On March 10, 2025, the Centers for Medicare and Medicaid Services (CMS) proposed a rule that in many respects reverts to pre-Biden administration rules and definitions for health care marketplaces across the country. The proposed rule would:
- End the availability of the monthly special enrollment period (SEP) for individuals with household incomes below 150% of the federal poverty level (FPL).
- Require all marketplaces to reinstitute pre-enrollment verifications of eligibility for SEPs and require further verifications of income when there is no tax data available for verification.
- Require marketplaces to continue to re-enroll an individual into the same plan but reduce advance payment of the premium tax credit by $5 when a consumer does not proactively verify their ongoing eligibility in a plan. This action is designed to protect consumers from being enrolled without their knowledge and consent, CMS states. The payment of a $5 monthly premium until the enrollee confirms or updates their eligibility determination ensures the enrollee is aware of their enrollment in specific coverage.
- Reduce the annual open enrollment period for individual market coverage offered through the marketplaces by ending it on Dec. 15, one month earlier than the current deadline.
If fully implemented, these actions will reduce improper federal spending on advance payments of the premium tax credit by $11 billion in 2027, CMS states.
In addition, the rule would:
- Allow issuers to require payment of past-due premiums before effectuating new coverage, which would be a similar policy as was included in the 2017 Market Stabilization Rule which was reversed in 2023.
- Eliminate the fixed-dollar and gross percentage-based premium payment thresholds, allowing issuers to only adopt the net percentage-based threshold. This change is intended to enhance program integrity by ensuring enrollees pay some of the premium owed. CMS believes this would mitigate the risk that consumers are enrolled in coverage improperly or without their knowledge, as well as increase transparency and accountability.
Change “Lawfully Present” Definition and Limit “Sex-Trait Modification Coverage”
The proposed rule would also revert to a previous definition of “lawfully present” that excludes Deferred Action for Childhood Arrivals (DACA) individuals for the purpose of enrolling through the marketplace, for premium tax credits, Advance Payments of the Premium Tax Credit (APRC) and cost-sharing reductions (CSRs) and for the Basic Health Plan (BHP) in states that have chosen to operate a BHP. This definition of lawfully present was in effect from 2010 to 2024. The justification for reverting to the previous definition ensures tax dollars used to subsidize Affordable Care Act (ACA) coverage will go only to eligible lawfully present consumers.
Second, the rule proposes effective plan year 2026, issuers subject to essential health benefit (EHB) requirements — non-grandfathered individual and small group market plans — may not cover sex-trait modification as an EHB. This does not prohibit health plans from voluntarily covering such services nor would it prohibit states from requiring such services in health plans. The proposed policy aims to align EHBs with the “typical employer-sponsored benefits, potentially leading to more consistent coverage offerings and clearer definitions of EHBs.”
“Preponderance of the Evidence” proposed definition
CMS also proposes adopting a “preponderance of the evidence” standard of proof with respect to issues of fact for the department to assess whether an agent, broker or web broker’s marketplace agreement should be terminated due to noncompliance and to add a definition of “preponderance of the evidence.” CMS concludes that this change would improve transparency for holding agents, brokers and web brokers accountable for compliance and protect consumers.
