CMS Issues 2025 Marketplace Integrity and Affordability Proposed Rule

This week, CMS issued a proposed rule entitled “Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability” (the Proposed Rule). Comments are due by April 10, 2025.

The Proposed Rule was issued in response to CMS findings that (i) millions of applications for ACA Health Insurance Marketplace (Marketplace) coverage were submitted with erroneous data, and (ii) 4 to 5 million people were improperly enrolled in subsidized ACA coverage in 2024, at a cost of $20 billion. CMS has proposed:

• significant changes to the annual Open Enrollment Period (OEP) for both on- and off-Marketplace individual market coverage;

• removal of the special enrollment period (“SEP”) for individuals with projected household incomes at or below 150% of the Federal Poverty Limit (“FPL”);

• additional eligibility verification requirements;

• payment by enrollees of past-due premium and/or minimum premium in certain cases;

• a prohibition on coverage of “sex-trait modification” as an essential health benefit; and

• an updated definition of “lawfully present” that excludes Deferred Action for Childhood Arrivals (“DACA”) recipients for purposes of enrolling in Marketplace coverage.

In addition, agents and brokers take note: a “preponderance of the evidence” standard of proof would be established with respect to issues of fact for HHS to assess whether an agent, broker, or web-broker’s Marketplace Agreements should be terminated due to noncompliance.

Below we’ve summarized in greater detail the proposed changes to 45 CFR Parts 147, 155, and 156.

Please reach out to us with questions and for assistance in preparing comments.

Topic	Summary
Satisfying Debt for Past-Due Premiums	– Issuers could require payment of past-due premiums before effectuating new coverage to the extent permitted by state law. – Practically speaking, past-due premium amounts could be added to the initial premium the enrollee must pay to effectuate new coverage.
Eliminating Gross Premium Percentage-Based and Fixed-Dollar Premium Payment Thresholds	– Issuers would be required to adopt net percentage-based premium thresholds. – In other words, enrollees would be required to pay some portion of the premium owed in order to reduce the risk of improper enrollments.
Shortening the Annual Open Enrollment Period for Individual Market Coverage	– The annual OEP for all individual market coverage would run from November 1 through December 15 preceding the coverage year, instead of through January 15 of the coverage year. – This adjustment would apply, by its terms, to both on- and off-Marketplace individual market coverage.
Affirming Previous Interpretation of “Lawfully Present” Definition	– The definition of “lawfully present” would be amended to exclude DACA recipients. – This change would make DACA recipients ineligible (i) to enroll in a Qualified Health Plan (QHP) through the Marketplace, (ii) for premium tax credits, Advanced Premium Tax Credit (APTC), and cost-sharing reduction (CSRs), and (iii) for the Basic Health Plan (BHP) in states that elect to operate a BHP, reversing the 2024 DACA Rule.
Verifying Consumer Income Eligibility for Insurance Affordability Programs	– Exchanges would be required to determine an individual ineligible for APTC if they (or their tax filer) failed to file their federal income tax. – Marketplaces would be required to generate annual income inconsistencies in certain circumstances when a tax filer’s attested projected annual household income is equal to or greater than 100% of the FPL and no more than 400% of the FPL, while the income data returned by IRS, SSA, or current income data sources are less than 100% of the FPL. – Marketplaces would not be required to accept an applicant’s or enrollee’s self-attestation of projected annual household income when the Marketplace requests tax return data from the IRS but the IRS confirms there is no such tax return data available. Instead, Marketplaces would be required to verify income with other trusted data sources (if available) and follow the alternative verification process. – CMS would remove the 60-day extension of the statutorily-required 90-day period for resolving income inconsistencies.
Reducing Improper Enrollments through Annual Eligibility Redeterminations and SEPs	– Consumers who are automatically re-enrolled in a QHP with what would otherwise have been a fully subsidized premium would instead be automatically re-enrolled with a $5 monthly premium, which premium would be eliminated once eligibility is confirmed. – CSR-eligible enrollees would not automatically be reenrolled into a higher metal tier plan (e.g., from a bronze to 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). – The monthly SEP would be removed for individuals with projected household incomes at or below 150% of the FPL. – Pre-enrollment verification would be required for SEP eligibility across all Marketplaces, including state Marketplaces. – Marketplaces, including state Marketplaces, would be required to verify eligibility for at least 75% of new enrollments through SEPs.
Aligning Essential Health Benefit and Employer-Sponsored Benefits	– Effective beginning in plan year 2026, issuers subject to essential health benefit (EHB) requirements would be prohibited from covering “sex-trait modification services” as an EHB. – This would not prohibit health plans from voluntarily covering such services; nor would it prohibit states from requiring such services in health plans, subject to the rules related to state-mandated benefits.
Improving Cost-Sharing, Premium Adjustments, and Plan Options	– CMS would update the methodology for calculating the premium adjustment percentage and proposes the plan year 2026 maximum annual limitation on cost sharing, reduced maximum annual limitations on cost sharing, and required contribution percentage using the proposed premium adjustment percentage methodology. – The de minimis ranges would widen to +2/-4 percentage points for all individual and small group market plans subject to the actuarial value (AV) requirements under the EHB package, other than for expanded bronze plans. The conditions of QHP certification also would be updated.
Establishing Evidentiary Standard for Termination of Agent, Broker, and Web-Broker Marketplace Agreements for Cause	– A “preponderance of the evidence” standard of proof would be established with respect to issues of fact for HHS to assess whether an agent, broker, or web-broker’s Marketplace Agreements should be terminated due to noncompliance.