CMS unveiled a proposed rule Feb. 9 that would reshape the ACA marketplace for plan year 2027, expanding insurer flexibility on plan design, tightening eligibility verification, and re-introducing several program integrity measures that were blocked by a federal court last year.
The proposal arrives at a turbulent period for the individual market. Enhanced premium tax credits expired at the end of 2025 after congressional negotiations to extend them collapsed, leading to about 1.5 million fewer plan selections for 2026 so far, according to the latest CMS data.
“This proposal puts patients, taxpayers and states first by lowering costs and reinforcing accountability for taxpayer dollars,” CMS Administrator Mehmet Oz, MD, said. “We are cracking down on improper and misleading practices while giving states and health plans more room to innovate and compete.”
The proposed rule, which will be published in the Federal Register on Feb. 11, is accepting public comments through March 11. Multiple provisions would align marketplace rules with requirements enacted under H.R. 1.
Seven key proposal areas:
1. Plan design flexibility
- Multi-year catastrophic plans: Payers could offer catastrophic plans with terms of up to 10 consecutive years, with plan-level adjustments to the index rate and prorated monthly cost-sharing. CMS is also seeking comment on whether to apply similar multi-year standards to metal-level plans. Catastrophic plans could use value-based insurance designs to cover preventive services beyond current minimums before the member’s deductible is met.
- Non-network plan certification: For the first time, non-network (indemnity-style) plans could receive QHP certification in 2027. These types of plans set specific benefit amounts rather than relying on contracted provider networks, allowing enrollees to seek care from any provider. Payers would need to demonstrate that a sufficient range of providers, including essential community providers and mental health and substance use specialists, accept the plan’s benefit amount as payment in full. CMS framed this as a way to promote price transparency and competition while eliminating administrative overhead from network management.
- Standardized plan repeal: CMS is proposing ending the requirement that payers offer standardized plan options, as well as the limit on non-standardized plan options. Payers could choose to keep, modify, or discontinue existing standardized offerings.
- Bronze and catastrophic cost-sharing changes: CMS wants to change the permissible cost-sharing parameters for individual market bronze plans and updating catastrophic plan cost-sharing requirements, beginning in 2027.
- Expanded hardship exemptions: Individuals aged 30 and older who are ineligible for enhanced tax credits or cost-sharing reductions due to projected household income below 100% or above 250% of the FPL would qualify for hardship exemptions, expanding access to catastrophic coverage in all states.
2. Re-introduced program integrity measures
CMS is looking to revive policies from the June 2025 Marketplace Integrity and Affordability final rule that were paused by a federal court in August.
- Pre-enrollment special enrollment period verification: Federal exchanges would verify special enrollment period eligibility before enrollment for at least 75% of new SEP enrollments, expanded beyond the loss of minimum essential coverage to additional SEP categories.
- Income verification below 100% FPL: Consumers would be required to submit documentation when data sources indicate household income under 100% FPL. CMS is proposing to remove the original sunset language, making this policy permanent.
- Income verification without tax data: CMS is proposing permanently removing the requirement that exchanges accept income attestations when IRS returns no data, reversing the prior policy’s built-in expiration date.
3. Subsidy eligibility restrictions
- Narrowed immigration eligibility for enhanced tax credits: Beginning in 2027, only U.S. citizens, legal permanent residents, Cuban/Haitian entrants, and Compact of Free Association migrants would qualify as “eligible noncitizens” for premium tax credits. Refugees, asylum recipients, and individuals with other lawful immigration statuses would lose eligibility.
- Sub-100% FPL noncitizens: Noncitizens ineligible for Medicaid due to immigration status with household income below 100% FPL would lose tax credit eligibility.
- 150% FPL SEP prohibition extended: Exchanges would continue to be banned from offering the low-income special enrollment period after 2026.
4. State authority and network standards
- Provider access and essential community provider review delegation: Federal exchange states could elect to conduct their own provider access and/or ECP certification reviews, as long as CMS determines the state has sufficient authority and technical capacity.
- Network adequacy: CMS wants to remove the requirement that state exchanges implement quantitative time and distance standards at least as strict as those for qualified health plans on the federal exchange by 2026. States would instead be required to ensure sufficient provider choice under broader standards.
- ECP threshold reduced: The minimum percentage of essential community providers that issuers must contract with in each service area would drop from 35% to 20%, applicable to the overall threshold and separately to the FQHC and family planning provider thresholds.
- State exchange transitions: States transitioning from the federal exchange to a state-based exchange would no longer need to operate as an SBE-FP for one year first.
- Enhanced direct enrollment option: State-based exchanges could opt to rely exclusively on web-brokers for consumer-facing enrollment, rather than operating their own centralized website.
5. Payer accountability and enforcement
- Marketing restrictions: CMS is looking to expand regulations on marketing practices, including explicit examples of banned behavior: cash incentives to enroll, false claims of zero-dollar insurance, and miscommunication of enrollment timelines. New requirements would mandate timely production of marketing materials for monitoring and enforcement.
- Agent and broker oversight: Agents, brokers, and web-brokers would be required to use HHS-approved forms for eligibility application review and consumer consent documentation.
- Expanded penalty authority: CMS wants to clarify its authority to impose civil money penalties against health plans on state exchanges when a state is not enforcing requirements.
- Audit authority: CMS also wants to clarify that compliance reviews of APTC, CSR, and user fee programs can be conducted on an as-needed or annual basis.
6. Essential benefits and MLR changes
- Adult dental essential health benefits ban: CMS wants to reverse a Biden-era policy that allowed plans to include routine non-pediatric dental services as an essential health benefit. CMS said the proposed reversal better aligns with the ACA’s statutory standard of a “typical employer plan.”
- State benefit defrayal: Any state-required benefit enacted after Dec. 31, 2011 that is specific to required care, treatment, or services would be considered “in addition to EHB,” requiring states, not consumers, to defray those costs for exchange enrollees, regardless of whether the benefit is embedded in the state’s EHB-benchmark plan.
- MLR comments wanted: CMS is seeking comment on whether to adjust the federal medical loss ratio rule in the individual market, including whether HHS should be able to adjust the MLR standard even in states that don’t request an adjustment. This could affect the 80/20 rule, which caps the share of premium revenue that individual and small group insurers can spend on administrative costs, marketing, and profit at 20%, and requiring at least 80% go toward claims and quality improvement.
7. Financial parameters
- Risk adjustment: CMS would update its risk adjustment models with more recent claims data and keep the user fee flat at $0.20 per member per month.
- Quality improvement: Payers would get more flexibility in choosing which quality areas to focus on, with CMS dropping the current requirement to specifically address health disparities.
- CSR transparency: Payers that bake unreimbursed cost-sharing reduction costs into their premiums would have to show their math in rate filings.
