Major Changes to Affordable Care Act Enrollment Policies

Action: On June 20, the Centers for Medicare and Medicaid Services (CMS) released a final rule that reforms the eligibility and the enrollment process for the Affordable Care Act (ACA) marketplace. The reforms target what CMS considers improper enrollments to deliver “improved health care coverage” and estimates it will lower cost for premiums under the ACA by 5%. The rule will come into effect on August 25, leaving businesses relatively little time to prepare before the 2026 open enrollment period begins this November. CMS estimates the rule will reduce ACA enrollment by between 750,000 and 1,800,000 people after a record enrollment year in 2025 and will likely impact the exchange markets. CMS also released a factsheet on the changes.

Trusted Insights for What’s Ahead^®

• CMS believes the new rule will address fraud in the program by agents and brokers improperly enrolling ineligible consumers and unauthorized plan switching, citing a report estimating as many as 5,000,000 improper enrollments costing taxpayers up to $20 billion. The Administration argues that combating fraud will drive down the average cost of premiums and save taxpayers up to $12 billion in 2026.
• The “Marketplace and Integrity and Affordability Final Rule” includes a number of reforms. This includes excluding Deferred Action for Childhood Arrivals (DACA) recipients from the program and tighter standards related to the annual open enrollment and special enrollment periods.
• These regulations also affect those already enrolled in ACA exchanges by including income eligibility verifications for premium tax credits and cost-sharing reductions, annual eligibility redeterminations, de minimis thresholds for the actuarial value for plans subject to essential health benefits requirements, and income-based cost-sharing reduction plan variations.
• Finally, the rule revises the premium adjustment percentage methodology to establish a percentage growth measure capturing premium changes in insurance markets for 2026 and beyond.
• Nearly 24.2 million signed up for health care coverage under the ACA in 2025, in part because of increased flexibilities in the enrollment period introduced under the Biden Administration. The rule reverses these flexibilities, which critics alleged have led to massive levels of fraud. 
• Critics of the reforms, including the American Medical Association, argue that the new rule will unduly reduce access for eligible enrollees and is designed to contribute to the effort initiated under the President’s first term to reduce the size of the ACA exchanges. The Administration argues that reducing fraud in the program will reduce the price of premiums costs and the broader tax burden for taxpayers. CMS estimates that between 750,000 to 2 million individuals would lose coverage if all the provisions were to go into effect.
• Recent data suggests that ACA-related subsidies accounted for just 6% of all Federal health insurance spending in 2023, compared to spending for Medicare (54%) and Medicaid (39%).