Dive Brief:
- The Trump administration on Friday finalized a controversial rule shrinking sign-up windows and heightening eligibility verification for Affordable Care Act plans.
- Regulators said the policies are necessary to combat fraud in the ACA exchanges, including people receiving subsidies for plans who aren’t actually eligible. However, outside experts say the rule appears aimed at shrinking the size of the exchanges, a priority of President Donald Trump during his first term.
- Many of the stricter income verification policies are temporary, a change from the proposed rule. The Trump administration said this was to enable a crackdown on improper enrollment without affecting eligible beneficiaries in the long-term — though, Republicans on the Hill are currently working to pass some of the policies permanently into law.
Dive Insight:
Currently, 24 million Americans are enrolled in ACA plans — an all-time high, after the Biden administration made it easier and more affordable to sign up for the coverage.
But that number is expected to shrink following implementation of the final rule. The CMS estimates between 725,000 and 1.8 million people could lose coverage in 2026 as a result of the policies, which significantly raise the burden of verification for financial assistance and shorten enrollment windows for ACA plans.
For example, people who fail to reconcile their tax information with their eligibility for subsidies currently have two years before they lose financial assistance. The rule shrinks that window to one year.
Enrollees will also no longer automatically get an extension to verify their income if they run up against any issues during the process.
In addition, the rule requires exchanges to charge people automatically re-enrolled in subsidized coverage from one year to the next a $5 monthly premium until they confirm or update their eligibility information.
The regulation also ends a monthly special enrollment period for people with income below 150% of the federal poverty line to sign up for coverage outside of the normal enrollment window. And, it shrinks the annual open enrollment period by one month.
The Trump administration is arguing that some short-term pain is worth it to improve program integrity, including stopping people from being enrolled in marketplace coverage without their knowledge or consent.
Experts say that such concerns are valid, following thousands of complaints from consumers over the past few years that their plan was changed without their say-so — complaints that led regulators to come down on unscrupulous insurance agents and brokers during the Biden administration, too.
“This is about putting patients first, stopping exploitation of the system, and realigning the program with the values of personal responsibility and fiscal discipline,” CMS Administrator Dr. Mehmet Oz said in a statement Friday.
However, the Trump administration’s strategy to increase program integrity will harm beneficiaries in the name of tackling a problem that’s not as big of a deal as Republicans maintain, one academic said regarding the proposed rule in March.
In a press release on the rule, the CMS cites research from the right-leaning Paragon Institute finding that an estimated 5 million people were improperly enrolled in ACA plans in 2024. However, some experts say that’s an overestimate and that the true number of improper enrollments is likely far lower.
Trump administration officials said that the final rule is crafted to reduce its impact on eligible beneficiaries. A number of the policies are set to sunset at the end of the 2026 plan year to reduce the risk of coverage gaps — especially as more generous subsidies for ACA plans slated to run out at the end of this year.
“Given the expiration of the enhanced [advanced premium tax credit] benefits, CMS has also concluded it would be reasonable to accept some risk of future improper enrollments after these policies sunset, in favor of limiting overall disruptions as the market adjusts and sheds holdover improper enrollments,” the CMS wrote in a fact sheet on the final rule.
Most of the new income verification hoops were only enacted through 2026, including those declaring an enrollee ineligible for subsidies if they fail to reconcile their tax information with their eligibility after one year and those requiring beneficiaries to provide evidence resolving income inconsistencies if the IRS doesn’t have tax return data available.
The $5 premium for consumers who auto-enroll in coverage is also set to expire at the end of next year.
But despite the policies’ temporary nature, Republicans in Congress are currently working on codifying some of the restrictions into law.
Many of the policies are in the GOP’s reconciliation megabill currently in the Senate, including tighter verification rules and shorter enrollment periods.
As such, the rule aligns with GOP efforts to cut federal spending, including in healthcare programs.
The CMS said the rule will lower premiums for individual ACA plans by 5% on average, and save taxpayers up to $12 billion next year by reducing improper enrollments and other federal spending.
Friday’s final rule also targets social issues that have been a priority for Trump.
It allows insurers to stop covering gender-affirming care by removing it from the list of essential health benefits under the ACA, though payers can still elect to cover the services.
The rule also excludes “Dreamers,” or people who arrived illegally in the U.S. as children, from marketplace coverage, undoing a Biden-era policy that was blocked by a federal judge and is still being litigated.
