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  Title	HHS Proposes To Restrict Marketplace Eligibility, Enrollment, And Affordability In First Major Rule Under Trump Administration (Part 1)
  ID	7652155
  External ID	7620975510
  Author	Katie Keith, Jason Levitis
  Published Date	March 12, 2025, 11:30 a.m.
  Summary	Editor's Note This article is the latest in the Health Affairs Forefront featured topic , “ Health Policy at a Crossroads .” Articles in this topic will offer timely analysis of regulatory, legislati
  Tags	press-release
  URL	https://www.healthaffairs.org/do/10.1377/forefront.20250312.194932/full/
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  Content ID	4957401
  Key	8da64cbf-befd-4297-af48-eb9fc607f977
  Content	Editor's Note This article is the latest in the Health Affairs Forefront featured topic , “ Health Policy at a Crossroads .” Articles in this topic will offer timely analysis of regulatory, legislative, and judicial developments in health policy under the Trump-Vance Administration and the 119th Congress. On March 10, 2025, the U.S. Department of Health and Human Services (HHS) issued a proposed rule —the first major health care rule under the second Trump administration—that would, if finalized, reverse several Biden-era regulatory changes under the Affordable Care Act (ACA) and impose new restrictions. In proposing the rule, HHS invokes a memorandum issued by President Trump on inauguration day and various executive orders , as well as the administration's goals of improving health care affordability and access while maintaining fiscal responsibility. The rule was accompanied by a press release and fact sheet . Comments are due 30 days after display (rather than publication) in the Federal Register The proposed “marketplace integrity and affordability” rule would reverse several Biden-era policies to expand eligibility, enrollment, and affordability. This includes policies to extend the annual open enrollment period (OEP), create a new special enrollment period (SEP) for qualifying low-income Americans, and reduce administrative burdens on consumers. These and other Biden-era changes—combined with enhanced premium tax credits that will expire at the end of 2025 if not extended by Congress—contributed to record-high ACA enrollment of more than 24 million people for 2025. This is double the number of consumers that enrolled in marketplace coverage for 2021 under the final year of the first Trump administration. The Trump administration takes issue with these enrollment gains, asserting that millions of people are improperly enrolled in subsidized marketplace coverage. This includes consumers who have been fraudulently enrolled by agents, brokers, and web-brokers. While the proposed rule includes one proposal directly targeted to holding agents, brokers, and web brokers accountable, HHS largely addresses its concerns about improper enrollment by proposing to reinstate Trump-era restrictions that will limit consumer eligibility and enrollment opportunities or erode the value of marketplace coverage. Additionally, HHS would newly alter the automatic reenrollment process in ways that could lead to confusion and coverage losses. Under this proposal, consumers who would currently be automatically reenrolled in a $0 premium plan would instead be charged a $5 premium for reenrollment in that same plan; this premium would be eliminated after the enrollee confirmed their eligibility. The proposed rule would also newly prohibit the coverage of gender-affirming care as an essential health benefit (EHB), a policy that HHS proposes even though courts have blocked President Trump's directives on this issue. Different parts of the rule would, if finalized, go into effect at different times, including many on timelines that seem unrealistic given complex marketplace operations. For example, elimination of a SEP for low-income Americans and new paperwork requirements for applicants would apply on the final rule's effective date, which is generally 60 days after publication of the final rule—potentially landing it in mid-2025. Other changes—such as proposed SEP pre-enrollment verification requirements—would not go into effect until the 2026 plan year. The proposed rule also includes a severability clause in anticipation of litigation over the future final rule. The proposed rule is significant and would, if finalized, restrict marketplace eligibility, enrollment, and affordability. HHS acknowledges as much and notes that the proposed rule, if finalized, would reduce enrollment, premiums, and advance premium tax credits each year beginning in 2026. Up to 2 million people could lose their coverage in 2026 alone, with coverage losses concentrated in Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee, Texas, and Utah. Part 1 of this article discusses proposed policies to limit the annual OEP, eliminate the monthly SEP for low-income consumers, impose SEP verification requirements, eliminate eligibility for Deferred Action for Childhood Arrivals (DACA) recipients, allow insurers to condition new coverage on repayment of premium debt, require premiums for those who are automatically reenrolled in new coverage, treat gender-affirming care as non EHB, revise standards that apply to brokers, and revise methodologies and policies that apply to the premium adjustment percentage and actuarial value. A second part will address the rule's proposed policies on failure to reconcile, income verification, and premium payment thresholds. Limits On Enrollment Opportunities The proposed rule would make it harder for consumers to enroll in marketplace coverage by shortening the annual OEP, eliminating the monthly SEP for low-income consumers, imposing burdensome SEP verification requirements, and eliminating marketplace and Basic Health Program eligibility for DACA recipients. Limiting The Annual Open Enrollment Period HHS proposes to, once again, limit the annual OEP to 45 days—from November 1 through December 15—beginning with the OEP for 2026. The duration of OEPs has varied over time, ranging from 45 days to 180 days. Of most relevance here, the first Trump administration set a 45-day OEP from 2018 to 2021, a change it codified via its 2017 “ market stabilization” rule . The Biden administration then extended the OEP from November 1 to January 15, which is about 75 days, beginning with the OEP for 2022. HHS now believes that a 45-day OEP is warranted to protect the stability of the individual market and reduce adverse selection. HHS asserts that marketplace consumers are now accustomed to the December 15 deadline and a single December 15 deadline (instead of two deadlines) would reduce consumer confusion. One of the reasons that HHS extended the OEP to 75 days was to give consumers who qualify for premium tax credits and are auto-reenrolled into coverage more time to change their plan in January. This is especially important for consumers who are set to receive a lower subsidy than the prior year. Because these consumers are auto-reenrolled, HHS reasoned, they may not be aware of their higher premium contribution until they receive a bill in early January. With a January 15 deadline, these consumers are able to change plans and select a more affordable option. HHS no longer believes that this need warrants a 45-day OEP: Only a small number of consumers—fewer than 3 percent of federal exchange enrollees for the 2025 plan year—switched to a lower-cost plan between December 15 and January 15. In what would be a shift for many, state-based exchanges (SBEs) would be required to limit their annual OEP to November 1 through December 15. Currently, SBEs have flexibility to set a shorter or longer OEP (so long as it extends through at least December 15). However, HHS asserts that SBE OEP extensions have not increased enrollment and rather “present an unnecessary risk of adverse selection.” Recognizing that SBEs could potentially extend the proposed OEP through a blanket SEP, HHS asks for comment on whether SBEs should be prohibited from doing so. HHS also requests comment on whether the 45-day OEP should be delayed until the OEP for 2027. HHS assumes that Congress will not extend the enhanced premium tax credits that expire at the end of 2025. As a result, most marketplace enrollees will see their premiums rise, which will lead many to drop coverage or change their plan for 2025 after December 15, 2025. HHS asks if these circumstances for the 2026 plan year warrant a delay in the 45-day OEP to 2027 plan year. Finally, HHS commits to continued consumer notifications and public outreach regarding marketplace coverage (although the extent of this commitment is unknown). This includes annual notices, advertising campaigns (including television, radio, and social media), collaboration with assisters, and the use of HealthCare.gov. Even so, HHS already significantly reduced funding for the navigator program—from a record high of $100 million under the Biden administration to $10 million annually. As discussed in prior Forefront articles , this reduction could, as it did in the first Trump administration, leave some consumers without the help they need to enroll in marketplace or Medicaid coverage. Eliminating The Monthly SEP For Low-Income Consumers In 2021, the Biden administration established a monthly SEP for people at or below 150 percent of the federal poverty level, with the goal of helping ensure that uninsured people who qualify but are not enrolled in coverage can access free or nearly-free platinum-equivalent marketplace coverage. Initially, this SEP was in effect only when this population qualifies for maximal advance premium tax credits (i.e., when Congress sets the taxpayer's premium contribution to 0 percent). This has been the case since 2021 thanks to enhanced premium tax credits but could end at the end of 2025 if Congress fails to extend them. Last year, the Biden administration eliminated the requirement that a consumer be eligible for zero-premium silver coverage. HHS did so in light of data suggesting that the SEP had been successful, the importance of the SEP as an additional safety net especially for consumers transitioning from Medicaid or CHIP into other coverage, and a lower-than-anticipated risk of adverse selection. As a result, a consumer at or below 150 percent of the federal poverty level can currently enroll using a monthly SEP even when the taxpayer's premium contribution is not set to 0 percent. Now, HHS proposes to entirely eliminate the monthly SEP for low-income consumers. The agency now believes that the SEP risks adverse selection and increased improper enrollments by agents, brokers, and web-brokers. HHS also cites consumer complaints, litigation, and a sharp increase in enrollment of individuals at this income level during the 2024 plan year. Some of HHS's conclusions seem to have been reached in part by comparing apples-to-oranges data (i.e., by comparing the number of people who estimated their income to enroll in 2024 marketplace coverage to the income of respondents to the 2022 American Community Survey data). Finally, HHS newly takes issue with its own legal authority, asserting that the SEP was not the “single, best interpretation” of the ACA provision that governs the Secretary's authority to set marketplace standards, including SEPs. If finalized, this change would apply on the effective date of the final rule; HHS would not extend the policy through the end of the 2025 plan year to coincide with the expiration of the enhanced premium tax credits. HHS does not believe that the other changes it proposes—such as SEP pre-enrollment verification—or the expiration of the enhanced marketplace subsidies would address its concerns about the monthly SEP. Instead, it proposes to swiftly end this enrollment option for low-income Americans. Special Enrollment Period Verification Requirements HHS proposes to reinstate pre-enrollment SEP verification requirements for certain types of SEPs by the federal marketplace and to require all marketplaces to newly conduct SEP eligibility verification for at least 75 percent of new enrollments. These requirements, if finalized, would apply beginning with the 2026 plan year. Through mid-2016, consumers were largely able to self-attest to their eligibility for SEPs and enroll in coverage without further verification or proof. However, in response to industry concern that consumers could be gaming SEP eligibility, the first Trump administration imposed pre-enrollment SEP verification requirements beginning in 2017. The Trump administration later proposed to require all exchanges to conduct SEP eligibility verification for at least 75 percent of new enrollments. The Biden administration rolled back pre-enrollment SEP verification requirements in the 2023 payment notice and declined to finalize the Trump administration's proposal to extend these requirements to all exchanges. As a result, exchanges currently have the option to conduct pre-enrollment SEP verification processes, and HHS conducts pre-enrollment verification of SEP eligibility only for the loss of minimum essential coverage. Now, HHS wants to reinstate the policies in place before the 2023 payment notice; require the federal exchange to conduct pre-enrollment SEP verification of eligibility for five SEPs (marriage, adoption, moving to a new coverage area, loss of minimum essential coverage, and Medicaid/CHIP denial); and newly require SBEs to conduct pre-enrollment SEP verification for at least 75 percent of new enrollments. If these requirements are finalized, consumers would have their eligibility verified electronically or would be asked to submit documentation to confirm their eligibility for a SEP. This process would have to be completed before the coverage takes effect. HHS acknowledges that pre-enrollment verification—and the process of locating and submitting documents or other proof to the marketplace for review—poses barriers to enrollment that may deter consumers, especially younger people, from enrolling in coverage. However, HHS believes that applicants should be able to comply with these requirements to confirm their SEP eligibility. Although SBEs could ask to use alternative SEP verification methods, this change could also be costly for SBEs: most SBEs would incur one-time costs of about $12 million while five SBEs would incur one-time costs of about $60 million. This is in addition to ongoing annual costs to implement and operationalize SEP verification requirements. Guaranteed Issue And Repayment Of Past Due Premiums HHS would allow, but not require, insurers to condition new coverage on the repayment of outstanding premium debt for prior coverage. A similar policy was initially adopted by the Trump administration in the “ market stabilization” rule , which allowed insurers to lock consumers out of coverage that would otherwise be available during OEPs or SEPs if they could not pay past-due premiums from the prior 12 months. This interpretation was a shift from prior rules; the Obama administration interpreted the ACA's guaranteed issue requirement to bar an insurer from requiring payment for past-due premiums before effectuating new coverage in a different product. Insurers could pursue collection for past-due premiums but could not condition new coverage on payment of the amount due. The Biden administration eliminated the Trump-era policy in the 2023 payment notice in response to concerns that the policy creates barriers to coverage and is inconsistent with guaranteed issue protections. HHS and commenters explained that nonpayment of premiums may not be intentional and could result instead from financial hardship, hospitalization, an environmental disaster, or a lack of awareness. Even if the reason for nonpayment is not known in all cases, the Biden administration did not view this as a reason to deny coverage to individuals and believes insurers have adequate recourse to collect owed premiums. Now, HHS proposes to reinstate this policy with a few changes. Under the proposed rule, insurers could refuse to effectuate new coverage if a consumer fails to pay past-due premiums from any prior year. 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. If a consumer cannot pay the initial and past-due premium amounts in full, the insurer could refuse to effectuate their new coverage. (By using insurers' terms of coverage, HHS appears to be trying to leverage exceptions to guaranteed renewability requirements to impose conditions on new enrollment that are not authorized under guaranteed issue requirements.) This policy, if finalized, would apply on the final rule's effective date and thus could go into effect in 2025. HHS's proposed rule goes beyond the prior 2017 policy in several ways. The 2017 policy limited past-due premiums to the prior 12 months whereas this rule would allow repayment for past-due premiums from any time period. HHS also previously required insurers to notify consumers about this policy but does not propose a similar requirement here. Instead, HHS asks whether it should reimpose these or other requirements—or rather leave these issues to state regulation of premium payment policies. HHS also asks for comment on whether it should require , rather than allow, insurers to adopt this policy and how much it would cost insurers to implement a premium repayment requirement. HHS acknowledges that this policy would result in enrollment losses but expects those losses to be minimal because the amount that consumers owe is “relatively small,” and many consumers qualify for premium tax credits. HHS also notes that enrollees who face financial constraints “might need to adjust their household budgeting to maintain coverage or, if they are not able to, become uninsured,” which could, in turn, lead to higher costs for care, medical debt, and uncompensated care. Eliminating Eligibility For DACA Recipients In a swift reversal of a Biden-era policy, HHS proposes to eliminate marketplace and Basic Health Program eligibility for DACA recipients. Under the ACA, marketplace eligibility and financial assistance is limited to U.S. citizens or nationals as well as those who are “lawfully present” in the United States. As discussed here by Zach Baron for Forefront , the definition of “lawfully present” has been addressed in several regulations under the ACA. Most recently, HHS revised the definition of “lawfully present” to include DACA recipients for purposes of marketplace coverage, affordability programs, and the Basic Health Program eligibility. This rule was challenged by Republican attorneys general from 19 states. In December 2024, a district court judge in North Dakota enjoined the Biden administration from enforcing the rule in those states, meaning DACA recipients in 19 states are currently ineligible for marketplace coverage. Citing this court decision—as well as Trump-era executive orders on immigration and long-standing prior policy—HHS now proposes to exclude DACA recipients from these programs by reinstating the agency's prior definition of “lawfully present.” HHS no longer believes, as it asserted in the 2024 rule, that there is a reason to “align” its position on DACA recipients with that of the Department of Homeland Security with respect to certain Social Security benefits. Further, HHS now asserts that it was improper to depart from its prior interpretation of “lawfully present” with respect to DACA recipients and that this interpretation was contrary to the ACA's statutory limits. This change, if finalized, would apply on the final rule's effective date and thus could go into effect in 2025. If finalized, exchanges in states that are not subject to the injunction noted above would need to update their eligibility systems and notify consumers. Exchanges would also need to terminate existing coverage for DACA recipients who had already enrolled and ensure that these individuals are not renewed in future coverage years. Although 100,000 DACA recipients were projected to enroll in coverage, HHS now estimates current enrollment of about 11,000 DACA recipients who would be affected if the proposed rule is finalized. At the same time, HHS also acknowledges that excluding DACA recipients could have a small negative impact on the individual market risk pool because DACA recipients are young and generally tend to be healthy. Requiring Premiums For Those Auto Reenrolled Under current regulations , exchange enrollees that remain eligible for a marketplace plan from one year to the next are automatically reenrolled in the same plan, unless they terminate that coverage or actively enroll in a different plan. If the same plan is not available, the exchange uses a hierarchy to enroll the individual in a similar plan based on metal level, product, and insurer. Automatic reenrollment has been in place since the initial year of enrollment. In a change that could have significant implications for consumers, HHS proposes to newly require consumers who are automatically reenrolled into marketplace coverage with no premium to pay $5 per month until they confirm their eligibility information. This proposal would apply to fully subsidized consumers (i.e., enrollees whose premium is $0 because they are eligible for advance premium tax credits that fully cover their premium) beginning with the 2026 plan year for the federal exchange and the 2027 plan year for SBEs. The goal of this policy is to “prompt an affirmative action” that would force enrollees to reconfirm their plan eligibility or pay premiums they do not owe. Specifically, exchanges would be required to decrease the monthly amount of advance premium tax credit that each fully subsidized enrollee would receive by $5. The exchange would do so until the enrollee returns to the exchange to confirm or update their eligibility information. Once the consumer has confirmed their eligibility, exchanges would be required to reinstate the full amount of advance premium tax credits (i.e., returning the premium to $0) on a prospective basis. If such a policy were in place for 2025, HHS estimates that it would have affected nearly 2.7 million enrollees in the federal exchange. HHS proposes this change even at a time when it assumes fewer enrollees will have access to $0 premium coverage if the enhanced premium tax credits expire at the end of 2025. This is not the first time that the Trump administration has proposed changes to the automatic reenrollment process. In the proposed 2021 payment notice , the first Trump administration proposed to automatically reenroll consumers without advance premium tax credits at all, meaning consumers would be reenrolled in unsubsidized coverage until they returned to the exchange to verify their eligibility. Commenters widely panned this approach, arguing that it would result in coverage losses, administrative burdens, and confusion and that automatic reenrollment helps stabilize the risk pool. Although this proposal was not finalized for 2021, the current proposed rule builds on this prior concept. HHS asks whether the premium penalty should be greater than $5 and seeks comment on the appropriate dollar amount that fully subsidized consumers should have to pay before being able to access a zero-premium plan. HHS also solicits comment on whether the risk of “program integrity concerns” might outweigh the benefit of automatic reenrollment, suggesting some interest in additional changes to the automatic reenrollment process. HHS would also eliminate reenrollment hierarchy standards for automatically reenrolling consumers who were in a bronze plan that is being discontinued. Under existing requirements, exchanges can transition a consumer who is currently enrolled in a to-be-discontinued bronze plan and eligible for cost-sharing reductions into a silver marketplace plan for a future year under certain circumstances. Specifically, the silver plan must be in the same product with the same provider network and with a lower or equivalent net premium after advance premium tax credits. This addresses concerns about low-income consumers leaving large subsidies on the table. Now, HHS proposes to eliminate this standard, meaning exchanges could no longer transition a consumer from discontinued a bronze plan into a silver plan beginning with the 2026 plan year. HHS believes the current policy inappropriately overrides consumer choice and that a consumer's decision to enroll in a bronze plan should be honored during the reenrollment process. Exchanges would still be required to account for the same provider network when reenrolling enrollees into a new plan if their current plan was no longer available, but HHS would generally revert to reenrollment hierarchy standards in place before the OEP for 2024. Limits On Essential Health Benefits HHS proposes narrow but significant changes to EHB requirements. In a sharp departure from long-standing marketplace policy, HHS would prohibit individual and small group insurers from covering what it refers to as “sex-trait modification” as EHB beginning with the 2026 plan year. “Sex-trait modification” is defined by reference to one of several executive orders signed by President Trump that target care for transgender people. As discussed more here , transgender people may need access to a range of services used to treat gender dysphoria. This care is outlined in evidence-based medical standards maintained by experts such as the Endocrine Society and is endorsed by every major US medical association, including the American Medical Association and the American Psychological Association. Needed care may cut across several categories of benefits, including mental health, ambulatory care, and prescription medications, as just some examples. Under the ACA, individual and small group plans must cover an EHB package that includes at least 10 general categories of care and be equal in scope to the benefits provided under a typical employer plan. By proposing to exclude treatment for gender dysphoria from EHB, this care would not be subject to cost-sharing limitations that apply to EHB under the ACA. As a result, transgender people could face higher out-of-pocket costs. Health plans could still voluntarily cover this care as non-EHB, but states that require plans to cover this care—whether now or in the future—could be required to defray the cost if considered a benefit mandate. HHS's main justification for this proposal is that this coverage is not typically included in employer-sponsored plans. But HHS cites no source or evidence for this information other than state EHB benchmark plan selections first made more than a decade ago. HHS also fails to recognize that the scope of typical employer plans has evolved since then. For instance, data shows that many companies do routinely cover transgender-inclusive benefits: for instance, 72 percent of Fortune 500 companies cover treatment for gender dysphoria for employees and dependents as do state employee health plans in 24 states and D.C HHS also seems to assume that the absence of a specific state coverage mandate means plans do not cover this care. While a handful of states have passed laws to clarify the scope of coverage for gender dysphoria treatment, 24 states and D.C. have interpreted federal and state nondiscrimination laws to prohibit health insurers from excluding coverage for this care. Policymakers have done so in part based on the recognition that the medical services associated with treatment for gender dysphoria are not needed only by transgender people. The same hormone therapy used for transgender patients, for example, is provided to non-transgender patients with endocrine disorders and menopausal symptoms. Surgical procedures, such as a hysterectomy, are regularly covered by insurance companies for non-transgender individuals for indications such as treating injuries or for cancer treatment or prevention. HHS acknowledges as much and asks for comment on whether it should clarify that these services—when provided for other indications—would still be covered as EHB for non-transgender people for other medical conditions. HHS also points to other types of benefits that it has excluded from EHB—such as routine non-pediatric dental services and long-term/custodial nursing home care benefits—based on the conclusion that these benefits are often provided as excepted (rather than typical) benefits by an employer. But this excepted benefits rationale does not extend to treatment for gender dysphoria. As noted above, the services provided to transgender people for the treatment of gender dysphoria are the same services that are routinely covered for non-transgender people for a variety of medical indications, meaning plans already cover this care under existing EHB categories. HHS cites no examples of other instances where it has targeted treatment for a single medical condition for exclusion from the EHB. HHS is proposing this new policy even though enforcement of President Trump's executive orders on transgender health care has been blocked in court. HHS acknowledges these court orders but asserts that its proposal does not conflict with those orders because HHS has a sufficient justification for proposing the EHB limit that is separate and independent from those orders. This assertion notwithstanding, HHS does not consider or otherwise discuss whether this proposal conflicts with a range of federal nondiscrimination requirements, including those that apply to EHB design. Additional Standards For Agents, Brokers, And Web-Brokers Prior Forefront articles have discussed ongoing concerns about improper marketplace enrollment by agents, brokers, and web-brokers as well as prior action taken by the Biden administration to address this issue. As noted above, HHS raises concerns about fraudulent enrollment throughout the proposed rule as a primary justification for many of its program integrity proposals. With respect to agents, brokers, and web-brokers themselves (referred to collectively here as “brokers”), HHS would alter the process for holding these entities accountable. Specifically, HHS would amend three exchange agreements that brokers must sign to enroll consumers in the federal exchange. These agreements already allow HHS to terminate a broker for cause, but doing so requires a specific finding of noncompliance or a pattern of noncompliance that is sufficiently severe. HHS now proposes to amend broker agreements to make clear that it would apply a “preponderance of the evidence” standard of proof when making this determination. HHS believes this standard—which is a lower evidentiary standard than, say, “clear and convincing evidence” or “substantial evidence”—is appropriate but asks for comment on alternatives and the proposed definition for the “preponderance of the evidence” standard. HHS also asks for comment on questions related to state oversight of brokers, whether it should provide additional federal guidance on consumer consent, whether other measures are needed to hold consumers harmless for improper enrollment, and any additional actions that HHS should take to enhance broker oversight. Reducing Affordability HHS proposes to reinstate Trump-era methodologies and policies that, if finalized, would raise premiums and out-of-pocket costs for consumers. Premium Adjustment Percentage And Other Parameters The annual premium adjustment percentage 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. The percentage must be determined by the Secretary of HHS on an annual basis. In addition, under premium tax credit regulations, the Internal Revenue Service generally uses the premium adjustment percentage to adjust premium tax credit parameters that determine individuals' contributions. Beginning with the 2015 plan year, HHS 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. HHS used employer-sponsored premium data because it reflected health care cost trends without being skewed by individual market premium fluctuations. HHS updated this methodology beginning with the 2020 plan year to additionally include increases in individual market premiums. The shift resulted in a higher premium adjustment percentage and thus a higher annual limit on out-of-pocket costs and a higher required contribution from subsidy-eligible consumers. HHS, under the first Trump administration, proposed to maintain the same methodology for the 2022 plan year, which would have resulted in a higher premium adjustment percentage and increased premiums and out-of-pocket costs. Citing concerns from commenters, the Biden administration declined to do so and instead readopted the same methodology as was used from 2015 to 2019 for 2022 and beyond. Now, HHS proposes to readopt the premium adjustment percentage methodology that it established beginning with the 2020 plan year. HHS believes that it is once again appropriate to incorporate individual market premiums because the individual market is more stable and the COVID-19 public health emergency has long ended; the preamble includes an extended discussion regarding this rationale. HHS also no longer believes that its methodology selection should be informed by policy objectives such as making coverage more accessible and affordable. This proposal, if finalized, would supersede October 2024 guidance on the percentage, which set the percentage for 2026 at 1.6002. Under this new methodology, the premium adjustment percentage for 2026 would be about 4.5 percent higher at 1.6727 percent, up from about 1.4512 for 2025. A higher premium adjustment percentage would mean higher annual limits on out-of-pocket costs (which apply to individual and group plans) and, if used to update premium tax credit parameters, higher premiums for subsidized consumers. In this case, the new methodology would increase the maximum annual out-of-pocket limit on cost sharing for 2026 to $10,600 for self-only coverage and $21,200 for other than self-only coverage. This would be a 15 percent increase compared to the 2025 plan year limits and a 4 percent increase relative to the percentage adopted by the Biden administration for 2026. These limits would be reduced to $3,500 for self-only coverage and $7,000 for other than self-only coverage for those with incomes under 200 percent of the federal poverty level and $8,450 for self-only coverage and $16,900 for other than self-only coverage for those with incomes between 201 and 250 percent of the federal poverty level. HHS would also update the required contribution percentage at 8.05 percent for 2026, up from 7.28 percent for 2025. If the Internal Revenue Service adopts this revised value to update premium tax credit parameters, per its normal practice, consumer premiums would rise as well to about 4.5 percent higher for a benchmark plan compared to current rules. Actuarial Value And De Minimis Variation Insurers that offer coverage in the individual and small group markets must comply with actuarial value requirements of 60 percent for a bronze plan, 70 percent for a silver plan, 80 percent for a gold plan, and 90 percent for a platinum plan. Under the ACA, HHS has flexibility to allow de minimis variation in actuarial value to account for differences in actuarial estimates. As a result, metal level plans must satisfy their specified actuarial value level within an allowable de minimis variation. Federal officials initially allowed a de minimis variation of 2 percentage points, but this amount was revised under the first Trump administration to +5/-4 percentage points for certain bronze plans (to account for plan design issues unique to them) and then to +2/-4 percentage points for all plans. Beginning with the 2023 plan year, HHS revised the de minimis ranges to +2/-2 percentage points for individual and small group market plans that must comply with EHB requirements. HHS also created several exceptions to be more protective of consumers. First, the de minimis range for expanded bronze plans was changed to +5/-2 percentage points. Second, as a condition of certification, insurers had to agree to limit the de minimis range for individual market silver qualified health plans to +2/0 percentage points. Third, income-based silver cost-sharing reduction plan variations were limited to a de minimis range of +1/0 percentage points. The latter two policies were designed to ensure that enrollees could receive the full value of marketplace subsidies provided under the law. Now, HHS proposes to revert to de minimis ranges of +5/-4 percentage points for expanded bronze plans and +2/-4 percentage points for other plans beginning with the 2026 plan year. HHS would also eliminate the second exception regarding a +2/0 percentage point de minimis range for individual market silver qualified health plan certification and revise the third exception to allow a de minimis range of +1/-1 percentage points for cost-sharing reduction plan variations. Expanding the permitted downward variation of silver plans would, by extension, reduce premium tax credit amounts, as HHS notes. More generally, these changes would erode the value of marketplace coverage and could contribute to consumer confusion about coverage options. HHS asserts that it is proposing these changes in light of concerns raised by insurers about the need for additional flexibility in establishing plan cost sharing.
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