Health insurers face a wave of regulatory and policy changes in 2026, from the expiration of enhanced ACA premium tax credits to tighter prior authorization rules and new state coverage mandates.
Here’s a rundown of major federal and state payer policies taking effect:
Affordable Care Act
Enhanced premium tax credits expire: The enhanced ACA premium tax credits expired Dec. 31, leaving millions of marketplace enrollees facing significantly higher premiums. The enhanced subsidies, enacted under the 2021 American Rescue Plan Act, expanded eligibility to households earning more than 400% of the federal poverty level and capped benchmark plan premiums at 8.5% of income. Marketplace enrollment reached 24.3 million in 2025 under the enhanced credits.
Congressional action to extend the subsidies has stalled. The Urban Institute estimates around 4.8 million people will drop coverage without an extension. Insurers also implemented the highest rate increases since 2018 heading into 2026. Several states have taken steps to partially offset the federal funding loss, including New Mexico, California, Maryland, Connecticut and Colorado, while Arkansas, Texas and Wyoming adopted premium alignment strategies to stretch remaining subsidies.
CMS finalizes 2026 marketplace rules: CMS issued the Notice of Benefit and Payment Parameters final rule. The rule, effective Jan. 15, 2025, applies to plan year 2026. It strengthens CMS authority to pursue enforcement actions against brokers and agents involved in unauthorized enrollment activity, including actions against “lead agents” at agencies where misconduct occurs. The agency also expanded its ability to immediately suspend brokers posing unacceptable risks to marketplace operations.
User fees will increase following the subsidy expiration. The FFM user fee rises from 1.5% to 2.5% of monthly premiums, while SBM-FP fees increase from 1.2% to 2.0%. Additional provisions refine the risk adjustment program by phasing out the market pricing adjustment for hepatitis C drugs and adding a cost factor for HIV pre-exposure prophylaxis medications. The rule also codifies CSR loading practices, updates standardized plan requirements with meaningful differentiation standards, and expands CMS oversight of essential community provider networks.
One Big Beautiful Bill Act
Several OBBBA provisions affecting marketplace operations take effect Jan. 1:
Premium tax credit repayment caps eliminated: Enrollees receiving excess advance premium tax credits must now repay the full amount regardless of income. Previously, repayment caps protected households under 400% FPL.
Income-based special enrollment periods terminated: Individuals can no longer enroll outside open enrollment based solely on income changes.
Premium tax credits restricted for certain immigrants: Lawfully present noncitizens with incomes below 100% FPL who are ineligible for Medicaid due to immigration status no longer qualify for marketplace subsidies. CBO estimates approximately 300,000 people will lose coverage.
Medicaid expansion incentive ends: States newly adopting Medicaid expansion will no longer receive the temporary two-year, five-percentage-point FMAP increase.
HSA eligibility broadened: Bronze and catastrophic marketplace plans now qualify as HSA-eligible high-deductible health plans. Direct primary care memberships can be paid with HSA funds.
Medicare Advantage
Prior authorization restrictions tightened: CMS enacted Medicare Advantage and Part D policy changes under its 2026 final rule to strengthen prior authorization protections and clarify appeals processes. Plans are now restricted from reopening previously approved inpatient hospital admissions except in cases of clear error or fraud, requiring plans to honor prior authorization decisions once granted.
The rule closes appeals loopholes by clarifying that organization determinations include coverage decisions made before, during or after services are rendered, preserving full beneficiary appeal rights. Plans must inform enrollees and providers of coverage decisions when providers submit requests on a patient’s behalf, and enrollee liability cannot be determined until the plan makes a payment decision on a provider’s claim.
Additional 2026 provisions establish new guardrails on special supplemental benefits for chronically ill patients, codify non-allowable benefits, and update risk adjustment data submission requirements for MA plans, cost plans and PACE organizations.
Prior Authorization
Decision deadlines shortened: Key provisions of the CMS Interoperability and Prior Authorization Final Rule take effect in 2026, significantly shortening prior authorization timelines. Impacted payers, including Medicare Advantage plans, Medicaid and CHIP programs, and managed care plans, must issue decisions within 72 hours for expedited requests and seven calendar days for standard requests.
Payers must provide specific reasons for denials and publicly report prior authorization metrics. Beginning Jan. 1, 2027, impacted payers must implement an HL7 FHIR-based Prior Authorization API to support electronic end-to-end prior authorization.
WISeR model launches: CMS launched the Wasteful and Inappropriate Service Reduction Model on Jan. 1, a six-year Innovation Center pilot testing whether AI and machine learning can streamline prior authorization and medical review in traditional Medicare. The model operates in New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington state through Dec. 31, 2031.
The model targets specific outpatient services vulnerable to fraud, waste and abuse, including skin and tissue substitutes, electrical nerve stimulators and knee arthroscopy for osteoarthritis. Emergency services and services posing significant risk if delayed are excluded. All coverage denials must be made by licensed clinicians using standardized, evidence-based processes. The model applies only to traditional Medicare, not Medicare Advantage.
Medicare Part D
Negotiated drug prices take effect: Medicare’s first negotiated drug prices under the Inflation Reduction Act take effect Jan. 1. The initial round covers 10 high-cost, high-use drugs: Eliquis, Jardiance, Xarelto, Januvia, Farxiga, Entresto, Enbrel, Imbruvica, Stelara and NovoLog/Fiasp. CMS projects $1.5 billion in annual out-of-pocket savings for beneficiaries and $6 billion in annual program savings.
Out-of-pocket cap increases: The annual out-of-pocket cap for Part D beneficiaries rises to $2,100, up from the initial $2,000 limit established in 2025. The cap covers deductibles, coinsurance and copays, with no further cost-sharing required once beneficiaries reach the threshold. The cap is subject to annual adjustments based on drug spending trends.
State coverage mandates and PBM regulations
Arkansas
PBM pharmacy ownership ban: A federal judge blocked enforcement of a first-in-the-nation law banning PBMs from owning or operating pharmacies. The law was set to take effect Jan. 1, but CVS Caremark and Express Scripts successfully obtained a preliminary injunction. Litigation continues.
California
Insulin copay cap: Large group insurers must cap insulin copayments at $35 for a 30-day supply starting Jan. 1, 2026. Individual and small group insurers must comply by Jan. 1, 2027. Plans must include at least one insulin option per drug type on formularies.
PBM spread pricing ban: PBMs are prohibited from spread pricing effective Jan. 1, 2026, with contract authorizations voided by Jan. 1, 2029. PBMs must use passthrough pricing models, with compensation limited to flat management fees not tied to drug prices. Patient cost-sharing must be capped at the actual rate paid by the plan.
Connecticut
Biomarker testing coverage: Individual and group health plans must cover biomarker tests for diagnosing, treating or monitoring conditions including cancer and Alzheimer’s, effective Jan. 1. Coverage must be provided through in-network labs when supported by clinical evidence.
Delaware
Abortion coverage: A new law requires most private health plans, state-regulated plans and Delaware’s Medicaid program to cover abortion services up to $750 per year, with no cost-sharing requirements such as copays or deductibles. Religious employers may request an exemption if the requirement conflicts with their religious beliefs.
Illinois
Menopause therapy coverage: State-regulated health plans must cover medically necessary hormonal and non-hormonal therapies for menopausal symptoms. The mandate applies to plans issued, amended, delivered or renewed on or after Jan. 1, 2026.
Maryland
Prior authorization for pediatric transfers: Insurers, Medicaid MCOs and the Maryland Children’s Health Program can no longer require prior authorization for transfers to special pediatric hospitals serving patients under age 22.
Anesthesia time limits: Insurers cannot impose time limits on anesthesia coverage when recommended by a medical professional. Coverage must extend for the entire procedure.
Virginia
Expanded cancer screening coverage: Two laws expand cancer screening coverage requirements. Insurers must cover diagnostic and follow-up breast examinations at no cost to patients, including mammograms, MRIs and ultrasounds. Separate legislation requires coverage for updated prostate cancer screening tests for men over 50 and high-risk men starting at age 40.
New York
Essential Plan coverage restrictions: Approximately 450,000 lawfully present immigrants enrolled in the Essential Plan will lose coverage starting in July 2026 due to OBBBA eligibility restrictions. The program currently serves 1.6 million residents.
