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CMS Final Rule Creates New Barriers to ACA Marketplace Coverage

In June, the Centers for Medicare & Medicaid Services (CMS) finalized a sweeping rule that makes it harder for people to enroll in and keep their health insurance through the Affordable Care Act (ACA) Marketplace (in Pennsylvania, our ACA Marketplace is called Pennie). CMS estimates that as many as 1.8 million people will lose coverage nationwide in 2026 because of these changes.  In Pennsylvania, around 45,000 fewer people will be able to enroll in Pennie due to these changes, according to Pennsylvania Insurance Commissioner Michael Humphries.

The Marketplace Integrity and Affordability Final Rule, published on June 20, 2025, takes effect on August 25, 2025. While all states will experience coverage losses, CMS expects them to be most concentrated in nine states where CMS says “erroneous and improper enrollment is most noticeable” — many of which are non-Medicaid expansion states where low-income individuals have limited coverage options. This article includes an overview of the major changes coming as a result of the final rule.

 

Immediate Impact: DACA Recipients Lose Coverage

One of the most consequential changes takes effect immediately. CMS is amending the definition of "lawfully present" to exclude Deferred Action for Childhood Arrivals (DACA) recipients, which immediately terminates coverage for those currently enrolled. CMS estimates that 10,000 DACA recipients nationwide will lose Marketplace coverage as a result of this rule.  For more information about the impact of the new rule on DACA Recipients’ access to coverage, click here.

 

Eliminating Year-Round Enrollment 

Starting in August 2025, households with projected incomes at or below 150 percent of the federal poverty level (around  $48,000 a year for a family of 4) will no longer have access to an ongoing special enrollment period that allowed them to enroll in coverage year-round. While this provision only lasts a year under the new rule, the federal budget bill signed into law on July 4th effectively eliminates this special enrollment period by requiring people who use it to pay the full cost of their health plan premium, which would almost certainly be unaffordable to a family with limited income. According to Pennie’s comments to the proposed rule, about 27,000 Pennsylvanians utilized this special enrollment period in 2024.  

This elimination of the low-income special enrollment period means that people earning less than $22,590 annually (for a single person) who miss the shortened open enrollment window will have to wait until the following year to get coverage, potentially leaving them uninsured for months.

 

More Paperwork & Red Tape Create Barriers to Coverage

The rule implements several new paperwork and enrollment requirements that will make getting coverage more difficult: 

  • Pre-enrollment verification for special enrollment periods: Most people can only sign up for health insurance during an "open enrollment" period, but sometimes life changes happen - like losing your job, getting married, or having a baby. When this happens, you can sign up for insurance during a "special enrollment period." Under the new rule, before you can actually get insurance using a special enrollment period, you have to prove you qualify by showing official documents like birth certificates or marriage licenses.
     
  • Changes to How You Must Prove Income: Enrollees will no longer be able to attest to their income and household size when that information is not verifiable using their tax returns. Instead, Exchanges and consumers must use other trusted sources to verify that information. This creates challenges for people with irregular employment or fluctuating income, those who recently started working, or individuals experiencing changes in family composition during the year.
     
  • New Tax Fling Requirements: The rule will require anyone using financial assistance (called “premium tax credits”) to file and reconcile their taxes to be eligible for further credits in the next plan year. Those who fail to do so will not get any financial help paying for insurance. Even if you normally don’t need to file taxes, you now must file them each year to get help paying for health insurance. People may be caught off guard by this rule, which will require them to file their 2025 taxes to get financial help in 2026. In 2027 and after, there is a two-year grace period, allowing for more time to catch up and file past taxes.
     
  • Shortened Open Enrollment Periods: The rule shortens the open enrollment period for the federal marketplace to Nov. 1-Dec. 15 starting in 2027, and limits open enrollment periods for state-based marketplaces to Nov. 1-Dec. 31. This eliminates the flexibility that state-based marketplaces have traditionally had to offer longer enrollment periods, potentially leaving fewer opportunities for people to sign up for coverage.
     
  • Past-Due Premiums Can Stop You from Getting New Insurance:  To the extent permitted by state law, marketplace plans may require payment of past due premiums before you can enroll in new coverage. This can trap those who fell behind on payments in a cycle of non-coverage.

 

Higher Costs; Fewer Services Covered

  • Health Insurance Will Cost More: Beyond enrollment barriers, the rule will increase healthcare costs for people when they buy insurance and when they see doctors or get medical care. In 2026, you could pay up to $10,600 out of your own pocket for individual health insurance before your insurance covers your care.  For family plans, you could pay up to $21,200 out of pocket. Compared to existing rules, this is about $1,400 more in healthcare costs for individuals and $2,800 more for families each year.  Additionally, Your monthly insurance premium (the amount you pay each month to have coverage) will likely go up by 2% to 7%, meaning if you pay $300 per month now, you might pay $306 to $321 per month next year.
     
  • You may have to pay $5 each month for coverage, even if your plan should be free: If an enrollee does not proactively verify their eligibility for a fully subsidized ($0 premium) plan, the Marketplace must re-enroll that individual into the same plan and increase the premium to $5/month until the enrollee verifies their income. This creates an additional administrative burden and financial barrier for the lowest-income families.

 

  • You may no longer automatically get better insurance: Marketplaces can no longer automatically re-enroll certain low-income bronze plan enrollees in silver plans that would provide better coverage at the same or lower cost. This eliminates a consumer protection that helped ensure people automatically get better coverage when available for the same cost. Now, the system will no longer automatically do this and individuals will need to figure it out and switch plans themselves.
     
  • Restrictions on Services Covered as Essential Health Benefits: CMS has added sex-trait modification to the list of services that may not be covered as essential health benefits beginning in plan year 2026. This removes access to medically necessary care for transgender people, though states retain some ability to mandate coverage under state law. 

 

The Broader Context: Enhanced Subsidies Set to Expire

These coverage restrictions come at a particularly challenging time because the enhanced premium subsidies that helped nearly 24 million people nationwide enroll in Marketplace plans as of January 2025 are set to expire on December 31, 2025. Without congressional action extending these subsidies, families will face a double blow: higher premiums from subsidy reductions combined with new barriers to enrollment from this rule.

 

How Can States Help Mitigate the Harm?

While many provisions of the rule apply nationwide, states do retain some flexibility to protect their residents:

✅ State marketplaces have discretion in implementing some verification requirements
✅ States can choose not to allow insurers to require past-due premium payments
✅ States can mandate coverage of gender-affirming care under state law
✅ State regulators can work with insurance companies to establish more consumer-friendly policies where federal rules allow flexibility.

 

The rule comes as the Trump administration has slashed federal Medicaid and other healthcare funding and implemented stricter eligibility requirements across government programs. While CMS frames these changes as necessary to combat fraud and improve program integrity, the practical effect will be to reduce access to affordable healthcare for the most marginalized populations. As these changes take effect, advocates, healthcare providers, and state officials can work to help mitigate the harm by pushing for consumer-friendly state policies and helping people navigate the new restrictions and maintain coverage wherever possible.