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Update: CMS Final Rule Creates Barriers to ACA Coverage - What's Changed Since August

Amy E. Lowenstein

In June, the Centers for Medicare & Medicaid Services (CMS) published a sweeping final rule making it harder for people to enroll in and keep their health insurance through the Affordable Care Act (ACA) Marketplace (called Pennie in Pennsylvania). As many as 1.8 million people will lose coverage nationwidenext year 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.

In late August, with the final rule set to take effect, a federal court ruling in a case called City of Columbus v. Kennedy, temporarily blocked ("stayed") several provisions of the final rule. That means those provisions will not go into effect as long as the lawsuit is going on. The below is an update to our August article on the final rule, noting what's changed since then—namely, those provisions of the rule that are still not in effect because of the court's temporary block (stay). 

 

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: 

  • UPDATE- TEMPORARILY BLOCKED BY COURT: Changes to How You Must Prove Your 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.
     
  • UPDATE- TEMPORARILY BLOCKED BY COURT: Stricter Tax Filing Requirements: The rule will require anyone using financial assistance (called “premium tax credits”) to file their taxes and pay back excess tax credits in order to be eligible for further credits in the next plan year. Previously there had been a two-year grace period to file and reconcile taxes.  Those who fail to do so will not get any financial help paying for insurance. Although the court decision temporarily blocks this rule, the budget reconciliation law passed by Congress over the summer enacts the same requirement starting in plan year 2028.
     
  • Shortened Open Enrollment Periods: Starting for enrollment in plans for 2027, 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

  • UPDATE- PARTIALLY TEMPORARILY BLOCKED BY COURT: 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. UPDATE: The court decision temporarily blocks the rule that would allow insurers to have health plans with higher deductibles and copays in each of the different plan value levels (e.g., bronze plans, silver plans).  The rest of the rule that causes premiums to rise and out of pocket limits to be higher remains in place.
  • 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. Beginning with health coverage in 2027, 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.