A coalition of 22 states are suing to block key pieces of CMS’ 2027 ACA marketplace rule, arguing the changes will push consumers into “barebones” coverage and revive provisions a federal court previously struck down.
The complaint, filed July 31 in the U.S. District Court for the Northern District of California, is being co-led by the attorneys general of California and New Jersey. CMS finalized the rule in May, which seeks to impose stricter eligibility and income verification requirements, expand catastrophic plan access and eliminate the requirement that insurers offer standardized policies.
The states are aiming to block the expansion of catastrophic plans, higher out-of-pocket maximums for catastrophic and bronze plans, pre-enrollment verification for 75% of special enrollment period sign-ups on the federal exchange, two income verification requirements, and a one-year failure-to-reconcile window for 2027.
Four of the challenged provisions are near-verbatim copies of measures from CMS’ 2025 marketplace integrity rule, a separate policy that a Maryland federal court partially vacated June 12 – the states contend CMS revived the language in the 2027 rule without addressing the court’s concerns. In a related challenge to the 2027 rule, the same court temporarily paused several provisions on July 16.
The states also claim that the 2027 rule unlawfully opens catastrophic plans, which the ACA limits mostly to people under 30 or those facing a hardship, to anyone earning below 100% or above 250% of the federal poverty level. In addition, the rule would allow certain bronze plans to set 2027 out-of-pocket maximums at up to 130% of the standard statutory limit, or as high as $15,600 for an individual rather than $12,000, according to the complaint. A similar policy for catastrophic plans is scheduled to take effect in 2028.
HHS has estimated the rule will cause 2 million people to lose coverage next year and leave enrollment 5 million lower by 2030.
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