A federal judge has paused eight provisions of CMS’ 2027 ACA marketplace rule, blocking a slate of eligibility, verification and plan design changes just days before they were set to take effect July 20.
Judge Brendan Hurson of the U.S. District Court for the District of Maryland granted the stay July 16 in City of Columbus v. Kennedy, brought by three cities, Pima County, Ariz., Main Street Alliance and Doctors for America, finding the plaintiffs likely to succeed on all eight provisions they challenged in a June lawsuit.
The rule would have opened catastrophic coverage to more people through an income-based hardship exemption, allowing enrollees ineligible for premium tax credits or cost-sharing reductions because of their projected income to qualify regardless of age. The court found the provision likely unlawful, holding that a “hardship” cannot be defined by income alone. CMS guidance last fall had already prompted some insurers to offer the coverage, and more than 20,000 consumers ineligible for premium tax credits enrolled in catastrophic plans under the revised exemption during the last open enrollment period. The court said a stay would not disrupt those enrollees because they could be re-enrolled through a special enrollment period.
The court also found the failure-to-reconcile policy for 2027, which would deny advance premium tax credits to enrollees who received them the prior year and did not file a tax return and reconcile, and a provision letting insurers offer bronze plans with maximum out-of-pocket costs up to 130% of the statutory cap, likely exceeded CMS’ authority. The remaining five provisions, which the court found likely arbitrary and capricious, are two heightened income verification requirements, pre-enrollment verification for special enrollment periods, changes to network adequacy standards, and the elimination of standardized plans and limits on non-standardized plans.
The decision closely tracks the same court’s treatment of CMS’ 2025 rule, which Judge Hurson partially vacated in June.
The ruling did not touch one of the rule’s most closely watched changes for payers that would let non-network plans obtain certification as qualified health plans on the ACA exchange in 2028. Those plans set fixed benefit amounts rather than relying on contracted provider networks, allowing enrollees to seek care from any provider, and insurers must show that a sufficient range of providers, including essential community providers and mental health and substance use disorder specialists, accept the plan’s benefit amount as full payment.
The decision comes as ACA enrollment has declined to 19.2 million in February, down 12% from nearly 21.8 million at the same time last year following the expiration of enhanced premium tax credits.
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