpredictable income, including low-income consumers, may have a more difficult time estimating their income. We have made improvements over the years to account for this concern and recommend that consumers utilize tools such as the income calculator tool to assist with that process.\163\ Additionally, we understand that income can change throughout the year. Consumers who struggle to estimate their income are encouraged to use the tools provided by the Exchanges to provide the best estimate they can, and we highly recommend that consumers update their Exchange application if they have reason to believe that income estimation is no longer accurate. Further, even if a consumer would normally not be required to file a tax return due to their income, once they have received APTC, they are required to file a tax return to reconcile their APTC. For those applying for APTC for the first time who were not required to file a tax return due to their income, verification through other trusted data sources may trigger this DMI and require further documentation to verify income.

\163\ https://www.healthcare.gov/income-calculator/.

For those that experience difficulty identifying documents to submit, we recommend consulting the full list of acceptable documents provided on multiple consumer notices and our website.\164\ The resources provided in the Guide to Confirming Your Income Information may be used to better understand which documents may be most appropriate for confirming current household income.\165\ For example, while some documents such as tax forms may not substantiate attested income for these consumers, many of the other documents can convey future year income such as a paystub that indicates how much is typically earned in a pay period or a self-employment ledger.

\164\ https://www.healthcare.gov/help/how-do-i-resolve-an-inconsistency/#household-income.

\165\ https://www.cms.gov/marketplace/outreach-and-education/household-income-data-matching-issues.pdf.

While we understand that some consumers may have trouble estimating and proving their income, we emphasize the importance of ensuring that APTC distributed is accurate and fully verified through this additional income verification requirement.

Comment: Some commenters stated concerns that this additional verification process would result in worse health outcomes and additional burden for consumers already experiencing health issues. Some commenters noted how this would be particularly difficult for consumers they serve at community health centers. One commenter noted how those who have cancer are already facing serious health and administrative challenges that make it particularly difficult to gather documents and deal with a complex eligibility process. Some commenters stated concerns that these consumers would ultimately not be able to resolve their income DMIs and, as a result, lose coverage due to unaffordability, which would result in worse health outcomes due to no longer having coverage while undergoing treatments.

Response: We understand that some consumers may experience more difficulty than others submitting documents to resolve their income DMI. We recommend submitting documents earlier in the 90-day period to allow more time if the original documents submitted are not sufficient to resolve the DMI. While we acknowledge these concerns and that some consumers may end up having their DMI expired and lose APTC as a result, we continue to emphasize the importance of this policy, especially to help prevent unauthorized enrollments done by some agents, brokers, and web-brokers.

Comment: Many commenters stated concerns about the costs and burdens of this proposal on Exchanges. Commenters noted 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 in order to implement and maintain this income verification policy. 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 the WFTC legislation. Some commenters expressed skepticism that this would result in taxpayer savings related to APTC for consumers whose income DMI expires and do not receive APTC for further months, with one commenter noting that 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, which are described in more detail in section IV.I. of this final rule. 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. We acknowledge concerns that State Exchanges have expressed regarding implementation costs and timelines. However, we believe that it is a crucial program integrity measure to require further income verification when a household attests to income greater than 100 percent of the FPL but trusted data sources indicates income less than 100 percent of the FPL because these households are ineligible for APTC. This income verification is a crucial step in preventing households who are not eligible for APTC from receiving any APTC, especially households with annual household income below 100 percent FPL when they file their taxes may not be required to repay APTC given IRS rules at 26 CFR 1.36- 2(b)(6). There may be circumstances where this DMI identifies an inaccurate income attestation, in which case further documentation may be needed to protect the individual from accumulating tax liabilities.

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. As illustrated later in the regulatory impact analysis section of this rule, we estimate that APTC savings will be greater than operational costs. This is especially true given that many of these consumers may have annual household income below 100 percent FPL when they file their taxes and therefore may not have to pay back the APTC they received. Absent an income DMI, they would likely receive APTC for the entire plan year whereas, with an income DMI, they would only receive APTC during the inconsistency period if income could not be verified. Finally, we emphasize that while some consumers may end up enrolling in Medicaid after APTC is terminated for failing to verify income, we see this as

a positive outcome as it would result in a consumer enrolling in coverage for which they are eligible.

Comment: Some commenters stated concerns about how this policy would impact the risk pool. Specifically, commenters stated that healthier consumers are less motivated to get insurance, particularly when they encounter administrative burdens such as additional required paperwork, while sick consumers are often more motivated to overcome administrative barriers to coverage. Commenters stated that all of this results in fewer healthy consumers entering the risk pool, which would result in increased premiums for everyone, especially those who do not receive subsidies.

Response: We acknowledge that administrative barriers can deter healthy people from enrolling. However, we continue to emphasize the need for this policy to help ensure only those truly eligible for APTC receive it. While this policy may deter some healthy people from enrolling, it will also deter many agents, brokers, and web-brokers from intentionally misreporting annual household income to secure a commission.

Comment: Many commenters stated concerns with the data and studies the proposed rule cited as proof of program integrity concerns. Commenters stated that the policy generally lacks justification, including a lack of proof of widespread unauthorized enrollments, and that the benefits of the proposal are only speculative while the harms are obvious. Some commenters noted how this policy is arbitrary. One commenter noted how the justification of preventing fraud by agents, brokers, and web-brokers is insufficient to justify implementing this proposal. One commenter noted how the high generation of income DMIs by agents, brokers, and web-brokers being an indication of fraud is an overgeneralization, as consumers assisted by them tend to have lower and more variable incomes and less health literacy.

Response: We do not agree that this policy lacks sufficient justification. A 2025 GAO audit illustrated that program integrity issues continue to exist, with 18 out of the 20 fictitious applications created to identify program integrity issues remaining improperly enrolled through September 2025.\166\ While this is a small sample size, for agents, brokers, and web-brokers who engage in fraudulent or otherwise noncompliant behaviors, the numbers would be much higher. This is compounded by some of them utilizing newer technology such as artificial intelligence that makes it more difficult for the Federal Exchange to address individual cases of fraudulent or improper enrollment. For example, some have attempted to use technology that disguises a speaker's true voice to impersonate consumers. We also continue to see concerning rates of DMIs generated by applications submitted by agents, brokers, and web-brokers. Additionally, many of these consumers with annual household below 100 percent FPL when they file their taxes may not be required to repay APTC per current IRS rules at 26 CFR 1.36B-2(b)(6). Absent this policy, these consumers may receive that APTC for the entire plan year compared to only during the 90-day DMI period. Compounded with potentially fraudulent actions by some agents, brokers, and web-brokers, we expect further income verification could help save taxpayers time and money related to APTC overpayment.

\166\ GAO. (2025 Dec.) Patient Protection and Affordable Care Act: Preliminary Results from Ongoing Review Suggest Fraud Risks in the Advance Premium Tax Credit Persist, GAO-26-108742. https://www.gao.gov/products/gao-26-108742.

Comment: Some commenters noted that this proposal is under litigation and is currently stayed in City of Columbus v. Kennedy, and that an identical policy was struck down in City of Columbus v. Cochran. These commenters stated they do not believe the proposal has meaningfully changed from what was finalized in the 2025 Marketplace Integrity and Affordability final rule. One commenter stated that this proposed rule does not properly address the sunset provision or public defenses of that rule.

Response: We believe that this proposed and final rule address concerns raised in both City of Columbus v. Kennedy and City of Columbus v. Cochran. As stated in this final rule, after the 2025 Marketplace Integrity and Affordability final rule was finalized, the Federal Exchange has continued to see improper enrollments that include suspected intentionally incorrect attestations of income. This was further illustrated through a 2025 GAO study, also published after 2025 Marketplace Integrity and Affordability final rule was finalized, that resulted in most fictitious enrollments staying enrolled through at least September 2025.\167\ Additionally, we have begun to see some agents, brokers, and web-brokers utilizing newer technology such as artificial intelligence to impersonate consumers and falsely attest to incorrect income amounts with the intention of receiving maximum subsidies. In light of this new information, we find it necessary to finalize this policy removing the sunset that was established in the 2025 Marketplace Integrity and Affordability final rule. Additionally, while the WFTC legislation eliminated the repayment caps on APTC, consumers with annual household income below 100 percent FPL when they file their taxes may not be required to repay APTC per current IRS rules at 26 CFR 1.36B-2(b)(6), further necessitating implementing this income DMI.

\167\ GAO. (2025 Dec.) Patient Protection and Affordable Care Act: Preliminary Results from Ongoing Review Suggest Fraud Risks in the Advance Premium Tax Credit Persist, GAO-26-108742. https://www.gao.gov/products/gao-26-108742.

Comment: Many commenters stated concerns related to the requirement for State Exchanges to implement this proposal. Many of these commenters noted that State Exchanges do not have the type of fraudulent behavior this proposal attempts to address because nearly all State Exchanges have expanded Medicaid, which commenters stated eliminates the incentive for inflating income. Additionally, some commenters noted that existing State systems already have robust verification and fraud safeguards, and that this policy will undermine those. Finally, many commenters stated concerns with the large cost and administrative work associated with this policy, especially in relation to other policies being proposed in this rule and upcoming in the future. Overall, these commenters believed that this policy should be optional for State Exchanges.

Response: We appreciate that State Exchanges may not have experienced the same challenges of agents, brokers, and web-brokers improperly overestimating income resulting in improper payment of APTC and participating in fraudulent behavior. We also acknowledge that many States have additional verification and fraud safeguards and appreciate the work of States to address fraud. Additionally, while the WFTC legislation eliminated the repayment caps on APTC, for households that attest to projected annual household income greater than 100 percent FPL but whose annual household income is less than 100 percent FPL when they file their taxes may not be required to repay APTC when they file their tax return pursuant to 26 CFR 1.36B-2(b)(6), so it is important to protect taxpayer dollars in this scenario by requiring further income verification.

Comment: Some commenters noted that this proposal does not address interactions with future changes that

will be made due to the WFTC legislation. One commenter stated that this rule should be delayed until those requirements, as well as other program integrity related measures in this proposed rule, go into effect to evaluate if this proposal is necessary or not.

Response: We understand concerns regarding future implementation of the WFTC legislation and how it will interact with current and future DMI processes, including those in this final rule. As stated in the proposed rule, we are currently considering how changes related to the WFTC legislation will be implemented. However, we believe that this policy is necessary before and after the implementation of changes related to the WFTC legislation given the continued occurrences of agents, brokers, and web-brokers intentionally overestimating income.

Comment: Some commenters stated that we should better address concerns with IRS data, specifically around data latency and applicants' annual household income often being very different year-to- year. One commenter requested that we rely more on current sources of income data to help streamline verification processes and enhance efficiency.

Response: We emphasize that while the Exchanges first check IRS data to determine whether they can verify a household's attested income, the Exchanges may continue to utilize additional data sources to verify income. Specifically, once IRS returns income below 100 percent of the FPL for a household whose attested annual household income is at or above 100 percent of the FPL, and the difference between IRS data and the attested annual household income is more than a reasonable threshold, the Exchanges may then check any additional data sources available to them to attempt to verify the household's attested income. In cases where a household's attested annual income cannot be verified through those additional data sources, we believe it is important for consumers to submit documents to demonstrate that their attested annual household income is accurate. Additionally, in response to the commenter who requested that we rely more on current sources of income data, we clarify that the Federal Exchange currently uses the Verify Current Income Hub but continue to allow State Exchanges flexibility in what additional data sources they use beyond IRS, subject to timeliness and accuracy standards.

Comment: Some commenters stated concerns with requirements regarding the verification process. One commenter stated that consumers who are not eligible for financial assistance should not have to undergo income verification, particularly for consumers who receive individual coverage health reimbursement arrangements (ICHRAs) and qualified small employer health reimbursement arrangements (QSEHRAs). Multiple commenters requested that we allow Exchanges to utilize a threshold rather than automatically set a DMI when attested annual household income does not match IRS data. One commenter stated frustration that States would be required to redetermine Medicaid upon an income DMI generated from this policy expiring.

Response: We appreciate these comments and would like to provide clarification on the income verification process. For consumers who did not request financial assistance, or where an Exchange determines them ineligible for financial assistance during their application, we do not set an income DMI and they will not receive APTC.

When checking data sources, including IRS, to determine whether they can verify income information, we utilize a reasonable threshold to determine whether the income information from a data source sufficiently close to the information on the application. As mentioned in the proposed and final updates to Sec. 155.320(c)(3)(iii)(A), Exchanges must use a reasonable threshold which cannot be less than 10 percent and can include a dollar amount. The Federal Exchange currently employs a threshold of 50 percent or $12,000. Therefore, in cases where data from IRS is slightly different than attested annual household income, but that difference is within a reasonable threshold, we would not generate an income DMI. Additionally, Exchanges can and should continue to use additional data sources subject to timeliness and accuracy standards as approved by HHS to attempt to verify income information in cases where IRS cannot.

Finally, when an income DMI expires, including in this scenario, consumers would have their eligibility for financial assistance decreased based on IRS data which, in this case, would result in them losing financial assistance altogether. While we believe many of these consumers may be eligible for Medicaid rather than Exchange coverage, we recommend Exchanges find ways to help those consumers apply for Medicaid; however, we are not requiring Exchanges to automatically redetermine their eligibility for Medicaid upon income DMI expiration. 13. Removal of the Requirement To Accept Attestations of Household Income When Tax Data Is Unavailable (Sec. 155.320(c)(5))

In the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), we removed the requirement for all Exchanges to accept an applicant's annual household income attestation when IRS is successfully contacted but the IRS returns no tax data. We finalized the policy to sunset after PY 2026, requiring Exchanges to resume acceptance of applicant attestations of their household income where the IRS, on behalf of the Treasury Secretary, reports that it has no data in response to a verification request under section 1411(c) of the Affordable Care Act. In the 2027 Payment Notice proposed rule (91 FR 6348), we proposed to permanently rescind the requirement under Sec. 155.320(c)(5) that Exchanges accept attestations under the current rule, in favor of requiring Exchanges, beginning with applications for coverage for PY 2027, to collect documentation from applicants to verify an applicant's household income when the IRS returns no data.

There were many reasons that we opted to temporarily pause the requirement for Exchanges to accept household income attestation when tax data is unavailable. As outlined in the 2025 Marketplace Integrity and Affordability final rule, we believed that this policy may have helped contribute to the weakening of the Exchange eligibility system, which some agents, brokers, and web-brokers took advantage of by enrolling consumers in fully-subsidized plans they may not have been eligible for, oftentimes without those consumers' knowledge. Additionally, after reassessing our reasoning for implementing the original policy, we concluded that we no longer agreed that the original income verification process, including time and effort to submit verifying documents, was punitive. Given this, we concluded in the 2025 Marketplace Integrity and Affordability final rule that the administrative burden of the full income verification process was offset by program integrity benefits that reinstating this policy would have.

We finalized this provision in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) because we recognized that the imminent program integrity concerns were being driven by the existence of fully-subsidized plans. We noted that the expiration of the enhanced subsidies coupled with the temporary program integrity requirements enacted by the

rule could alleviate the need for ongoing higher levels of program integrity policies beyond PY 2026. We stated that as the level of improper enrollments decreased in 2026, we expected the lower subsidy levels to appropriately deter future levels of improper enrollments from ever growing so high again, diminishing the returns of the temporary policies we enacted in that rule. In other words, the burden of continuing the temporary policy would reach a point at which it outweighed any benefits.

After further consideration, we proposed in the 2027 Payment Notice proposed rule to remove Sec. 155.320(c)(5), eliminating the requirement to accept an applicant's household income attestation if the IRS does not return any tax data so that for PY 2027 and beyond, Exchanges must generally follow the existing income verification process when the IRS returns no data. We proposed to continue this policy based on our statutory authority and new consideration of impacts from the WFTC legislation.

Section 1411(b)(3)(A) of the Affordable Care Act requires consumers applying for APTC to provide income information described in the Code for the tax year ending the second year preceding the plan year. However, as APTC is determined based on annual household income for the plan year for which they are applying for coverage, when the consumer applies during the open enrollment period, they provide their projected income for the plan year rather than the income from the second year preceding the plan year. Section 1411(c)(3) of the Affordable Care Act requires HHS to submit this income information provided under section 1411(b)(3)(A) of the Affordable Care Act to the IRS for verification without exception. Section 1411(d) of the Affordable Care Act then requires HHS or the Exchanges to verify information submitted on the application that is not required to be submitted to the IRS. This includes income information on “changes in circumstances” under section 1411(b)(3)(B) of the Affordable Care Act as described in section 1412(b)(2) of the Affordable Care Act. Section 1412 of the Affordable Care Act outlines the process for determining APTC. Section 1412(a) directs the Secretary of HHS in consultation with the Secretary of Treasury to establish a program for determining APTC eligibility, and section 1412(b)(2) allows the Secretary of HHS to provide procedures for determining APTC eligibility when a change in circumstance has occurred, which includes substantial changes in income and when the household was not required previously to file a tax return. Finally, section 1412(c)(2)(A) of the Affordable Care Act requires the Secretary of Treasury to provide APTC to issuers on a monthly basis for the plan year.

Historically, given the inconsistency between the statutory requirement for HHS to develop an APTC eligibility process that generally uses income verified by the IRS from the second tax year preceding the plan year, and the fact that HHS must determine eligibility for APTC for the plan year (which occurs significantly after the tax year for which income is used for verification), we have interpreted section 1412(b)(2) of the Affordable Care Act to require households to provide projected annual household income to allow the Secretary of HHS to determine whether a change in circumstance has occurred since the second tax year preceding the plan. In instances where Exchanges receive IRS data as defined in 1411(b)(3)(A) of the Affordable Care Act, the applicant's projected annual household income is compared to that IRS data to determine if it aligns (within certain thresholds) or if there has been a change in circumstance. The Secretary then determines APTC based on projected income per section 1412(b)(2) of the Affordable Care Act if a change in circumstance has occurred and if a change in circumstance has not occurred, meaning the IRS data is aligned with the projected household income, the Exchange is effectively determining APTC based on IRS data for the second tax year preceding the plan year. Furthermore, section 1412(b)(2)(B) allows for instances in which an applicant was not required to file a tax return for the second preceding year to also be considered a change in circumstance, which is one reason why IRS data may not be returned for an applicant. When the IRS cannot verify income and there is a change in circumstance, HHS or the Exchanges then turn to verify income through additional trusted data sources under section 1411(d) of the Affordable Care Act.

In a situation where neither IRS data under section 1411(c)(3) of the Affordable Care Act nor additional trusted data sources under section 1411(d) of the Affordable Care Act can verify income, HHS must then follow the process in 1411(e)(4) of the Affordable Care Act to both require Exchanges to make a reasonable effort to determine the cause of the inconsistency and then allow the applicant the opportunity to correct the inconsistency within a 90-day period. In a situation in which an applicant lacks additional documentation or other supporting evidence of their attested income within the applicable time period, HHS would generally be compelled by statute to deny eligibility for APTC and CSRs based on the inconsistency with IRS data after the 90-day period has ended. In scenarios where IRS does not return income information for a household after the Exchange completes a data request, the statutory framework just outlined establishes additional verifications. When the Exchange's attempt to receive IRS information as stipulated in 1411(b)(3)(A) of the Affordable Care Act is not successful, we stated in the proposed rule that we believe that simply considering that attested annual household income fully verified is insufficient to the authority in section 1411(d) of the Affordable Care Act to verify change in circumstance information stipulated in section 1411(b)(3)(B) of the Affordable Care Act and determine the method of verification, as it does state that the Secretary “shall verify” that information. Absent IRS data, we stated in the proposed rule that we believe that it is necessary to proceed with further verification of this information in order to comply with the requirement in section 1411(d) of the Affordable Care Act to verify it, which would be more than simply accepting attestation.

Therefore, upon further review and consistent with our discussion in the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12968), we stated in the 2027 Payment proposed rule that we believe the best method of verification to be the current established verification processes for annual income, and that accepting attestation without further verification is not compliant with the requirement to, in some way, verify the information.

Finally, the newly applicable policy from the WFTC legislation provides much stronger motivation to verify consumer income information more stringently than previous practice. Under section 71305 of the WFTC legislation, repayment caps on excess APTC payments will discontinue starting in PY 2026. Absent this proposed policy, we stated in the proposed rule that households for whom IRS returns no data would have their annual household income verified by their attestation of projected household income and, if eligible based on this income, would receive APTC for the duration of the plan year (unless there is a change in eligibility). In contrast, under this proposed policy, we stated that such household incomes

would likely be verified against additional trusted data sources and, if this verification fails, receive an income DMI that would require them to submit documents to verify their annual household income and, if they do not, would result in the loss of APTC after the 90-day DMI period. For years before 2026, section 36B of the Code provided a repayment cap on the maximum amount of excess APTC taxpayers with household income below 400 percent of the FPL were responsible for paying back when filing their Federal income tax for the year of coverage. Absent the proposed policy and with the removal of the repayment caps starting in 2026, we stated that tax filers whose APTC continues uninterrupted and whose actual household income is higher than their projected household income may have excess PTC and, if so, must pay back the full difference between their APTC and PTC, regardless of their income level. Therefore, we stated in the proposed rule that the proposed policy, which ends APTC for consumers who cannot verify their income with documentation, provides an important protection for consumers against significant tax liabilities. The Federal Exchange does have a process that allows consumers to report an unauthorized enrollment, which will allow them to avoid tax liabilities, but this requires the consumer to be aware of the improper enrollment and take actions to correct it. The Federal Exchange also permits issuers to report improper enrollments to HHS, which has the same effect of allowing the consumer to avoid tax liability for an enrollment they were unaware of and did not authorize.

We stated in the proposed rule that this is particularly important for consumers whose income is intentionally or unintentionally misrepresented by agents, brokers, web-brokers, or other intermediaries for enrollment on the Exchange. For example, we stated that many of these agents, brokers, and web-brokers intentionally estimate a household's attested income to receive the maximum amount of APTC possible in order to, even with the expiration of the enhanced subsidies, get consumers into low-cost plans that they may not otherwise be eligible for. While we previously stated in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) that we believe that unauthorized enrollments will decrease as a result of $0 benchmark plans no longer being available due to the expiration of the enhanced subsidies, we stated in the 2027 Payment Notice proposed rule that the removal of the repayment caps necessitates this policy becoming permanent to protect consumers from significant tax liabilities.

For these reasons, we stated in the 2027 Payment Notice proposed rule that we believe that the justifications for sunsetting this policy in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074) starting in PY 2027 are now outweighed by the loss of the repayment caps. We had previously stated that the removal of the enhanced subsidies, and likely subsequent decrease in unauthorized enrollments, would mean that the corresponding Exchange costs and consumer burden for additional income verification, potential negative risk pool impact, and potential loss of coverage for low-income consumers would be greater than the positive program integrity benefits of making this policy permanent. We are now of the view that the risk of tax liability for these consumers outweigh those concerns, and providing that protection is necessary even with the costs, burdens, and coverage impacts this policy could result in. We reiterated in the proposed rule that applicants whose income is not returned by IRS would benefit from other verification procedures, including the Exchange checking other data sources beyond IRS and having 90 days to submit documentation to verify their attested annual household income.

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. Further, we clarify that Sec. 155.320(c)(5) does not require Exchanges to automatically set an income DMI as soon as IRS returns no data. Likewise, it does not change requirements for the rest of an Exchange's income verification process after the Exchange checks IRS data and IRS returns no data. Rather, this policy simply removes the requirement to accept an applicant's attestation of annual household income when the IRS returns no data. Once the IRS returns no data, Exchanges should continue with the rest of its income verification process under Sec. 155.320(c)(3)(vi). Exchange income verification processes typically include checks of any additional data sources to determine whether the income information on the application can be verified before setting a DMI. Many State Exchanges check available data sources that maintain information specific to the state.

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

Comment: Many commenters supported the proposal, including many commenters who stated the proposal would reduce fraud and protect enrollees against surprise tax bills by verifying attested information.

Response: We appreciate the commenters' support and agree that this proposal will help mitigate the risk of fraud and large tax liabilities. An accurate annual household income estimate is a critical program integrity element for verifying and determining eligibility for APTC. We believe that checking annual household income against other trusted data sources through the alternative verification process are appropriate measures to ensure that an applicant's attestation of household income is accurate when a tax return is unavailable.

Comment: Some commenters supported the proposal but provided recommendations such as providing exceptions for certain situations, providing State Exchanges with implementation flexibility, ensuring Exchanges are prepared to implement this proposal without undue harm to consumers, and allowing Exchanges to check additional data sources when tax data is unavailable.

Response: We acknowledge that commenters believe that exceptions to this policy could be warranted and that they believe this policy should be optional for State Exchanges, but we do not agree as this policy ensures that every income attestation provided by households is verified either through a data source consistent with the requirements under section 1411(d) of the Affordable Care Act or through submitted documentation consistent with the requirements of section 1411(e)(4) of the Affordable Care Act. Given that the WFTC legislation eliminates APTC repayment caps, we have a responsibility to all consumers, regardless of whether they participate in an Exchange on the Federal platform or not on the Federal platform to ensure they are protected from large tax liabilities at tax filing. This requirement can reduce large tax liabilities by requiring that the income that APTC is based on is verified either through a data source or documentation provided by the consumer. Additionally, in the case that the household income is not accurate and cannot be verified, then households will only receive APTC for a limited number of months, specifically, the 90 days while the verification is pending, as opposed to

the entire year if this policy were not finalized.

We appreciate the various comments identifying how this program integrity risk looks different for State Exchanges compared to States on the Federal Exchange. We acknowledge that many State Exchanges have robust income verification processes and can integrate well with additional data sources and their State's Medicaid and CHIP programs, making it more likely that consumers' income will be verified even when tax return data is unavailable. Since the scope of verification data sources State Exchanges have access to when tax return data is unavailable is extensive, this policy should impose limited burden on State Exchanges and their consumers. We believe that the improvements to program integrity and consumer protection outweigh the costs and burden of implementing this policy.

Comment: Many commenters stated concern with this proposal, stating that it would 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. Although reintroducing income verification for applicants for whom IRS does not provide tax return data would increase the burden on some applicants, we do not anticipate this burden would deter many eligible people from enrolling as there are a multitude of documents that can verify income, and additionally, the Exchanges on the Federal platform have provided an extensive guide to verifying income with resources for households that struggle to obtain documentation.\168\ 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 as, even those these consumers will be responsible for paying back the full amount of the difference between APTC and PTC upon filing their Federal income tax returns due to the removal of the repayment caps, it is still vital that Exchanges make the most accurate determination of APTC possible to protect consumers and federal funds, including funds the Federal government must expend to investigate, identify, and recoup improper APTC payments. We acknowledge the concerns about the impact of this proposal on the risk pool and agree about the importance of maintaining a healthy risk pool, but we believe that the positive impact to program integrity and protecting consumers from tax liability outweigh any negative impacts.

\168\ https://www.cms.gov/marketplace/outreach-and-education/household-income-data-matching-issues.pdf.

Comment: Many commenters who opposed the proposal believed that when self-attestation does not match trusted data sources, this is not indicative of fraud but rather people whose income fluctuates often or dramatically enough that their projected household annual income would not match records for previous years. The commenters stated that this often occurs for consumers who are members of vulnerable populations, such as low-income consumers and those with chronic illnesses.

Response: We acknowledge the commenter's concern about the variable nature of consumer income, especially in vulnerable populations. We proposed to require Exchanges to verify household income with other trusted data sources or through documentation when a tax return is unavailable because we believe it would strengthen program integrity by improving the accuracy of eligibility determinations across all Exchanges. While we acknowledge that these consumers would ultimately have to pay back any excess APTC during tax time given the removal of the repayment caps, it is still important to program integrity both to ensure Exchanges give the best and most accurate APTC eligibility determinations possible. Additionally, removing the requirement to accept attestations of household income when tax data is unavailable will help prevent consumers from large tax liabilities.

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

Response: We recognize that certain eligible consumer groups may experience longer document submission periods during the verification and data matching process and note that the 1-hour estimate is an average. However, all consumers will still have 90 days to submit documentation to verify their projected household income. We provide a robust list of acceptable documents \169\ that households can submit to resolve their income DMIs, and this list is included in multiple consumer notices and on the CMS website. We recommend that consumers for whom more common documents like paystubs and tax forms are either not available or are inaccurate submit one of many other suggested income documents that may be more available and accurate.

\169\ https://www.healthcare.gov/help/how-do-i-resolve-an-inconsistency/#household-income.

Comment: Some commenters stated concern that the proposal would harm low-income consumers. They suggest shifting the focus of provisions to address the underlying issue of fraudulent activity by some agents and brokers.

Response: As mentioned earlier in this section, an accurate annual household income estimate is a critical program integrity element for verifying and determining eligibility for APTC. While HHS is actively addressing unauthorized enrollments involving noncompliant actions by agents, brokers, or web-brokers, we cannot ignore program integrity risks presented by consumer-submitted information. We believe it is important to institute policies that address all program integrity concerns related to all program participants, and not just agents, brokers, and web brokers. This policy will also make it less likely that actions by non-compliant agent, brokers, or web brokers result in undetected improper enrollments.

Comment: Some commenters noted how this proposal is under litigation and is currently stayed in City of Columbus v. Kennedy, many of whom stated they do not believe the proposal has meaningfully changed from what was finalized in the 2025 Marketplace Integrity and Affordability final rule. One commenter stated that this proposed rule does not properly address the sunset provision or public defenses of that rule.

Response: We understand that this specific policy has been scrutinized in the past and understand why that raises concerns. However, we believe that this proposed and final rule address concerns raised in Columbus v Kennedy.

As described earlier in this section, the WFTC legislation eliminates the excess APTC repayment caps that previously limited many consumers' financial liability when their APTC amount exceeded the amount of PTC they were eligible for based on their actual annual income. Without these caps, consumers who receive excess APTC may be required to repay a large amount. This change, which starts with PY 2026, makes accurate income verification critically important for plan years beyond 2025, which is when this

policy was established to sunset in the 2025 Marketplace Integrity and Affordability final rule. For this reason, and considering the importance of determining accurate APTC amounts and related program integrity considerations of potential improper enrollments or plan switches by agents, brokers, and web-brokers, we find it necessary to finalize this policy removing the sunset provision established in the 2025 Marketplace Integrity and Affordability final rule.

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

Response: We clarify that if IRS data does not immediately verify a consumer's attestation of annual household income, Exchanges would go through the rest of the verification and data matching process. Specifically, Exchanges would check other available income data sources and, if those cannot verify the attested income, generate an income DMI and provide 90 days for the applicant to provide documentation substantiating their attested income. During the 90-day period, all members of the household would be determined temporarily eligible for APTC based on their application attestation (if otherwise eligible) and may use the APTC towards QHP coverage. It is only after that 90-day period has passed that the applicant, if the inconsistency is not verified, would have their APTC removed and be determined ineligible for APTC. Given this, we highly recommend consumers submit documents to verify their income during that 90-day period to ensure they maintain their APTC and health coverage. 14. Premium Payment Threshold (Sec. 155.400)

In the 2027 Payment Notice proposed rule (91 FR 6349), we sought comment on whether HHS should permanently discontinue regulatory options allowing QHP issuers to implement a fixed-dollar and gross percentage-based premium payment threshold for PY 2027 and beyond. In the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), we finalized for PY 2026 that issuers are only able to implement a net percentage-based premium threshold for PY 2026 and, effective January 1, 2027, issuers will be permitted to implement the fixed-dollar threshold and either the net or gross premium percentage- based thresholds.

In the 2017 Payment Notice (81 FR 12271 through 12272), in which HHS established the option for issuers to implement a percentage-based premium payment threshold, we received comment requesting that issuers be allowed to establish a fixed-dollar threshold. At that time, we did not consider implementing a fix-dollar threshold because there can be cases where, due to the payment of APTC on behalf of an enrollee, even a low, flat-dollar amount could represent a large percentage of an enrollee's portion of the premium (81 FR 12272).

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

We stated in the 2025 Marketplace Integrity and Affordability final rule, which was published after the 2026 Payment Notice, that, due to program integrity concerns stemming from the enhanced subsidies, offering these optional threshold flexibilities to issuers could enable a consumer to stay enrolled in a plan they are unaware of after payment of binder. At that time, we finalized modifications to Sec. 155.400(g) that paused through the end of PY 2026 QHP issuers' ability to implement a fixed-dollar or gross percentage-based premium payment threshold. We specified that QHP issuers would regain authority to implement a fixed-dollar or gross-premium threshold after December 31, 2026. We explained that allowing the provision to sunset on December 31, 2026, would address the urgent improper enrollment concerns previously noted without permanently dismantling these premium threshold options.

Overall, HHS observed an increase in the number of unauthorized enrollment (UE) complaints made in 2025 compared to 2024; 229,734 were made in 2024 vs. 341,906 in 2025. However, although HHS continues to see noncompliant behaviors resulting in improper enrollments, we stated in the proposed rule that we believe that program integrity measures implemented over the past year, in addition to the expiration of enhanced APTCs that took effect on January 1 of this year, are likely to lead to a decrease in the number of UE complaints received. Data from the beginning of this year already demonstrate a substantial decrease, with 46,099 UE cases reported in January 2025 compared to 24,053 for January 2026, and this trend is likely to continue.

We have also continued working to implement policies to quickly resolve cases where a consumer may be dually enrolled in Medicaid and a QHP with financial assistance without their consent (referred to as “Medicaid UEs”). We have also implemented multiple data cleanup efforts and have worked with issuers to identify and resolve UEs. We continue to monitor complaints received and UEs resolved to ensure that program integrity concerns continue to decrease.

However, in addition to erroneous and improper enrollment data, we stated in the proposed rule that there is evidence that consumers in many instances are unaware that they remain in coverage. For example, in a recent internal analysis of claims data from 2019 through 2024, we found that among silver plans offered on- and off-Exchange, a significantly higher percentage (34 percent from PY 2023 through PY 2024) of on-Exchange silver enrollments were associated with no claims as compared to off-Exchange silver enrollments (18 to 23 percent from PY 2019 through PY 2024) across all years examined, with the greatest difference occurring in PY 2023 and 2024. This trend was reflected in the percentage of zero claim enrollments in each metal level and was even reflected among enrollees in 94 percent of CSR plans, where out- of-pocket costs are mostly covered by insurers, and where utilization is generally expected to be higher as compared to plans with lower or no cost-sharing assistance available. In addition to this, as we explained in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27140), continued access to zero-dollar bronze plans after the application of APTC increases the risk of fraudulent enrollments and consumers continuing to be enrolled in coverage they do not

want. Despite the discontinuation of enhanced APTCs, it is estimated that 27 percent of enrollees can select a PY 2026 QHP with an after- APTC premium of $0,\170\ and 60 percent can select a PY 2026 QHP with an after-APTC premium of less than $50.\171\

\170\ Source: Internal CMS data.

\171\ CMS, (2025, Oct. 30). Plan Year 2026 Marketplace Plans & Prices Fact Sheet. available at https://www.cms.gov/newsroom/fact-sheets/plan-year-2026-marketplace-plans-prices-fact-sheet.

The FFE does not collect data from issuers on whether they have implemented a premium payment threshold policy (nor the threshold type), but we have observed that of all auto re-enrolled consumers who had a $0 premium in 2024 but who newly had a non-zero premium in 2025 (1,831,739 consumers), 9.4 percent owed >$0-$5, 9.9 percent owed >$5- $10, while 27.6 percent of consumers owed >$10-$25, and 53.2 percent of consumers owed >$25.\172\ We stated in the proposed rule that this suggests that while these premium thresholds prevent some consumers from being placed in a grace period, they likely also exacerbate the problem of consumers unknowingly remaining in coverage they did not or no longer want, since many consumers have premiums that fall below the threshold and could avoid delinquency without making paying premiums. With the expiration of enhanced subsidies for PY 2026 and the continued availability of zero-dollar and lower cost plans after application of APTC, we stated in the proposed rule that we are of the view that it may be reasonable and necessary to continue to limit the fixed-dollar and gross-premium percentage-based thresholds beyond PY 2026.

\172\ Source: Internal CMS enrollment data. CMS reviewed net premium changes for consumers who had a $0 premium for PY2024 and a subsequent >$0 premium for PY2025. The analysis shows how many consumers had net premiums of >$0-$5, >$5-$10, >$10-$15, >$15-$20, >$20-$25, >$25-$50, >$50-$100, >$100-$300, >$300-$500, and >$500.

Under the 2025 Marketplace Integrity and Affordability final rule, we finalized that issuers would re-gain the authority to implement fixed-dollar and gross-premium percentage-based thresholds after the end of the 2026 PY. This policy responded to commenter concerns that rescinding QHP-issuer flexibility to implement fixed-dollar and gross- premium percentage thresholds could create barriers to coverage for low-income enrollees who struggle to pay premiums and that consumers with chronic conditions might be able to utilize either the gross- premium percentage-based or fixed-dollar thresholds to avoid coverage gaps. It also acknowledged comments from State Exchanges and State- specific advocacy organizations that limiting this flexibility was unnecessary in States served by State Exchanges that experienced lower rates of improper enrollments.

While we recognized in the proposed rule the additional flexibility these policies might provide to consumers who may struggle in some months to pay their full share of their premium, we stated that we still believe it may be necessary to limit flexibilities to ensure that enrollees do not remain in coverage for extended periods of time without paying at least some of the premium owed. We stated in the 2025 Marketplace Integrity and Affordability final rule that this policy increases the risk that improper enrollments remain undetected, since the enrollee is less likely to receive invoices, and a delinquency or termination notice alerting them to the improper enrollment in the case that the individual or entity submitting the improper enrollment used false contact information. In addition, we stated that an enrollee who stops paying premiums in the belief that this would lead to termination of coverage may instead find that the coverage has continued for several months due to the issuer having implemented a fixed-dollar or gross percentage-based premium threshold, with the additional risk that the enrollee has accumulated a large amount of debt if the issuer has adopted a gross premium percentage-based threshold and the enrollee's gross premium is much higher than the de minimis $10 fixed-dollar threshold. We noted that, in contrast, this is not the case with the long-established net percentage-based threshold, under which enrollees must always pay at least some premium to avoid delinquency or loss of coverage.

As such, in the proposed rule, we stated that we are concerned that allowing the rescission of the fixed-dollar and gross-premium percentage-based threshold flexibilities to sunset for PY 2027 may exacerbate the risks we have outlined. We sought comment from interested parties on whether we should take no regulatory action and allow the policies to sunset at the end of PY 2026, or whether we should amend Sec. 155.400 to rescind these policies for another fixed period of time or permanently in the interest of maintaining program integrity, as the fixed-dollar and gross percentage-based thresholds may hinder efforts at program integrity by allowing consumers to remain enrolled in unwanted coverage after payment of binder. In addition, we sought comment on whether it would be appropriate to grant State Exchanges the flexibility to adopt one or both of these thresholds, even if they remain unavailable for Exchanges on the Federal platform. We also sought comment on any other feedback interested parties may have on other changes HHS can make to the premium payment threshold policy.

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 for all Exchanges the removal of the fixed-dollar and gross-premium threshold flexibilities. We summarize public comments received on the comment solicitation below.

Comment: Most commenters opposed rescinding the fixed-dollar and gross premium percentage-based thresholds and stated that allowing issuers to treat de minimis premium shortfalls as paid helps prevent disproportionate coverage loss for consumers. Such commenters also stated that rescission of the threshold options will put more consumers at risk of delinquency or loss of coverage, particularly women with low incomes, other financially vulnerable populations, and consumers with chronic conditions.

Response: We acknowledge that the additional thresholds may prevent coverage loss for some enrollees, but as we noted in the proposed rule, they also permit issuers to keep consumers enrolled in coverage while they owe unpaid premiums over an unreasonable period of time. We continue to observe high levels of UE on the Exchanges, and as we noted in the proposed rule, these thresholds may exacerbate this problem by enabling improper enrollments to go undetected for longer periods of time. As a result, we believe it is appropriate to finalize a repeal of the fixed-dollar and gross premium percentage-based thresholds beyond PY 2026.

Comment: Some commenters stated that keeping the fixed-dollar and gross premium percentage-based thresholds would reduce administrative burden for State Exchanges and issuers, such as the administrative cost associated with the pursuit and collection of unpaid premiums, and delinquency and termination processes. Some commenters also stated that this would reduce administrative burden of having to terminate consumers over small payment errors.

Response: While we acknowledge that there are costs associated with pursuing unpaid premiums, addressing and preventing persistent UEs is a priority for HHS because they result in increased Federal expenditures in identifying and correcting UEs. Additionally, consumers fraudulently enrolled in coverage with

the fixed dollar and/or gross premium percentage-based thresholds may be receiving the benefit of APTC for a longer period of time due to these policies. Although APTC payments are eventually recouped if the improper enrollment is identified and reported to HHS, investigating improper enrollments and recouping APTC payments to issuers still increases Federal expenditures.

Comment: Several commenters stated that they did not believe that thresholds contributed to UEs, but that agent/broker behavior contributed to UEs, and that limiting the thresholds would not address this issue. Commenters also stated that requiring binder payment to be paid in full before these thresholds went into effect is a program integrity measure.

Response: We agree that requiring full payment of binder under this provision is an important program integrity measure. However, it is not sufficient given that issuers have told CMS, both in the context of rescissions and unauthorized reporting processes, that they see evidence of agents, brokers, and web-brokers making binder payments on behalf of enrollees. As a result, enrollees might not detect an improper enrollment and may remain enrolled in coverage while staying within the gross and/or fixed dollar thresholds.

Comment: One commenter stated that CMS has not provided evidence that premium payment thresholds contribute to improper enrollment, but stated that permitting the new threshold options could contribute to improper enrollment, and that rescinding these flexibilities was imposing concrete harms to address only hypothetical problems--an approach the commenter stated was roundly condemned by the courts in both City of Columbus cases.

Response: We do not agree and point to the improper enrollment and claims data provided in the preamble as evidence that consumers may unknowingly remain in coverage. As detailed in the preamble to this rule, we have provided substantial improper enrollment and claims data supporting our concern that consumers may unknowingly remain in coverage under premium payment threshold policies that allow coverage to continue without a meaningful premium contribution. Specifically, the preamble cites UE complaint trends showing that UE complaints reached historically elevated levels during the period of enhanced APTC availability. In 2024, there were 229,734 UE complaints, which increased to 341,906 UE complaints in 2025. Complaints have only recently begun to decline, with January 2026 UE cases (24,053), which is down substantially from January 2025 UE cases (46,099). Zero-claims enrollment data shows that approximately 34 percent of on-exchange silver enrollments from PY 2023 through PY 2024 were associated with no claims, which we have identified as a potential indicator of fraudulent or UE activity. In addition, almost 20 percent of returning enrollees had a net premium of $10 or less, creating conditions under which fixed-dollar or gross percentage-based thresholds that could allow improperly enrolled individuals to remain in coverage for the entire plan year Taken together, this data supports our determination that the program integrity risks associated with fixed-dollar and gross percentage-based thresholds are concrete and documented--not hypothetical--and that the harms associated with rescinding these threshold options must be weighed against the risk of allowing improper enrollments to persist undetected, during which Federal APTC expenditures continue to accrue on behalf of consumers who may not have knowingly enrolled in coverage.

Comment: Some commenters stated that issuers, given their specific knowledge of local market dynamics, plan designs, and varying State billing capabilities, are best positioned to establish and update appropriate thresholds, and that a uniform Federal standard fails to account for the wide variation in premiums and payment infrastructure across States.

Response: We acknowledge that issuers have specific knowledge of market conditions in their service areas. However, the net premium percentage-based threshold ensures consistent program integrity standards across the Exchanges and prevents the inconsistencies in payment obligations that can arise when thresholds vary by issuer. We will continue to evaluate whether a more flexible, issuer-driven approach may be appropriate in future rulemaking, considering both program integrity and consumer protection considerations.

Comment: One commenter stated that dental plans have considerably lower premiums than medical plans and this flexibility will allow issuers to implement the appropriate type of threshold.

Response: We acknowledge that standalone dental plan (SADPs) tend to have lower premiums than medical plans, but do not believe that the flexibilities allowed by the fixed-dollar and gross premium percentage- based thresholds outweigh the risk of increased or continued levels of improper enrollments that these thresholds allow.

Comment: One commenter stated that the fixed-dollar and gross premium percentage-based threshold policies also help stabilize the risk pool, as those with higher health needs are more likely to maintain coverage while those in better health may be more likely to allow coverage to lapse.

Response: While we agree that healthy individuals may be more likely to drop coverage over time and therefore may be more likely to remain in the risk pool longer when given more generous threshold policies, we do not agree that this justifies retaining the fixed- dollar and gross premium percentage-based thresholds. As documented in the preamble, a significant share of enrollees retained under these more generous threshold policies may be improperly or unknowingly enrolled, and although retaining enrollment for such individuals may have some minor positive impact on the risk pool, this does not outweigh the harms to program integrity this policy will address. We believe the net premium percentage-based threshold promotes a risk pool composed of individuals who are knowingly and actively enrolled--the appropriate foundation for long-term market stability.

Comment: Several commenters stated that other proposals in this rule such as requiring individuals to proactively confirm enrollment, payer enforcement mechanisms, and proposals to monitor third party payments would better address the issue of UEs.

Response: We appreciate commenters' suggestions on additional ways to address the problem of UEs on the FFE, and as we implement the longer-term requirements for consumers to confirm their enrollment,\173\ we intend to explore further payer enforcement mechanisms and methods of monitoring third party payments, as well as other ways in which the FFE can reduce the prevalence of misconduct in the future. However, as noted in the preamble to this section, we continue to believe that ending the fixed dollar and gross percentage- based premium thresholds will help address the problem of improper enrollments, and thus we believe it is appropriate to finalize this policy.

\173\ As required by Section 71303 of the WFTC legislation.

Comment: One commenter stated that they support the collection of additional data about the extent to which these voluntary fixed dollar and/or gross percentage-based premium payment thresholds have been deployed and the

impact of such threshold on the market, both in terms of retaining individuals enrolled in coverage, as well as possible tax and/or premium liabilities.

Response: We appreciate the commenter's suggestion and intend to continue to collect data on the impact of premium thresholds on the FFEs.

Comment: Several commenters stated that State Exchanges should be granted the flexibility to set their own premium payment threshold policy and decide whether to allow issuers to adopt such flexibilities based on their local market conditions. Commenters also stated that State Exchanges do not have the same levels of UEs and other fraud that the FFE has seen.

Response: While we agree that State Exchanges have seen fewer fraudulent enrollments, we still maintain that the continuing number of improper enrollments represent a serious risk to program integrity. Until HHS observes a substantial and sustained decrease in the overall level of improper enrollments, rescinding the fixed and gross percentage thresholds for all Exchanges is necessary to ensure that this problem is not exacerbated. We note that State Exchanges would maintain the flexibility to adopt a net premium percentage-based threshold (which is not being rescinded) or not, based on their policy goals and market needs.

We will continue to work with State Exchanges to monitor improper enrollments.

Comment: One commenter stated that CMS should only allow issuers to adopt a net percentage-based threshold because a fixed-dollar threshold policy may strain the consumer experience by opening the opportunity for certain enrollees (with a premium less than the fixed threshold amount) to stay active for multiple months, then enter into the grace period when finally exceeding the threshold, and that gross premium percentage-based threshold may confuse members since the enrollee would likely focus their attention to their responsibility amount rather than the total premium.

Response: We agree with this commenter that a fixed-dollar threshold policy may allow a consumer who has not paid their full premiums to remain in coverage for multiple months. Similarly, a gross premium percentage-based threshold may create confusion for enrollees who are focused on their net premium responsibility--the amount they are required to pay after application of APTC--rather than the total gross premium amount, potentially leading to misunderstandings about their payment obligations and coverage status. For these reasons, we are finalizing the rescission of both the fixed-dollar and gross premium percentage-based threshold options and retaining only the net premium percentage-based threshold, which ensures that enrollees must always pay at least a proportional share of their actual premium obligation to maintain coverage and provides a clear, consistent, and uniform standard across all plan types and income levels.

Comment: Several commenters supported rescinding the fixed-dollar and gross premium percentage-based thresholds because only allowing the net premium percentage-based threshold would improve consistency and program integrity by ensuring that payment requirements reflect the consumer's actual financial responsibility. Commenters also stated that allowing fixed-dollar and gross premium percentage-based thresholds was inappropriate due to the large amount of improper enrollments. Commenters further stated that issuers have a perverse financial incentive to tolerate improper enrollment since they would continue to receive APTC on behalf of the enrollee. Commenters also stated that rescission of the fixed-dollar and gross premium percentage-based thresholds would also protect those who have been fraudulently enrolled by reducing the likelihood that they remain enrolled and accumulate tax liabilities.

Response: We agree with commenters that rescinding both the fixed- dollar and gross premium percentage-based thresholds is the appropriate course of action to promote program integrity and protect consumers. The net premium percentage-based threshold most accurately reflects each enrollee's actual financial obligation after application of APTCs, ensuring payment requirements are clear, uniform, and directly tied to the consumer's true financial responsibility. We also acknowledge commenters' observations that issuers would continue to receive Federal APTC payments regardless of whether an individual is knowingly enrolled. We agree that rescinding these threshold options will help protect consumers who have been fraudulently enrolled without their knowledge by increasing the likelihood that improperly enrolled individuals--particularly those who were enrolled with false contact information--can identify that they were improperly enrolled which would ultimately reduce the risk that they accumulate tax liabilities as a result of APTC payments made on their behalf if they were not eligible for QHP coverage or APTC. For these reasons, we are finalizing the rescission of both the fixed-dollar and gross premium percentage- based thresholds for PY 2027 and beyond. We will continue to work with issuers to promote continued monitoring of improper enrollments.

Comment: One commenter requested that CMS also consider allowing consumers who experience an unexpected payment malfunction that results in termination of their policy to have that policy reinstated if that malfunction was the result of administrative or billing issues from the financial institution.

Response: While this comment is out of scope for this final rule because it does not relate to the specific proposals included in the proposed rule, we appreciate the feedback and may consider these recommendations for future rulemaking. 15. Extend the Removal of the 150 Percent FPL SEP Beyond Plan Year 2026 (Sec. 155.420(d)(16))

To align Exchange regulations with section 71304 of the WFTC legislation, in the 2027 Payment Notice proposed rule (91 FR 6351), we proposed to remove Sec. 155.420(d)(16) such that all Exchanges will continue to be prohibited from offering the 150 percent FPL SEP after PY 2026. In addition to removing Sec. 155.420(d)(16), we also proposed conforming amendments to remove Sec. Sec. 155.420(a)(4)(ii)(D) and 155.420(b)(2)(vii), and to revise Sec. 155.420(a)(4)(iii).

The “150 percent FPL SEP” refers to a monthly SEP that was available, at the option of the Exchange, to individuals who were eligible for APTC and who had household income no greater than 150 percent FPL. This SEP enabled qualified individuals to enroll in an Exchange plan at any time and to change their Exchange plan up to once per month. We originally established the 150 percent FPL SEP in regulation, at the option of the Exchange, in part 3 of the 2022 Payment Notice (86 FR 53412). At the time, we stated that the primary objective of the 150 percent FPL SEP was to “make affordable coverage available to more consumers,” by making it easier for individuals to access the enhanced tax credits provided by section 9661 of the ARP (86 FR 53432). As finalized in part 3 of the 2022 Payment Notice, a consumer was required to have an applicable percentage of zero, meaning that they had access to a silver plan with a zero-dollar monthly premium after the application of APTC, to qualify for the SEP. In the 2025 Payment Notice (89 FR 26218), we removed the requirement that an individual have an applicable percentage of zero to qualify for the 150

percent FPL SEP. In this rulemaking, we cited a commitment to “ensuring that affordable Exchange coverage is available for individuals with lower household incomes,” and required that an individual be eligible for APTC to qualify for the SEP (89 FR 26320).

In the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), we finalized a policy that prohibited Exchanges from offering the 150 percent FPL SEP, effective from August 25, 2025, until the end of PY 2026, at which time the prohibition would “sunset” and Exchanges could begin offering the 150 percent FPL SEP again. We stated that pausing the availability of the 150 percent FPL SEP was necessary due to a rise in improper enrollments, including misuse of the SEP by agents, brokers, and web-brokers (90 FR 27114). Exchanges would have been permitted to begin offering the 150 percent FPL SEP again in PY 2027, and this pause was finalized in part due to significant concerns raised by commenters regarding the impact of a wholesale repeal of the SEP on low-income Americans who properly use this SEP pathway (90 FR 27114). We reasoned that after the enhanced subsidies expired and individuals were exposed to greater premium costs, the ability of individuals or actors on behalf of individuals to improperly enroll would be diminished, mitigating the risk of allowing Exchanges to offer the 150 percent FPL SEP (90 FR 27114).

The 2025 Marketplace Integrity and Affordability final rule was finalized on June 25, 2025. Shortly thereafter, on July 4, 2025, the WFTC legislation was signed into law. Section 71304 of the WFTC legislation amended section 36B of the Code such that a plan is not considered a QHP, and therefore no PTC is allowed for coverage under the plan, if the plan is enrolled in through an SEP that is based solely on the basis of the relationship of an individual's expected household income to the FPL and not on a change in circumstance (an “income-based SEP”). This provision is effective January 1, 2026.

Section 1411(a)(2)(A) of the Affordable Care Act provides that, for an individual who is claiming APTC or CSRs, the Secretary must determine whether the individual meets the income and coverage requirements of section 36B of the Code and section 1402 of the Affordable Care Act, respectively. HHS has interpreted section 1411(a)(2)(A) of the Affordable Care Act to require an Exchange to align its APTC eligibility rules with the Code's PTC eligibility rules. Therefore, HHS interprets section 71304 of the WFTC legislation to prohibit an Exchange from paying APTC for anyone enrolled in a plan if any individual enrolls in the plan through an income-based SEP, like the 150 percent SEP, that is not in connection with the occurrence of an event or change in circumstances specified by the Secretary.

Under the regulations finalized in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27074), Exchanges would have been permitted to resume offering the 150 percent FPL SEP beginning in PY 2027. However, due to requirements established by section 71304 of the WFTC legislation, we stated in the proposed rule that we have determined that permitting Exchanges to offer the 150 percent FPL SEP would provide no additional value and could potentially harm consumers. Throughout prior rulemaking on this topic, we have consistently stated that the primary goal of the 150 percent FPL SEP was to increase consumers' access to affordable coverage (see 86 FR 53432 and 89 FR 26320). We stated in the proposed rule that because consumers who enroll through the 150 percent FPL SEP are no longer allowed APTC for their coverage, permitting Exchanges to offer the 150 percent FPL SEP can no longer achieve this stated objective. Additionally, permitting Exchanges to offer the 150 percent FPL SEP could harm APTC-eligible consumers who enroll through the SEP, as section 71304 of the WFTC legislation prohibits payment of APTC to a plan if any enrollee in that plan enrolled through an income-based SEP.

For the reasons described in this section, we proposed to eliminate the “sunset” of the prohibition on Exchanges offering the 150 percent FPL SEP after PY 2026. To accomplish this, we proposed to remove the paragraph currently at Sec. 155.420(d)(16). We further proposed conforming amendments to remove the paragraphs currently at Sec. 155.420(a)(4)(ii)(D) and Sec. 155.420(b)(2)(vii), which relate to plan category limitations and effective dates for the 150 percent FPL SEP, respectively. Finally, we proposed a conforming amendment to Sec. 155.420(a)(4)(iii), related to plan category limitations, to remove a reference to the 150 percent FPL SEP.

We sought comment on this proposal.

After consideration of comments and for the reasons outlined in the proposed rule and this final rule, including our responses to comments, we are finalizing this policy as proposed. We summarize and respond to public comments received on the proposal to extend the removal of the 150 percent FPL SEP below.

Comment: Many commenters stated support for our proposal to extend the removal of the 150 percent FPL SEP beyond PY 2026. Commenters agreed with CMS' analysis that section 71304 of the WFTC legislation made the SEP much less valuable to consumers, given that consumers who utilized the SEP would not be eligible for APTC. Commenters further stated that Congress had sent a clear message that the 150 percent FPL SEP and other similar income-based SEPs needed to be discontinued.

Response: We agree with commenters that continuing to prohibit the 150 percent FPL SEP is a sensible policy choice, given that APTC is no longer allowed for consumers who enroll through such SEPs. We also agree that while the WFTC legislation did not expressly prohibit Exchanges from offering the 150 percent FPL SEP, we believe that removing Exchanges' ability to offer the 150 percent FPL SEP likely aligns with Congressional aims.

Comment: Several commenters stated support for our proposal to eliminate the 150 percent FPL SEP, observing that the SEP had previously made it easier for noncompliant agents and brokers to enroll consumers or change their plans without their knowledge. Commenters stated that eliminating the SEP would improve program integrity.

Response: We agree with commenters that the 150 percent FPL SEP, in combination with the fully-subsidized benchmark plans available under the American Rescue Plan of 2021 \174\ and the Inflation Reduction Act of 2022,\175\ enabled significant improper enrollment.

\174\ Public Law 117-2.

\175\ Public Law 117-169.

Given that APTC is no longer permitted for enrollments through the 150 percent FPL SEP, we do not believe that permitting Exchanges to offer the SEP again would be significantly detrimental to program integrity. However, as noted in the preamble of this section, the 150 percent FPL SEP now offers very limited value to consumers, and we are therefore finalizing our proposal to no longer permit Exchanges the SEP.

Comment: Several commenters stated support for eliminating the 150 percent FPL SEP, because the SEP had previously contributed to adverse selection. Commenters stated that the ability of individuals to wait until they had health needs to enroll, or to select a more generous plan if their health needs increased, inhibited issuers' ability to predict claims, leading to volatility in pricing and higher overall

premiums. One commenter noted that the adverse selection driven by this SEP induced issuers to set much higher rates for higher-value plans, while allowing narrower network, lower-value plans to set lower rates.

Response: We agree with commenters that the 150 percent FPL SEP previously contributed to adverse selection, given that it permitted consumers to newly enroll in coverage or to change plans as their health needs changed. We appreciate commenters sharing the ways in which the uncertainty caused by this SEP led to higher and distorted plan pricing.

Comment: Some commenters supported eliminating the 150 percent FPL SEP because they believe that other SEP opportunities are sufficient to meet consumers' needs, especially given that States' work to “unwind” from the Families First Coronavirus Response Act (FFCRA) continuous enrollment condition and to return to regular eligibility and enrollment processes in Medicaid and CHIP has concluded.

Response: We agree with commenters. The 150 percent FPL SEP was created in part to provide additional enrollment opportunities for consumers who lost Medicaid after the end of the FFCRA continuous enrollment condition, given the potentially high volume of terminations and the possibility that many consumers would not receive or not understand communications from their State Medicaid Agency (86 FR at 53434). Given that, following the end of the FFCRA continuous enrollment condition, States were required to achieve compliance with Federal renewal timeliness requirements by December 2025, we do not believe that continuing to offer a monthly SEP like the 150 percent FPL SEP is warranted. Consumers who lose Medicaid or CHIP qualify for an SEP for loss of minimum essential coverage under Sec. 155.420(d)(1)(i). Under the special rule at Sec. 155.420(c)(6), Exchanges have the option to permit consumers to access this SEP for 90 days following their loss of Medicaid or CHIP coverage, rather than the 60 days permitted for most other triggering events.

While we agree with commenters that SEPs other than the 150 percent FPL SEP are sufficient to meet consumers' needs, we also reiterate that we do not believe that permitting Exchanges to offer the 150 percent FPL SEP again would provide a meaningful enrollment opportunity given that APTC is no longer permitted for consumers who enroll through the SEP.

Comment: Some commenters supported eliminating the 150 percent FPL SEP to support continuous, year-round enrollment. Commenters also noted that eliminating the SEP simplifies program rules and reduces consumer confusion.

Response: We agree with commenters that monthly SEPs like the 150 percent FPL SEP are detrimental to Exchanges' ability to promote continuous, year-round enrollment. We also agree that the recission of the SEP provides Exchanges with an opportunity to re-emphasize the importance of the annual open enrollment period, of maintaining continuous enrollment, and of understanding what SEPs are available to individuals who experience a change in circumstance.

Comment: One commenter supported the elimination of the 150 percent FPL SEP because they believed that CMS lacked the statutory authority to offer the SEP.

Response: We appreciate the commenters' support for our proposal and acknowledge there are limits to our statutory authority to establish SEPs. We believe that SEPs should generally be reserved for changes in circumstance, rather than based solely on an individual's income. In the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12982), we noted that the statute requires a specific set of SEPs that focus on giving people an opportunity to enroll mid-year if they experience a change in their life circumstances, such as a move or the loss of job. We further noted that, in contrast, the 150 percent FPL SEP allows people to enroll at any time during the year based on their existing income, not a change in their income. Like this commenter, commenters to the 2025 Marketplace Integrity and Affordability proposed rule (90 FR 12982) also stated that the 150 percent FPL SEP departed from the ACA's structure to reserve SEPs for those experiencing life events necessitating a coverage change. However, in the 2025 Marketplace Integrity and Affordability final rule (90 FR 27147), we concluded that given the substantial uncertainty over the future of the Exchanges and individual health insurance market, we did not believe a permanent repeal of the 150 percent FPL SEP was appropriate and, instead, finalized a pause to best balance the urgent need for program integrity with the long-term desire for enrollment efficiencies. In this final rule, we are removing this pause and, without further defining the limits of our statutory authority in establishing SEPs, believe removing the pause better aligns with the overall structure and purpose of SEPs.

Comment: One commenter stated their support for the elimination of the 150 percent FPL SEP because it promotes alignment of SEP standards across on-Exchange and off-Exchange markets.

Response: We agree that the elimination of the 150 percent FPL SEP promotes alignment of SEP standards across on-Exchange and off-Exchange markets, given that the 150 percent FPL SEP was not available off- Exchange.

Comment: Several commenters opposed our proposal to eliminate the 150 percent FPL SEP. Commenters stated concerns that eliminating the SEP would disproportionately negatively impact individuals with low or volatile incomes, individuals experiencing frequent changes or gaps in employment, individuals with frequent changes to their household composition, individuals with housing instability, and individuals in States that have not expanded Medicaid by removing an important “safety net” enrollment opportunity. Commenters further stated concern that eliminating the SEP would remove a pathway to coverage for individuals who lose Medicaid or CHIP coverage, particularly given the possibility of noticing delays and of consumer confusion due to the fact that Medicaid and CHIP permit year-round enrollment. Commenters stated that they believed that this provision, particularly when considered in conjunction with a shorter OEP and increased SEP verification, would make it more difficult for consumers to access coverage. Some commenters noted that Exchanges should be permitted to offer the 150 percent FPL SEP because disallowing the SEP would result in consumers having longer periods of uninsurance, and to higher rates of uninsurance overall.

Response: We acknowledge commenters' concerns regarding the elimination of the 150 percent FPL SEP. However, we reiterate that because section 71304 of the WFTC legislation no longer permits Exchanges to provide APTC for individuals who enroll through the 150 percent FPL SEP, the SEP can no longer provide a meaningful pathway to affordable coverage for the individuals that the SEP was designed to reach. While individuals with volatile incomes and employment situations, for example, may have been most likely to utilize the 150 percent FPL SEP, they are also least likely to be able to afford to enroll in plan absent the availability of APTC. We do acknowledge that if HHS permitted Exchanges to offer the 150 percent FPL SEP, there may be some consumers who would elect to enroll in coverage even though APTC would not be available. However, we do not believe that this is a compelling

reason to permit Exchanges to offer the 150 percent FPL SEP for the following reasons.

First, as stated throughout prior rulemaking related to the 150 percent FPL SEP (86 FR 53432 and 89 FR 26320), the purpose of this SEP was to make affordable coverage available to more consumers. We do not believe that unsubsidized coverage can meaningfully be considered affordable for low-income consumers and therefore do not believe that the 150 percent FPL can achieve its intended purpose.

Second, HHS has an interest in preventing adverse selection. We believe that allowing Exchanges to offer the 150 percent FPL SEP is likely to contribute to adverse selection, given that the consumers most likely to enroll in unsubsidized coverage despite their low incomes are more likely to have significant medical needs.

Third, HHS has an interest in promoting year-round enrollment. Allowing Exchanges to offer the 150 percent FPL SEP would undermine this interest by allowing a pathway that consumers could use to enroll in or change plans at any time, despite not having experienced a meaningful change in circumstances.

We also acknowledge commenters' concerns about access to coverage for consumers losing Medicaid or CHIP. We clarify that, unlike for most other SEPs, Exchanges have the option to permit consumers losing Medicaid or CHIP coverage 90 days to enroll in a QHP through an Exchange, rather than the typical 60 days, per Sec. 155.420(c)(6). We also clarify that, if an individual does not receive timely notice of their loss of Medicaid or CHIP, then the Exchange must permit the individual to enroll in coverage during the 60 days following the date that the individual knew, or should have known, that their loss of Medicaid or CHIP occurred, per Sec. 155.420(c)(5). We believe that these existing policies provide sufficient enrollment options to consumers transitioning from Medicaid or CHIP to QHP coverage through an Exchange.

We acknowledge commenters' concerns that the removal of the 150 percent FPL SEP, when considered in conjunction with a shorter OEP and increased SEP verification, may make it more difficult for certain consumers to enroll in coverage, potentially leading to longer periods of uninsurance or higher overall rates of uninsurance. However, we believe that both the removal of the 150 percent FPL SEP and the shorter OEP, finalized in the Marketplace Integrity and Affordability final rule (90 FR 27074), have the potential to help promote continuous, year-round enrollment for consumers by ensuring that enrollments that occur during OEP are effective January 1, and that there are clear and limited opportunities available for enrollment outside of OEP. We also reiterate that permitting Exchanges to offer the 150 percent FPL SEP would not meaningfully make it easier for low- income consumers to enroll in coverage, given that they would not be permitted to receive APTC for their coverage.

Comment: We received several comments that opposed the recission of the 150 percent FPL SEP because they believe that individuals who otherwise would have enrolled through the SEP will remain uninsured and will experience negative impacts to their access to healthcare, which may in turn result in additional costs to the healthcare system in the form of greater reliance on more expensive emergency care. Commenters detailed concerns related to the negative individual and population- level impacts of general care delays and avoidance, missed preventive services, interruptions in chronic condition management, decreased utilization of sexual and reproductive health screenings and care, and barriers to access of cancer treatment. Commenters stated that the removal of the 150 percent FPL SEP had the potential to exacerbate existing health disparities for individuals with low incomes. One commenter stated concerns related to downstream impacts on children's educational attainment, and the potential for responsibility for uninsured children's care to shift to already under-resourced schools. One commenter stated concerns that impacted individuals could lose access to trusted providers in the middle of treatment.

Response: We appreciate commenters' concerns. However, we reiterate that section 71304 of the WFTC legislation prohibits APTC for individuals who enroll through the 150 percent FPL SEP. Because of this, we do not believe that permitting Exchanges to offer the 150 percent FPL SEP is likely to alleviate the concerns that commenters raised regarding potential uninsurance and downstream negative health impacts, given that consumers with incomes at or below 150 percent of the FPL are unlikely to choose to enroll in an unsubsidized QHP.

We do not agree that prohibiting Exchanges from offering the 150 percent FPL SEP could result in enrollees losing access to providers in the middle of treatment. The recission of the 150 percent FPL SEP will not result in individuals who are already enrolled in a QHP through an Exchange losing their coverage. On the contrary, the removal of the 150 percent FPL SEP ensures that individuals do not have the opportunity to change plans mid-year solely on the basis of their income, therefore reducing the risk that consumers may change to a new plan that unexpectedly disrupts their access to existing providers.

Comment: Some commenters opposed the recission of the 150 percent FPL SEP because they believe that eliminating the SEP will increase individuals' “churn” in and out of coverage, and will reduce continuity of coverage.

Response: We do not agree that no longer permitting Exchanges to offer the 150 percent FPL SEP will cause increased “churn” or will have negative impacts on continuity of coverage. On the contrary, making it clear to consumers that the only available enrollment opportunities are the annual OEP and specific, time-limited SEPs tied to changes in circumstance promotes continuity of coverage. We fail to see how eliminating the 150 percent FPL SEP contributes to “churn,” given that the availability of the SEP has no impact on consumers ability to keep their Exchange coverage.

Comment: Some commenters opposed the removal of the 150 percent FPL SEP because they believed that the SEP, while it was implemented, resulted in a lower-than-expected risk of adverse selection. One commenter noted that HHS did not provide evidence that individuals who enrolled through the 150 SEP were more likely than others to be adversely selected. One commenter noted that the 150 percent FPL SEP did not pose a risk of adverse selection because consumers had no incentive not to enroll in and maintain enrollment in low-cost coverage, and that their State Exchange had not identified an adverse selection impact from the SEP. One commenter stated that they believed the 150 percent FPL SEP was an important tool for bringing healthier enrollees into the risk pool and driving down premiums.

Response: Even if we accept commenters' notions that the 150 percent FPL SEP had a limited, or neutral, or even positive impact on adverse selection, we do not believe that these would be compelling reasons to allow Exchanges to offer the 150 percent FPL SEP. We reiterate that because section 71304 of the WFTC legislation prohibits APTC for enrollments through the 150 percent FPL SEP, the SEP now provides very limited value to consumers and would not serve its purpose of making affordable coverage available to more consumers.

Comment: One commenter noted that there is no evidence of improper

enrollment through the 150 percent FPL SEP in State Exchanges, and stated that they support “continued state flexibility with regard to all SEPs.”

Response: Even if we accept commenters' notions that the 150 percent FPL SEP does not drive improper enrollment in State Exchanges, we do not believe this would be a compelling reason to allow Exchanges to offer the SEP. As stated throughout this section, the 150 percent FPL SEP can no longer serve a meaningful purpose given that the WFTC legislation prohibits Exchanges from providing APTC for individuals who enroll through the SEP.

We clarify that Sec. 155.410(a)(2) provides that Exchanges may only permit individuals to enroll in or change QHPs during the OEP or during the SEPs enumerated in 45 CFR 155.420. While Sec. 155.420 provides some limited flexibility to Exchanges, such as by allowing Exchanges to decide whether to consider certain triggering events SEP- qualifying, State Exchanges do not have flexibilities with regard to determining SEP policy beyond those specifically described in Sec. 155.420.

Comment: Some commenters noted alternatives to no longer permitting Exchanges to offer the 150 percent FPL SEP. One commenter requested establishing a new “narrowly tailored, fraud-resistant” SEP. Other commenters requested implementing oversight policies focused on agents and brokers with a history of fraudulent activity, combined with robust outreach to eligible consumers to ensure that they are able to access coverage.

Response: We are no longer permitting Exchanges to offer the 150 percent FPL SEP because SEP can no longer serve its intended purpose of promoting access to affordable coverage, given that the WFTC legislation prohibits Exchanges from providing APTC for individuals who enroll through the SEP. We are uncertain what the appropriate parameters for a “narrowly tailored” SEP would be, nor how Exchanges could meaningfully ensure that it was “fraud-resistant.”

We remain committed to addressing fraud, waste, and abuse, including by strengthening oversight of Exchange agents, brokers, and web-brokers. Policies related to strengthening oversight of agents, brokers, and web-brokers are discussed in section III.D.6. of this final rule. We also remain committed to providing consumers with clear and accurate information about the SEPs for which they may be eligible.

Comment: Some commenters stated that they believed the removal of the 150 percent FPL SEP was harmful, but they understood that HHS' proposal to no longer allow Exchanges to offer the SEP was driven by statute. They requested that HHS identify other administrative options to minimize harm, such as streamlining transitions from Medicaid and CHIP to Exchange coverage, and supporting State Exchanges in exploring additional enrollment pathways. Commenters requested HHS to conduct robust outreach and communication regarding the removal of the 150 percent FPL SEP and to clearly communicate about remaining enrollment options, to mitigate coverage losses.

Response: We appreciate commenters' recognition that the proposal to no longer allow Exchanges to offer the 150 percent FPL SEP is reasonable given the statutory changes made under section 71304 of the WFTC legislation. We are continually working with State Medicaid and CHIP agencies to streamline transitions between Medicaid or CHIP and Exchange coverage. We will also continue to work with any State Exchanges interested in exploring the limited SEP-related flexibilities available to Exchanges under Sec. 155.420.

We are also committed to providing consumers and all Exchange interested parties with timely and accurate information regarding SEP availability. As part of our implementation of the Marketplace Integrity and Affordability final rule, which prohibited Exchanges from offering the 150 FPL SEP effective August 25, 2025, we updated language on HealthCare.gov, and worked with agents and brokers, navigators, and State Exchanges to provide clear information about the upcoming changes. Given that the policy finalized in this rule simply extends the existing prohibition on Exchanges offering this SEP, we plan to continue to provide accurate information regarding SEPs on HealthCare.gov, as well as make available frequent opportunities for interested parties to learn about SEP policy and operations.

Comment: Some commenters noted that section 71304 of the WFTC legislation prohibited APTC for individuals who enroll through the 150 percent FPL SEP, but still felt that CMS should permit Exchanges to offer the SEP. One commenter, a State Exchange, noted that some States offer generous State-funded subsidies to enrollees, and that because individuals who enroll in Exchange coverage through an income-based SEP could still access those state-funded subsidies, that the 150 percent FPL SEP could be valuable to consumers and Exchanges should therefore be permitted to offer the SEP. One commenter stated that HHS should permit Exchanges to offer the 150 percent FPL SEP because individuals who enrolled through the SEP could still access CSRs.

Response: We acknowledge that there are limited cases in which permitting Exchanges to offer the 150 percent FPL SEP could provide a meaningful pathway to enrollment for some consumers. These include cases in which a State subsidizes enrollees' premiums, or in which an enrollee determines they are able to afford to enroll in an unsubsidized QHP. However, we do not believe that these limited use cases justify permitting Exchanges to offer the 150 percent FPL SEP for a number of reasons.

First, we believe that there is significant likelihood for confusion from both consumers and Exchanges if HHS were to permit an enrollment opportunity that could not be meaningfully used by most enrollees.

Second, while HHS regulations do permit certain limited flexibilities to State Exchanges regarding which SEPs to provide, we also have a compelling interest in promoting clear and uniform SEP policy. Given the high volume of utilization of the 150 percent FPL SEP as compared to other SEPs for which HHS regulations continue to permit limited flexibilities, we believe that permitting Exchanges to offer the 150 percent FPL SEP would damage our ability to promote uniform SEP policy in a way that other existing flexibilities do not. During plan year 2024, approximately 1.9 million consumers enrolled in or changed plans through the 150 percent FPL SEP through the FFE, as compared to fewer than 13,000 consumers who enrolled in or changed plans through the other optional SEPs permitted under Sec. Sec. 155.420(d)(6)(v) and (d)(13). While we do expect that 150 percent FPL SEP utilization would likely decrease significantly if we were to permit Exchanges to offer the SEP, we still believe that past utilization provides important context about the ways in which allowing the SEP to be offered in States with generous State-funded subsidies could result in differences in SEP policy and functionality that far exceed the differences resulting from other flexibilities permitted under Sec. 155.420.

Finally, we clarify that our interpretation of section 71304 of the WFTC legislation is that Exchanges would be required to prohibit not just APTC, but both APTC and income-based CSRs, for otherwise-eligible individuals who enrolled through the 150 percent FPL SEP. In the preamble in this section, we note that section

71304 of the WFTC legislation amended section 36B of the Code such that a plan is not considered a QHP, and therefore no PTC is allowed for coverage under the plan, if the plan is enrolled in through an SEP that is based solely on the basis of the relationship of an individual's expected household income to the FPL and not on a change in circumstance. We further note that we interpret section 71304 of the WFTC legislation to prohibit an Exchange from paying APTC for anyone who enrolls in a plan through the 150 percent FPL SEP.\176\

\176\ HHS has interpreted section 1411(a)(2)(A) of the Affordable Care Act to require an Exchange to align its APTC eligibility rules with the Code's PTC eligibility rules.

Here, we clarify that Exchanges are also prohibited from allowing income-based CSRs for anyone who enrolls in a plan through an income- based SEP. This is because section 1402(g) of the Affordable Care Act provides that CSRs are not permitted for a month unless it is considered a “coverage month” under section 36B of the Code. Under paragraph (c)(2)(A) of section 36B of the Code, a month is generally only considered a coverage month if, as of the first day of the month, the individual is covered by a QHP. Because section 71304 of the WFTC legislation provides that a plan is not a QHP if it is enrolled in through an SEP based solely on income, section 71304 therefore prohibits Exchanges from providing income-based CSRs to individuals who enroll through the 150 percent FPL SEP.

Comment: One commenter noted their agreement with CMS' proposal to all Exchanges to begin offering the 150 percent FPL SEP again.

Response: We clarify that this provision will continue the prohibition on Exchanges offering the 150 percent FPL SEP, for the reasons described in the proposed rule and in this section.

Comment: One commenter opposed HHS' proposal to prohibit Exchanges from offering the 150 percent FPL SEP because the provision was stayed.

Response: We clarify that the provision of the Marketplace Integrity and Affordability final rule that prohibited Exchanges from offering the 150 percent FPL SEP, effective August 25, 2025, through the end of PY 2026, was not stayed by the Court in City of Columbus et al. v. Kennedy et al.\177\

\177\ City of Columbus v. Kennedy, 796 F. Supp. 3d at 160.