CMS Issues Marketplace Integrity and Affordability Proposed Rule

In its first healthcare proposed regulation, the Trump Administration, through the Centers for Medicare & Medicaid Services (CMS), displayed on March 10, 2025, a proposed rule titled, “2025 Marketplace Integrity and Affordability Proposed Rule” (the Proposed Rule), which proposes policy changes for the Health Insurance Marketplaces that impact health plans and insurers offering Affordable Care Act (ACA) coverage to consumers. Specifically, the Proposed Rule shortens the Annual Open Enrollment Period (OEP) for all individual market coverage; proposes standards related to income verification for Health Insurance Marketplaces (Marketplaces); modifies eligibility redetermination procedures; and eliminates eligibility for “Deferred Action for Childhood Arrivals” (DACA) recipients, among other provisions.  

The Proposed Rule was published in the Federal Register on March 19, 2025 (and previously available via a press release and fact sheet issued March 10, 2025). Stakeholders have 30 days after display (as opposed to publication in the Federal Register) to submit comments on the Proposed Rule. Comments will close on April 11, 2025.

Key Takeaways

• In issuing the Proposed Rule, the Trump Administration is aiming to undo several Biden Administration policy positions and, in some cases, reinstating policies that were implemented during the first Trump Administration. It proposes to implement several Trump Administration policy priorities, including countering fraud and abuse in health care, reducing “adverse selection” in enrollment, and addressing other issues related to gender-affirming care and immigration.
• Healthcare stakeholders should pay attention to the effective dates of provisions included in the Proposed Rule. Several provisions would be finalized when the final rule is issued, while others would become effective on specific dates, beginning in 2026.
• Stakeholders should also note that the Proposed Rule includes a severability clause in anticipation of litigation and challenges in the courts. In point of fact, the Proposed Rule notes in several places that preliminary injunctions and other court actions that have been taken in response to executive orders and policies that have been issued by the Trump Administration.

Overview of Proposals

In the preamble of the Proposed Rule, CMS justifies issuing the proposed regulatory changes by referencing a memorandum issued by President Trump on January 20, 2025 that instructs all executive departments and agencies to deliver emergency price relief, including appropriate actions to “eliminate unnecessary administrative expenses and rent-seeking practices that increase healthcare costs.” It asserts that the Proposed Rule aligns with several executive orders signed by President Trump that seek to advance the Administration’s policies, including on gender-affirming care (or “sex-trait modification” as that phrase is used by the Trump Administration) and immigration issues. CMS states that it is proposing these changes “to improve program integrity and protect against adverse selection, while at the same time keeping the enrollment process streamlined and accessible.” In the Proposed Rule, the Trump Administration cites the ACA's existing individual market rules requiring issuers to guarantee coverage to all applicants regardless of pre-existing conditions and restricting issuers from setting premiums based on health status as a rational for many of the proposed changes. More specifically, CMS says that these individual market rules create an inherent bias towards adverse selection (i.e., a situation where individuals with higher health risks are more likely to select coverage than healthy individuals) by allowing people to wait to enroll in coverage until they need health services. Additionally, throughout the Proposed Rule, CMS expresses concern about fraudulent enrollment as a primary justification for many of its program integrity proposals.

Below we summarize the various provisions included in the Proposed Rule.

Shortening the Annual Open Enrollment Period

The Proposed Rule aims to limit the annual OEP to 45 days, from November 1 through December 15 preceding the coverage year, instead of through January 15 of the coverage year. This change would also apply to non-grandfathered individual health insurance coverage offered outside of an ACA Health Benefit Exchange (Exchange). CMS states that this change is warranted to protect the stability of the individual market and reduce adverse selection. Further, it states that Marketplace consumers are now accustomed to the December 15 deadline and a single December 15 deadline would reduce consumer confusion. If finalized, this proposal would take place beginning with the OEP for 2026.

Eliminating DACA Eligibility

For purposes of enrollment in a qualified health plan (QHP) offered through an Exchange or a Basic Health Program (BHP), CMS proposes to modify the definition of “lawfully present” (at 42 C.F.R. § 155.20) in a key way that specifically excludes DACA recipients from that defined term. DACA recipients are currently eligible to obtain health insurance coverage through either channel. CMS states that under the original ACA expansion to DACA recipients, an estimated 100,000 DACA recipients would receive coverage. Notably, however, actual Exchange enrollment of DACA recipients has been much lower, with CMS now estimating current enrollment of about 11,000 DACA recipients who would be affected if the proposed rule is finalized.

Reinstating Special Enrollment Period (SEP) Verification Requirements

CMS proposes to reinstate pre-enrollment SEP verification requirements for certain types of SEPs by the federal Marketplaces and to require all Marketplaces to conduct SEP eligibility verification for at least 75 percent of new enrollments. CMS proposes to reinstate policies that existed under the previous Trump Administration that the Biden Administration rolled back in a rule finalized in May 2022. Specifically, the Proposed Rule would require that Federally Facilitated Exchanges (FFEs) conduct pre-enrollment SEP verification of eligibility for five events giving rise to SEPs including marriage, adoption, moving to a new coverage area, loss of minimum essential coverage, and Medicaid/CHIP denial. It would also require State-based Exchanges on the Federal platform (SBE-FPs) to conduct pre-enrollment SEP verification for at least 75 percent of new enrollments. CMS proposes that consumers would have their eligibility verified electronically or would be asked to submit documentation to confirm their eligibility for an SEP. If finalized, these verification requirements would apply beginning with the 2026 plan year (PY).

Establishing Income Verification for APTC Eligibility

CMS proposes a number of policies to undo policy changes that were implemented during the Biden Administration that expanded advance payments of the premium tax credit (APTCs). The following proposals, if finalized, would reduce Marketplace enrollment and APTCs each year beginning in PY 2026, and, in some cases, beginning in 2025:

• • • Addressing Failure to File and Reconcile: CMS proposes requiring Exchanges to determine an individual ineligible for APTC if they (or their tax filer) failed to file their federal income tax and reconcile APTCs for one year, instead of for two consecutive tax years as implemented under the Biden Administration.
    • Verifying Income When Data Sources Indicate Household Income Less than 100% of the Federal Poverty Level: Concerned with potential overpayment of APTC amounts to ineligible applicants, CMS proposes to stop accepting an applicant’s attestation as to their income in many cases when tax data from the Internal Revenue Service (IRS) shows recent income below 100 percent of the poverty line.

During the first Trump Administration, CMS finalized rules in 2019 that would have required a “data matching issue” (DMI), in many cases if a consumer’s tax data showed recent income below the poverty line, and the consumer projected an income above the poverty line. However, before this rule took effect, it was overturned by a Maryland district court (City of Columbus, et al. v. Cochran, 523 F. Supp. 3d 731 (D. Md. 2021), which found that the U.S. Department of Health and Human Services (HHS) had failed to adequately justify the proposal or respond to public comments that had largely opposed the change. 

• • • Verifying Income When Tax Data is Unavailable: CMS proposes to stop accepting an applicant’s attestation as to their income when tax data from the IRS is not available. Existing regulations currently provide an exception to the requirement that Exchanges verify reported household income levels through various trusted data sources like IRS tax data. This change would require Exchanges to follow the full alternative verification process to confirm eligibility.
    • Stopping Extensions of the Period to Resolve Income Inconsistencies: CMS proposes to remove the 60-day extension of the statutorily required 90-day period for resolving income inconsistencies. Current rules allow applicants up to 150 days to resolve such inconsistencies.

Ending the Monthly SEP For APTC-Eligible Consumers with Household Incomes Below 150% of the Federal Poverty Line (FPL).

CMS proposes to eliminate the monthly SEP for APTC-eligible qualified individuals with a projected annual household income at or below 150 percent of the FPL. CMS states that the current SEP risks both adverse selection and increased improper enrollments by agents, brokers, and web-brokers. CMS also cites consumer complaints, litigation, and a sharp increase in enrollment of individuals at this income level during the PY 2024. If finalized, this change would apply on the effective date of the final rule.

Proposing Guaranteed Issue and Repayment of Past Due Premiums

CMS proposes to allow insurers, subject to applicable state law, to add past-due premium amounts owed to the insurers to the initial premium the enrollee must pay to effectuate new coverage. Insurers that want to impose this requirement would set new terms of coverage that require consumers to pay any past-due premiums as part of their initial premium for a new plan. The Proposed Rule would also allow insurers to not effectuate new coverage if the past-due and initial premium amounts are not paid in full. If finalized, this proposal would apply on the final rule’s effective date.

Prohibiting Essential Health Benefits Related to “Sex-Trait Modification”

CMS proposes changes to Essential Health Benefit (EHB) requirements that would prohibit individual and small group insurers from covering what it refers to as “sex-trait modification.” This change would apply to EHBs beginning with PY 2026. While the Trump Administration describes “Sex-trait modification” by reference to the Executive Order (EO) 14187 titled, “Protecting Children From Chemical and Surgical Mutilation,” it does not specifically define the term in regulation, and, instead, solicits comments on whether a regulatory definition should be devised and adopted. In justifying this proposal, CMS states in relevant part that such coverage is not typically included in employer-sponsored plans. CMS states that the Proposed Rule, if finalized, would not prohibit health plans from voluntarily covering sex-trait modification as a non-EHB consistent with applicable state law and it would not prohibit states from requiring the coverage of sex-trait modification. It also acknowledges that recent EOs that were signed by President Trump have been subject to preliminary injunctions and that it does not rely on the enjoined sections of the EOs in issuing the Proposed Rule.

Requiring Premiums for Auto Re-enrolled Consumers

CMS proposes to modify the annual eligibility redetermination process by requiring Marketplaces to ensure that consumers who are automatically re-enrolled without affirming or updating their eligibility information, and who would have been automatically re-enrolled in a QHP with a fully subsidized premium after the application of APTC, to instead be automatically re-enrolled with a $5 monthly premium. Only once consumers confirm their eligibility would the $5 monthly premium charge be eliminated. Any premium paid would potentially be issued as a rebate to the enrollee when they file and reconcile their APTC on their taxes if they remain eligible for a fully-subsidized premium. CMS states that this proposal would “prompt an affirmative action” that would force enrollees to reconfirm their plan eligibility or pay premiums they do not owe. If finalized, FFEs and SBE-FPs must implement this starting with annual redeterminations for PY 2026. State Exchanges must implement it starting with annual redeterminations for benefit year 2027.

Establishing Termination Standards for Agents, Brokers, And Web-Brokers

CMS is proposing this regulatory change to address reported violations of law and regulation by agents, brokers, and web-brokers resulting in improper Marketplace enrollments. Specifically, CMS proposes to adopt 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 Agreements should be terminated due to noncompliance. Notably, CMS proffers to define a “preponderance of the evidence” to mean “proof by evidence that, compared with evidence opposing it, leads to the conclusion that the fact at issues is more likely true than not.” This new process and definition would go into effect for PY 2026 and beyond to hold these entities accountable.

Changing Premium Adjustment Percentage and Other Parameters

CMS proposes to readopt the premium adjustment percentage methodology for PY 2026 and beyond. The premium adjustment percentage, which must be determined by the HHS Secretary on an annual basis, is a measure of premium growth used to set the rate of increase for the maximum annual limit on cost-sharing and the required contribution percentage for exemption eligibility. Beginning with PY 2015, CMS adopted a methodology that determined the premium adjustment percentage based on projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Accounts. CMS updated this methodology beginning with PY 2020 to include increases in individual market premiums. In the Proposed Rule, CMS is proposing to readopt the premium adjustment percentage methodology that it established in PY 2020. CMS states that it believes it is appropriate to incorporate individual market premiums because the individual market is more stable, and the COVID-19 public health emergency has long ended. CMS also proposes the PY 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.

Changing Actuarial Value and De Minimis Variation

Beginning in PY 2026, CMS proposes changing the de minimis thresholds for the Actuarial Value (AV) for plans subject to EHB requirements to +2/-4 percentage points for all individual and small group market plans subject to the AV requirements under the EHB package. It proposes a de minimis range of +5/-4 percentage points for expanded bronze plans. CMS also proposes 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. According to CMS, these policies would allow for greater flexibility in plan design and thus provide consumers with increased plan options. CMS states that it would potentially lower premiums as issuers adjust plan designs to attract a broader range of enrollees, which would improve market competition and stability. 

Conclusion

If finalized, some of the provisions included in the Proposed Rule would become applicable beginning on or after January 1, 2026. The remaining proposals in this rule (e.g., those related to ending the SEP for APTC-eligible consumers and past-due premium amounts), if finalized, would become applicable upon the effective date of the final rule. The Proposed Rule also includes a severability clause in anticipation of litigation over the future final rule.

The Proposed Rule aims to undo several Biden Administration policy changes in addition to proposing some of the current Administration’s health policy priorities to “address adverse selection bias” and to “reduce waste, fraud, and abuse.” Crowell is monitoring ongoing policy developments at HHS and CMS, including changes to federal rulemaking. We are available to assist clients in developing appropriate legal and policy strategies to address concerns.