CMS Final Rule Creates New Barriers to ACA Marketplace Coverage
In June, the Centers for Medicare & Medicaid Services (CMS) published a sweeping final 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. According to PA Insurance Commissioner Michael Humphreys, around 45,000 fewer Pennsylvanians will be able to enroll in Pennie due to these changes. The CMS final rule takes effect on August 25, 2025.
Immediate Impact: DACA Recipients Lose Coverage
CMS has amended the definition of "lawfully present" to exclude Deferred Action for Childhood Arrivals (DACA) recipients. This will immediately terminate coverage for DACA recipients currently enrolled in a Marketplace plan when the law takes effect on August 25, 2025. CMS estimates that 10,000 DACA recipients nationwide will lose 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 for Low-Income Families
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 until the end of 2026 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 on 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 or qualify for another special enrolment period 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 and keeping coverage more difficult:
- Changes to How You Must Prove Income: For health insurance sought between August 25, 2025 and December 31, 2026 applicants seeking premium tax credits or help with the out of pocket health costs will not be able to attest to their income and household size when the IRS does not have tax data for that person. with information from the IRS. Instead, Marketplaces must use other trusted sources to verify that information and may request information from the applicant. 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. Beginning in 2027, attestation will again be permitted.
- New Tax Filing 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. Previously there had been a two-year grace period to file and reconcile. Those who fail to do so will not get any financial help paying for insurance.
- Shortened Open Enrollment Periods: The rule shortens the open enrollment period for all health insurance marketplaces, including Pennie, to begin no sooner than November 1 each year and end no later than December 31 each year. This restricts the flexibility that state-based marketplaces, like Pennsylvania’s Pennie, have traditionally had to offer longer enrollment periods, leaving fewer opportunities for people to sign up for 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 Pennie insurance and when they see doctors or get medical care. This is because the rule makes changes that allow plans to require higher out-of-pocket costs (copays, deductibles), increase the maximum amount a person has to pay out of pocket for health care, that will result in people paying more of their income towards monthly premiums. In 2026, you could pay up to $10,600 out of your own pocket for individual health insurance. 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.
- You may no longer automatically get better insurance: Marketplaces can no longer automatically 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 gender affirming medical care 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 Premium Tax Credits Set to Expire
These coverage restrictions come at a particularly challenging time because the enhanced premium subsidies (tax credits) 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 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 CMS final 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.
