Trump's CMS issues final rule: Officially screws over DACA recipients & transgender folks while causing higher out-of-pocket costs for enrollees & more

Back in March, the Health & Human Services (HHS) Dept. and the Centers for Medicare & Medicaid Services (CMS) proposed a so-called "Marketplace Integrity & Affordability Rule" which would include sweeping changes to how the ACA exchanges (both the federal one (HealthCare.Gov) and the 20-odd state-based ones (Covered California, MNsure, etc) operate, as well as who is or isn't eligible to enroll in ACA exchange coverage, restrictions on subsidy eligibility and so forth.

Many of these changes are simply repeals/reversals of improvements put into place during the Biden Administration; others are completely new ones being put into place by the Trump Regime under RFK Jr. & Dr. Oz.

However, until today, these were still technically only proposed changes. Now they're official. The final version isn't quite as bad as it could have been, and there's one or two items on the list which I'm not that upset about, but overall...yeah, it's pretty ugly.

As I noted in March: The issue of people being enrolled in ACA plans (or switched from their existing plan to another) by unscrupulous insurance agents/brokers is a real one which I've written about several times before; some of the actions being taken by the Musk/Trump Admin to address this issue are actually reasonable. HOWEVER, others appear to have nothing to do with this issue and are using it as an excuse to make enrolling in ACA plans more cumbersome for no legitimate purpose...and still others are simply cruelty for the sake of cruelty, which is unsurprising from this administration but still anger-inducing.

It's also worth noting that some of these changes will only be for one year (2026); I've highlighted those and will discuss the reason for that below.

Let's dig in, shall we?

Satisfaction of Debt for Past-due Premiums

CMS is finalizing the repeal of the rule that prohibits issuers from denying health insurance coverage based on unpaid past-due premiums. Similar to the policy established under the 2017 Market Stabilization Rule and later reversed in the 2023 Payment Notice, this change will permit an issuer, to the extent permitted by applicable State law, to require payment of both the initial and past-due premium amounts in order to effectuate new coverage. This change will reduce adverse selection and encourage continuous coverage, potentially leading to more stable premiums and fostering a more stable insurance market.

This one isn't actually unreasonable (at least on the face of it, of course).

Eliminating Gross Premium Percentage-Based and Fixed-Dollar Premium Payment Thresholds

CMS is finalizing elimination of the fixed-dollar and gross percentage-based premium payment thresholds, allowing issuers to only adopt the net percentage-based threshold. This change will enhance program integrity by better ensuring that consumers are aware of their enrollments, mitigating risk that consumers are enrolled in coverage improperly or without their knowledge, and increasing transparency and accountability in premium payments. As explained above, this provision, along with several other program integrity measures, is being implemented on a temporary basis through PY 2026.

I'm not familiar enough with this provision to comment one way or the other.

Standardizing the Annual OEP for Individual Market Coverage

CMS is finalizing changes to the annual OEP beginning with the OEP for plan year 2027. This adjustment will apply to both on- and off-Marketplace individual market coverage. The final rule allows all Exchanges flexibility to set their own OEPs within set parameters for timing and duration. Each OEP must start no later than November 1 and end no later than December 31, and the OEP may not exceed 9 calendar weeks. Finally, all enrollments pursuant to Open Enrollment Period must begin on January 1. For Exchanges on the Federal platform, the OEP will run from November 1 through December 31 preceding the coverage year, beginning with the OEP for plan year 2027. This change aims to reduce consumer confusion, align more closely with open enrollment dates for many employer-based health plans, encourage continuous coverage, and reduce the risk of adverse selection from consumers who may otherwise wait to enroll until they need health care services.

Currently, the annual Open Enrollment Period (OEP) runs from November 1st - January 15th in most states (76 days), with coverage for those who enroll before December 15th going into effect starting January 1st and coverage for those who enroll between December 16th - January 15th going into effect starting February 1st.

There are some states which have their final OEP deadline bumped out as late as January 31st, however. This would shorten it to no more than 61 days, including the state-based exchanges.

There are two major upsides to the current, longer OEP: First, it obviously gives people more time to enroll. Secondly, it gives current enrollees who are auto-renewed into the same plan (or who are "mapped" to a similar one) extra time to switch to a different plan if they decide the one they were automatically placed into is no longer appropriate for their needs.

Interestingly, Trump's CMS was originally proposing to shorten the OEP even further, to just 45 days, with a final deadline of December 15th...and it was originally supposed to kick in this year. Instead, it's 61 days starting next year. Huh.

Affirming Previous Interpretation of “Lawfully Present” Definition

CMS is finalizing amendments to the definition of “lawfully present” to exclude DACA recipients, returning to the interpretation adopted in the 2012 Interim Final Rule (77 FR 52614). This change will make DACA recipients ineligible to enroll in a Qualified Health Plan (QHP) through the Marketplace, for premium tax credits, APTC, and cost-sharing reductions (CSRs), and for Basic Health Programs (BHPs) in states that elect to operate a BHP, reversing the 2024 DACA Rule. This policy aligns with statutory requirements and ensures that subsidies are reserved for eligible individuals.

Oof. This screws over up to 580,000 DACA recipients (although more realistically only around 100,000 of them are likely to be eligible for various reasons) for...absolutely no good reason whatsoever, other than Trump/MAGA hating immigrants...even those who have lived here virtually their entire lives.

Really, there's no other logical reason not to let DACA recipients enroll in ACA exchange plans or to be eligible for APTC susidies, CSR subsidies or BHP programs.

Failure to File and Reconcile

CMS is finalizing the reinstatement of its 2015 policy requiring Exchanges to determine an individual ineligible for APTC if they (or their tax filer) failed to file their federal income taxes and reconcile APTC for one year instead of for two consecutive tax years as implemented in the 2024 Notice of Benefit and Payment Parameters (the 2024 Payment Notice). Under this change, a Marketplace must determine a tax filer ineligible for APTC if (1) CMS notifies the Marketplace that the tax filer or someone in their household received APTC for a prior year for which tax data would be utilized for verification of income, and (2) the tax filer or someone in their household did not comply with the requirement to file a federal income tax return and reconcile APTC for that year. This change will minimize improper enrollments and protect consumers from accumulating large tax liabilities. For the reasons listed above, this policy will sunset at the end of 2026.

On the one hand, it sounds reasonable on the surface to make sure that someone getting a federal tax credit files a tax return.

On the other hand, a significant number of low-income ACA enrollees have never earned enough to file a federal tax return before, and many may have language barriers, move a lot and so forth, making it easy for them to miss or not understand how to file one.

The idea behind the 2-year rule was to give them a one-time pass. Cracking down on this means that if you don't reconcile for even one year, you're screwed the next.

60-Day Extension to Resolve Income Inconsistency

CMS is finalizing the removal of the automatic 60-day extension of the statutorily-required 90-day period for resolving income inconsistencies introduced in the 2024 Payment Notice. This change will ensure enrollees verify their incomes on a timely basis within the 90-day window prescribed in statute and reduce the opportunity for enrollees with unverified incomes to receive APTC premiums through the full length of the verification period.

The ACA gives you up to 3 months to resolve income issues. This bumped that out by another 2 months. I honestly don't know how long is a "reasonable" period to expect folks to clear up issues like this so I don't really have a strong opinion on this one.

Income Verification When Data Sources Indicate Household Income Less than 100% of the FPL

CMS is finalizing the requirement that Marketplaces generate annual income inconsistencies in certain circumstances when a tax filer’s attested projected annual household income would qualify the taxpayer as an applicable taxpayer according to 26 CFR 1.36B-2(b), while the income data returned by the Internal Revenue Service reports that the tax filer’s income is less than 100% of the FPL. This policy will improve program integrity, reduce the burden of APTC on the federal taxpayer, and benefit consumers by ensuring subsidies are appropriately allocated and reducing their risk of improper tax liabilities. CMS is finalizing the requirement through plan year 2026 only.

Under the ACA, exchange enrollees are eligible for APTC subsidies as long as they earn at least 100% of the Federal Poverty Level (FPL). The reason those below 100% FPL aren't eligible is because the ACA also assumed that anyone earning less than 138% FPL would be eligible for Medicaid instead via ACA expansion.

Unfortunately, the Supreme Court ruled that Medicaid expansion had to be voluntary for each state, and as of today, 10 states have still refused to do so...which means anyone earning less than 100% FPL is royally screwed: They don't qualify for Medicaid expansion but they also don't qualify for ACA subsidies.

As a result, there's a small population of people in non-expansion states whose incomes may be right around 100% FPL. If they project 101%, they qualify for APTC subsidies...but if they actually end up earning 99% FPL, they're not eligible for any subsidies...which could mean having to pay back thousands of dollars which they obviously can't afford since they earn less than ~$15,000/year to begin with.

UPDATE: Thanks to Andrew Sprung for correcting me on this last point: The good news is those who turn out to earn less than 100% FPL don't have to pay back the subsidies after all. HOWEVER, it does mean CMS would be able to cut off your coverage mid-year (or, alternately, require you to pay the full premium amount for the balance of the year, which these folks would never be able to afford) if they determine that you're gonna fall below the 100% FPL threshold that year.

Basically, this is still a way of scaring the hell out of anyone who thinks they might earn less than 100% FPL from enrolling in the first place...which I imagine would also include a significant number of people who earn ~110% or so, etc.

Income Verification When Tax Data is Unavailable

CMS is finalizing the removal of the requirement that Exchanges accept an applicant’s or enrollee’s self-attestation of projected annual household income when the Exchange attempts to verify the attested projected annual household income with the IRS, but the IRS confirms there is no such tax return data available. Under this change, Exchanges will be required to verify income with other trusted data sources (if available) and to require applicants to submit documentary evidence or otherwise resolve the income inconsistency. This policy will improve program integrity by reducing the risk of improper enrollments, benefit consumers by helping reduce surprise tax liabilities, and reduce APTC overpayments and expenditures. Consistent with the approach mentioned above, CMS is finalizing the requirement through plan year 2026 only.

Once again, on paper it may seem reasonable not to "trust the honor system" regarding someone's household income, but the paperwork burden can be an unbelievable pain in the ass for many people.

Requiring $5 Premium Responsibility

CMS is finalizing modifications to the annual eligibility redetermination process by requiring Marketplaces on the Federal platform to ensure that consumers who are automatically re-enrolled with no premium responsibility following application of APTC and without affirming or updating their eligibility information, are automatically re-enrolled with a $5 monthly premium beginning in plan year 2026. Once consumers confirm or update their information, the $5 monthly bill will be eliminated if they continue to be eligible for a $0 premium after application of APTC. As with all enrollees, they may receive a refund or reduction on the taxes they owe (or may owe) when they file and reconcile their APTC on their federal income tax return. CMS is not finalizing this requirement for State Marketplaces. Rather, State Marketplaces will have flexibility to create a comparable process for the fully-subsidized population that would be subject to the Department of Health and Human Services’ (HHS’) approval within HHS’ existing oversight framework beginning in plan year 2027. This policy will reduce improper enrollments in Marketplaces on the Federal platform and help prevent Marketplace coverage from continuing for consumers who are unaware of their Marketplace enrollments. This change will also benefit consumers by increasing awareness and engagement in their health coverage decisions and reducing the likelihood of surprise tax liabilities. This policy will sunset at the end of the 2026 plan year.

Hoo boy. This one may be outright illegal. Normally, if an existing ACA enrollee takes no action whatsoever (ie, they never contact their ACA exchange by phone or by logging into their account) during OEP, the exchange will either automatically re-enroll them into their existing plan for another year or they'll "map" the enrollee to the closest equivalent plan in the event that their current one is being discontinued by the insurance carrier.

This rule states that in cases where the enrollee is fully subsidized (ie, 100% of their premiums are covered by APTC subsidies), they'd have those subsidies reduced by $5/month...which means they'd go from paying nothing to $5/month in premiums.

During the 2024 OEP, 42% of federal exchange enrollees (6.8 million people) were enrolled in $0-premium policies. I don't have that number for 2025 yet, but I'm assuming it's higher since total enrollment is 13% higher.

Assuming that extrapolated across every state, that'd be up to over 10 million ACA exchange enrollees who could potentially be hit with a $5/month hike in their monthly premium. They'd be charged the $5/mo until they actively confirmed that they wanted to remain enrolled in that policy or that their income had changed.

Again, on the surface, there's a reasonable-sounding justification for this change: That $5/mo premium would guarantee that the enrollee would know that they had been re-enrolled in the new plan, since they'd receive an invoice for $5/mo from the carrier.

HOWEVER, it doesn't even pass the smell test as a fraud reduction measure--CMS could make it $1/month or even $0.01/month instead of $5, since the point is supposedly to make certain the enrollee is aware of their enrollment status, not the amount itself.

Of course, if the upgraded IRA subsidies are allowed to expire at the end of this year, a lot fewer people will be enrolled in ACA exchange plans to begin with, and a lot fewer of those who do enroll will have $0/mo premiums which would trigger the $5/mo rule (in 2021, only 14% of HC.gov enrollees had $0 net premiums...the subsidy upgrade was made retroactive to the beginning of the year but wasn't in place during the 2021 OEP itself).

In other words, this is a troubling (and possibly illegal) solution to a legitimate problem.

Re-enrollment Hierarchy Standards

CMS is finalizing the repeal of a regulation that allows Marketplaces to automatically re-enroll CSR-eligible bronze QHP enrollees in a silver QHP if the silver QHP is in the same product, has the same provider network, and has a lower or equivalent net premium as the bronze plan into which the enrollee would otherwise have been re-enrolled. State Marketplaces may continue seeking approval from the Secretary to design and conduct their own annual eligibility redetermination process. This policy benefits consumers by respecting consumer choice and reducing confusion caused by changing a consumer’s plan from bronze to silver, even when their existing bronze plan remains available. These changes will also decrease any likelihood of unexpected tax liabilities related to re-enrolling bronze enrollees into a silver plan without their knowledge.

This one is a crock of shit. It was one of the better tweaks made by the Biden Administration, and it's a damned shame to see it reversed.

Normally the exchange will re-enroll people into the same policy if it's still available, but a couple years back the Biden Admin realized that there's a lot of people who are leaving thousands of dollars in potential savings on the table by selecting Bronze plans instead of a high-CSR Silver plan with the exact same provider network even when they're eligible for a far better value without paying a dime more.

To benefit enrollees, HealthCare.gov started shifting people in that specific situation over to Silver plans instead in order to provide them with greater savings on deductibles, co-pays & coinsurance fees. The Musk/Trump Administration is pulling the plug on this improvement.

Monthly SEP for APTC-Eligible Individuals with Household Incomes at or Below 150% of FPL

CMS is finalizing the repeal of the monthly SEP for individuals with projected household incomes at or below 150% of the FPL, due to concerns over increased unauthorized enrollments and adverse selection risk, as the SEP has been exploited to enroll consumers or change their plans without their knowledge. This policy is effective 60 days after the enactment of the final rule and will help to reduce opportunities for unauthorized enrollments and unauthorized plan switching. As noted above, in response to some commenters’ concerns, this provision will be effective only for the 2026 plan year. HHS also clarifies that a change in income is not an Exceptional Circumstance within the meaning of 45 CFR 155.420(d)(9). Thus, Marketplaces may not offer income-based SEPs under this authority.

I have mixed feelings about this one. The primary reason why ACA enrollment is mostly limited to a specific Open Enrollment Period (OEP) in the first place is to help prevent people from gaming the system--that is, waiting until they're sick or injured before signing up for health insurance coverage.

The justification from the Biden Administration for allowing those who earn less than 150% FPL (around $22,600/yr for a single adult this year) to enroll year-round is that thanks to the upgraded subsidies under ARPA/IRA, enrollees who earn less than 150% FPL are eligible for $0-premium Silver ACA plans anyway.

In other words, the risk of someone waiting until they're sick/injured to enroll in health insurance is a lot lower if there's no reason for them not to wait--that is, if they don't have to pay a dime in net premiums anyway, they're a lot more likely to sign up while they're healthy. This means the insurance carriers receive monthly revenue and prevents the type of "adverse selection" you'd otherwise see.

HOWEVER, there's two problems with this: First, it relies on the ARPA/IRA subsidies being in place...and as of this writing, it's extremely unlikely that those will be extended past the end of 2025. If Republicans allow them to expire on 12/31/25, ACA subsidies will revert back to their pre-ARPA formula, in which even those who earn less than 150% FPL would still have to pay at least ~1.8% of their annual income for the ACA benchmark Silver policy.

In that scenario, some enrollees would still likely qualify for $0-premium ACA plans (Bronze for the most part), but that wouldn't be guaranteed...and the temptation to game the system would be much higher, especially since the unsubsidized premiums would also skyrocket for enrollees.

The other problem (which exists even with the upgraded subsidies in place) is the one CMS is using as the cornerstone of this change: If the enrollee doesn't have to pay anything (not even a penny), it makes it a lot easier for them to be enrolled in a policy or switched to a different one without the actual enrollee ever knowing that it happened until months or even years later.

Since they're paying nothing themselves, they'll never receive a premium invoice from the insurance carrier and thus may only find out much later when they do visit the doctor/hospital and get confused about a policy they didn't realize they were enrolled in.

Believe me, it would be much better if the upgraded IRA subsidies were made permanent, but if they end, then I admit most of the rationale for the < 150% SEP ends as well.

 

All Marketplaces Conducting Eligibility Verification for SEPs

CMS is finalizing a requirement that Marketplaces conduct pre-enrollment verification for SEP eligibility beginning plan year 2026 for Marketplaces on the Federal platform, but is not finalizing this requirement for State Marketplaces at this time. The final rule provides that this requirement will sunset for Marketplaces on the Federal platform at the end of the 2026 plan year. For the reasons mentioned above and in the final rule, CMS believes that this approach sufficiently addresses commenters’ concerns and will avoid any sustained negative impacts of regulatory efforts to stop improper enrollments in the Marketplaces.

Marketplaces Conducting Eligibility Verification for 75% of New Enrollments through SEPs

CMS is finalizing a rule mandating pre-enrollment eligibility verification for at least 75% of new enrollments through SEPs beginning plan year 2026 for Marketplaces on the Federal platform, with the policy to sunset at the end of the 2026 plan year. HHS is not finalizing this requirement for State Marketplaces at this time to address issues concerning operational feasibility and increased burdens and costs.

For the past few years, the federal ACA exchange (HealthCare.Gov) has only required those who enroll during the off-season (ie, outside of OEP) to provide proof of their eligibility if the reason for a Special Enrollment Period is that they've lost another type of healthcare coverage; otherwise they were pretty much taken at their word (although it's still a federal crime to knowingly lie about your eligibility for a SEP).

Musk/Trump's CMS is cracking down on this by requiring verification (uploading a copy of a marriage certificate, for instance) regardless of the reason.

Once again: This is something which may sound reasonable in theory but in practice producing the required documentation can sometimes be difficult to do depending on the circumstances of the person enrolling.

Prohibiting Coverage of Specified Sex-trait Modification Procedures as an EHB

CMS is finalizing that, effective beginning in plan year 2026, issuers subject to EHB requirements (that is, non-grandfathered individual and small group market plans) may not cover specified sex-trait modification procedures, as an EHB. In the final rule, CMS is also adding a definition of the term “specified sex-trait modification procedure” in response to comments and specifying that certain services would not qualify as a “specified sex-trait modification procedure” under this definition.

This policy will not prohibit issuers of coverage subject to EHB requirements from voluntarily covering specified sex-trait modification procedures, nor will it prohibit states from requiring coverage of such services, subject to the rules related to state-mandated benefits at 45 CFR § 155.170. This policy will align EHB with the benefits covered by typical employer-sponsored plans, as required by the applicable statute.

In other words, they're throwing transgender folks under the bus, which is hardly surprising but is still appalling.

It doesn't mean that insurance carriers can't cover gender-affirming services, but it does mean those services can't have APTC subsidies applied towards them if they're included in the policy...which not only means that a lot more transgender folks will have to pay more for such services, it also means carriers will be less likely to choose to include them as part of their policies at all.

Premium Adjustment Percentage (PAPI) Methodology

CMS is finalizing updates to the methodology for calculating the premium adjustment percentage to establish a premium growth measure that captures premium changes in both the individual and employer-sponsored insurance markets for the 2026 plan year and beyond. CMS is also finalizing the plan year 2026 maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage using the finalized premium adjustment percentage methodology. This policy will ensure these annual adjustments to ACA parameters align more closely with the changes in premium trends in the markets they aim to track.

Maximum out of Pocket (MOOP) is the maximum amount that any ACA plan enrollee has to pay in deductibles, co-pays or coinsurance combined for in-network care over the course of the year.

While the fact sheet doesn't specify the exact amounts involved, according to my colleague Louise Norris:

• The 2025 Maximum Out of Pocket cap: $9,200 for an individual or $18,400 for the household
• Under the old rule: 2026 MOOP would be $10,150 / $20,300 (10.3% higher)
• Under the new rule: 2026 MOOP would be $10,600 / $21,200 (15.2% higher)

Don't get me wrong: The 10.3% MOOP hike for 2026 is bad enough, but jacking it up by 15.2% will be even worse.

De Minimis Thresholds

CMS is finalizing widening the de minimis ranges to +2/-4 percentage points for all individual and small group market plans subject to the AV requirements under the EHB package, other than for expanded bronze plans, for which CMS is finalizing a de minimis range of +5/-4 percentage points. CMS is also finalizing removing from the conditions of QHP certification the de minimis range of +2/0 percentage points for individual market silver QHPs and specifying a de minimis range of +1/-1 percentage points for income-based silver CSR plan variations.

This policy will allow for greater flexibility in plan design, providing consumers with increased plan options and lower premiums as issuers adjust plan designs to attract a broader range of enrollees, improving market competition and stability.

(sigh) This is basically blurring the lines between Bronze, Silver, Gold and Platinum-level ACA plans, making the distinctions vaguer, more confusing to enrollees and completely defeating the point of having separate "Metal Levels" in the first place.

Establishing Evidentiary Standard for Termination of Agent, Broker, and Web-Broker Marketplace Agreements for Cause

CMS is finalizing the adoption of a “preponderance of the evidence” standard of proof with respect to issues of fact for HHS to assess whether an agent, broker, or web-broker’s Marketplace Agreement should be terminated due to noncompliance with applicable HHS rules and the terms of their Marketplace Agreements. This change will improve transparency in the process for holding agents, brokers, and web-brokers accountable for compliance with applicable law, regulatory requirements, and their Marketplace Agreements and protect consumers from the impacts of potential noncompliance, including improper enrollments.

Honestly not sure whether this one will make the "rogue agent/broker/web broker" situation better or worse.

As for why some of these are only being put into place for one calendar year, a colleague of mine noted that this is likely a trick for the Congressional Budget Office scoring procedure. You see, if a piece of legislation codifies a policy which is already put in place via regulatory rules, the CBO only counts 50% of the savings...but if the regulatory rule ends before the codified version goes into effect, the CBO scores 100% of the savings.

So, for instance, let's suppose that the "Requiring $5 Premium Responsibility" provision above would reduce federal spending by $1 billion over a decade. If legislation codifies this permanently, the CBO only counts $500 million saved, but if the regulatory rule only puts it in place for 1 year, the CBO counts the codified version as saving the full $1 billion. Cute.

It's also worth noting that the main press release for all of these changes makes some...interesting claims:

The Centers for Medicare & Medicaid Services (CMS) is finalizing a major rule that will lower individual health insurance premiums by approximately 5% on average.

It's gonna be very interesting to see Trump, RFK Jr., Dr. Oz and Congressional Republicans crowing about "reducing ACA premiums by 5%!" at the same time that net premiums--that is, the actual price that enrollees have to pay every month--are absolutely SKYROCKETING.

Most people aren't gonna give a shit about the list price; what they're gonna care about is how much they have to pay...and thats going to shoot up through the roof starting January 1st for the vast majority of exchange enrollees if the IRA subsidies expire.

...“With this rule, we’re lowering marketplace premiums, expanding coverage for families, and ensuring that illegal aliens do not receive taxpayer-funded health insurance.”

The way they're doing this is by redefining legally-residing immigrants as "illegal aliens." The level of chutzpah here is astonishing.

Research shows that in 2024 alone, an estimated 5 million people may have been improperly enrolled, costing taxpayers as much as $20 billion[1].

"May have been" is doing a lot of heavy lifting here. Yes, there are some enrollees who were "improperly enrolled"...but the actual number could be considerably lower, and in most cases it was likely an unscrupulous agent/broker who fraudulently enrolled them without their knowledge, not the enrollee themselves.