Introduction
The Affordable Care Act (ACA) is more popular than ever: A new report shows that nearly 50 million people – or one in seven Americans – have had ACA Marketplace coverage at some point.[1]
Under President Biden and Vice President Harris, ACA coverage has become more affordable than ever: People with ACA Marketplace coverage save an average of $800 per year, thanks to the Inflation Reduction Act, and benefit from additional outreach and assistance to get the coverage that best meets their needs.
The Biden-Harris Administration is committed to ensuring Marketplace coverage remains accessible and affordable.
Today, the Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS) issued the proposed “Notice of Benefit and Payment Parameters" for the 2026 plan year (or proposed 2026 Payment Notice) that proposes standards for the Health Insurance Marketplaces, as well as for health insurance issuers, brokers, and agents who connect millions of consumers to ACA coverage. The rule proposes additional safeguards, beginning in 2025, to protect consumers from fraudulent changes to their health care coverage, as well as options to ensure the integrity of the Federally Facilitated Marketplace (FFM). Additionally, if finalized as proposed, the rule would make it easier for consumers to understand their costs and enroll in coverage through HealthCare.gov beginning in plan year 2026.
The proposed rule also includes updates to the HHS risk adjustment program (the permanent program that transfers funds from issuers of risk adjustment covered plans with lower-than-average risk to issuers of risk adjustment covered plans with higher-than-average risk; risk adjustment covered plans include the individual, small group markets, or merged markets, inside and outside the Marketplaces); 2026 user fee rates for issuers; changes to calculations for the Basic Health Program (BHP); and annual public reporting of aggregated, summary-level information from the ACA Quality Improvement Strategy (QIS), a program that aims to incentivize improved health outcomes for plan enrollees. These and other policies in the proposed rule are designed to reduce administrative burdens, ensure accurate risk adjustment transfers, promote transparency, and enhance health equity in the Marketplace.
The proposed 2026 Payment Notice comment period closes on November 12, 2024, At the Federal Register.
Preventing Unauthorized Marketplace Activity Among Agents and Brokers
Strengthening Reviews and Enforcement Actions, When Needed
CMS is proposing policies related to compliance reviews and enforcement actions against lead agents at insurance agencies to hold them responsible for violations of Marketplace standards when appropriate. This proposed policy would enhance public trust in the Marketplace, increase accountability for those who assist consumers, and reduce the risk of fraud or misconduct that puts consumers’ health care coverage at risk.
Expanding Authority to Suspend Marketplace Agents and Brokers
If CMS determines that an agent or broker poses an unacceptable risk to Marketplace operations or Marketplace information technology systems, we will use our existing authority to suspend that agent or broker’s ability to transact information with the Marketplace itself. CMS is proposing to expand its authority to suspend an agent or broker’s ability to transact information with the Marketplace itself if we discover circumstances that pose an unacceptable risk to the accuracy of Marketplace eligibility determinations, operations, applicants, and or enrollees. This proposed policy would improve the security and integrity of Marketplaces, resulting in fewer unauthorized changes to coverage and preventing further harm to consumers, agents, and brokers who follow the rules and comply with agency requirements.
Expanding the Model Consent Form
CMS proposes to update its model consent form, which was created to help agents, brokers, and web brokers document consent from consumers to assist with their Marketplace enrollments and submission of Marketplace eligibility applications. The expanded form would help document that a consumer or their authorized representative reviewed and confirmed the accuracy of their eligibility application information before their application was submitted to the Marketplace. The updated model consent form, if finalized as proposed, would also include scripts that agents, brokers, and web brokers can use to document compliance with the consumer consent and consumer review and confirmation of the accuracy of their eligibility application information requirements via an audio recording. These proposed updates would increase transparency and accountability in the application and enrollment process, help ensure that Marketplace application information is accurate, and reduce the risk of financial errors, such as receiving an incorrect advance payment of the premium tax credit (APTC) amount that would need to be repaid during tax reconciliation, or enrollment in health care coverage without a consumer’s consent.
Addressing Allowable Silver Loading
“Silver loading” happens when issuers raise premiums for their silver plans (one of five categories of plans, with silver plans generally representing a plan with a moderate monthly premium and moderate costs when someone needs care) to offset the cost of providing cost-sharing reductions that lower the amount consumers pay for deductibles, copayments, and coinsurance under those plans. CMS has requested public comment on whether to codify previous guidance indicating that certain silver-loading practices are allowed when the adjustments are reasonable, adequately justified, and follow state law. Enrollees who receive premium tax credits (PTCs) to cover all or part of their premium costs get more support through PTCs to generally cover higher premiums caused by silver loading.
Advancing Health Equity and Mitigating Health Disparities
Updating Premium Payment Thresholds to Permit Fixed or Premium-Percent Thresholds
CMS is proposing to allow issuers to either implement a fixed-dollar premium payment threshold or a percentage-based premium payment threshold, which would be used to enable consumers to maintain their coverage even if they have not paid the full amount owed, as long as the amount paid does not exceed the premium payment threshold set by the issuer. This would help avoid triggering a “grace period,” which typically begins when a consumer fails to pay their monthly premium, and by the end of which the consumer needs to pay the full amount of their premium to avoid losing coverage. For the fixed-dollar threshold, CMS proposes to cap the amount at $5 or less, which means that if an issuer adopts a $5 fixed dollar threshold, a consumer who has paid their first premium and then subsequently owed $5 or less after the application of their APTC would not be put into a grace period.
Alternatively, CMS is proposing to allow issuers to choose between one of two percentage-based thresholds:
- Net premium threshold: Currently, issuers have the option to adopt a net percentage-based premium payment threshold which allows consumers to maintain their coverage even if they have paid the enrollee-responsible portion of the premium that is less than 100%, as long it is within the reasonable threshold set by the issuer. CMS proposes to modify this requirement so that the existing net premium percentage threshold would be 95% t or higher. This means that if a consumer has paid at least 95% of their premium due (depending on the threshold the issuer sets) after the application of the monthly tax credit, the issuer would not be required to trigger a grace period.
- Gross premium threshold: CMS proposes a gross percentage-based premium payment threshold that would allow consumers to maintain their coverage even if they have paid a portion of the total premium that is less than 99% or more, as set by the issuer. This means that if a consumer has paid at least 99% of their total premium amount due (depending on the threshold the issuer sets), they will not trigger a grace period.
These proposed policies would allow issuers to choose a method that works best for them and their consumers. Thresholds generally help to reduce terminations of coverage for enrollees – particularly people with low and modest incomes – who risk losing coverage when they fail to pay a small amount they might owe for their premium.
Incentivizing Innovation for Plans that Enroll Underserved Consumers with High Health Needs
CMS is proposing to move the net risk adjustment amount from the numerator to the denominator of the medical loss ratio (MLR) calculation for qualifying issuers. This policy would support plans with unique business models that focus on underserved communities whose members often have higher rates of serious health conditions. These plans often rely heavily on risk adjustment payments versus premiums alone for their revenue.
Essential Community Providers (ECP) Certification Reviews in States Performing Plan Management
ECPs typically serve people with low-income or traditionally unmet medical needs. Beginning in plan year 2026, CMS proposes to conduct reviews of Qualified Health Plans (QHPs) in FFMs in states performing plan management functions to ensure issuers include in their provider networks a sufficient number and geographic distribution of ECPs. Additionally, this proposal would add more consistency to how the Federal government oversees ECP data across all FFMs.
Making It Easier to Enroll in and Maintain Health Care Coverage
Extending Consumer Notification Requirements to Two Consecutive Tax Years for Failure to File and Reconcile
As part of receiving APTC, which helps make health care coverage more affordable, eligible consumers must file their federal income taxes and reconcile their APTC as part of their annual income tax filings. Failing to do so (often called Failure to File and Reconcile or ‘FTR”) means a consumer may no longer be eligible for APTC and may risk unexpected costs. To make these requirements clearer, CMS proposes requiring that Marketplaces notify enrollees or their tax filers who have failed to file their federal income taxes and reconcile their APTC for two consecutive tax years that they are at risk of losing APTC. These notices would help educate consumers about the need to file and reconcile to keep coverage affordable.
Basic Health Program (BHP) Updates
CMS proposes to update the payment methodology to recalculate the premium adjustment factor (PAF) in certain situations. Specifically, CMS proposes to recalculate the PAF if a state is using the premiums from a year in which BHP was only partially implemented as the basis for their federal BHP payments. This proposal would result in more accurate federal BHP payments to states newly implementing a BHP.
CMS is also proposing to clarify how the agency calculates BHP payment rates when there are multiple “second lowest cost silver plan premiums” in a county. Under CMS’ proposal, if there is more than one second lowest-cost silver plan in a county, a state’s BHP payment would be based on the premiums of the relevant plan in the largest portion of the county, as measured by the county’s total population.
Simplifying Plan Choice and Improving Plan Selection
Updating Standardized Plan Options and Non-Standardized Plan Option Limits
“Standardized plan options” are QHPs that include standardized cost sharing and pre-deductible coverage for a key set of essential health benefits (EHB). Issuers on the Marketplaces that use the Federal platform are required to offer these plans at every product network type, at every metal level, and throughout every service area they offer non-standardized plan options. CMS proposes to update standardized plan options for plan year 2026 to ensure these plans continue to have actuarial values (AVs) aligned with the plan’s metal (“bronze,” “silver,” “gold,” or “platinum”) level. CMS also proposes requiring issuers to offer multiple standardized plan options within the same product network type, metal level, and service area to better differentiate these plans from one another to reduce the risk of duplicative offerings. This would help consumers better understand included benefits, networks, and drug coverage when making plan selections and comparisons.
CMS also proposes clarifying the flexibility issuers have to vary whether they include coverage for adult dental, pediatric dental, and adult vision benefits under their non-standardized plan options. This proposed policy would clarify the process an issuer uses for offering different plans and would align the regulation text with the flexibility that issuers have been operationally permitted since these requirements were introduced in the 2024 Payment Notice.
Increase Transparency
Improve Public Reporting on Marketplaces
CMS proposes to increase transparency and promote program improvements by publicly releasing the annual State-based Marketplace Annual Reporting Tools and accompanying financial and programmatic audits (for State Marketplaces and State-based Marketplaces on the Federal Platform), as well as additional data points for all Marketplaces. This would help enhance public understanding of and confidence in Marketplace operations, ensure transparent compliance activities, and improve Marketplace efficiency and accountability.
QIS Information Sharing
For the QIS, CMS proposes to start sharing aggregated, summary-level information publicly on an annual basis starting January 1, 2026 (with data submitted during the 2025 QHP Application Period). This would increase public transparency and accountability for QHP issuers and encourage best practices for improving health care coverage quality.
Further Refining the HHS-operated Risk Adjustment Program
Soliciting Comments on the Impact of the Time Value of Money on Risk Adjustment State Transfers
CMS seeks input on the impact of the “time value of money” (the availability of capital for investment that could accrue interest) on the HHS-operated risk adjustment program, including the impact the time value of money may have on issuers’ assessment of actuarial risk and incentives for adverse selection. CMS also seeks comment on whether and how it should consider the time value of money with respect to risk adjustment State transfers, which are collected and distributed eight to ten months after the benefit year has concluded.
Recalibrating the 2026 Benefit Year HHS Risk Adjustment Models
To continue to keep the risk adjustment models up-to-date while promoting model stability, CMS proposes to recalibrate the HHS risk adjustment models for the 2026 benefit year using 2020, 2021, and 2022 benefit year enrollee-level EDGE data. Additionally, CMS proposes to begin phasing out the market pricing adjustments to plan liability associated with Hepatitis C drugs starting with the 2026 benefit year such that the costs associated with these drugs would be modeled more consistently with other specialty drugs. Lastly, CMS proposes to incorporate human immunodeficiency virus (HIV) pre-exposure prophylaxis (PrEP) services into the 2026 benefit year HHS risk adjustment models as a new, separate factor in the adult and child models. This would help address potentially high costs associated with PrEP services, thereby reducing issuer incentives to restrict coverage and access to care.
Changing HHS Risk Adjustment Data Validation (HHS-RADV) Sampling
As part of HHS-RADV, issuers offering risk adjustment covered plans must have initial and second validation audits performed on a sample of risk adjustment data selected by CMS. To improve the precision of HHS-RADV results, which are used to adjust risk scores and associated risk adjustment state transfers, CMS proposes changes to the initial and second validation audits sampling.
For the initial validation audit (IVA) sampling, CMS proposes to exclude enrollees without Hierarchical Condition Categories (HCCs) and Prescription Drug Categories (RXCs) from the IVA sample, to remove the Finite Population Correction (FPC) from the IVA sampling methodology, which is used to determine the sample for smaller issuers, and to replace the source of the Neyman allocation data used to determine stratum sample size for the IVA sample with the three most recent consecutive years of HHS-RADV data with results that have been released before that benefit year’s HHS-RADV activities begin.
For the second validation audit (SVA) sampling, CMS proposes to modify the SVA pairwise means test by using a bootstrapping confidence interval and to increase the initial SVA subsample size from 12 to 24 enrollees.
These proposals are intended to ensure reliable audit results are used to calculate issuers’ HHS-RADV results.
Making Improvements to HHS-RADV’s Actionable Discrepancy and Appeal Threshold
CMS provides an opportunity for issuers to submit a request for reconsideration or appeal to contest HHS-RADV second validation audit results or error rate findings if the amount in dispute meets the materiality threshold for filing. CMS is proposing to create a second materiality threshold of $10,000 for rerunning HHS-RADV results in response to an appeal. Under this proposal, HHS would only take action to adjust risk adjustment State transfers if the financial impact on the filing issuer’s HHS-RADV adjustment is greater than or equal to $10,000. This proposed policy would result in more stable risk adjustment results for issuers and reduce administrative costs to the federal government.
Strengthening the Marketplace’s Impact on Consumers
2026 FFM/SBM-FP User Fee Rates
The Marketplace relies on user fees to remain viable and fiscally solvent. For the 2026 benefit year, CMS proposes to increase the FFM user fee rate to 2.5% of monthly premiums and the State-based Marketplace on the Federal platform (SBM-FP) user fee rate to 2.0% of monthly premiums, subject to the contingency below.
Millions of Marketplace consumers have enrolled in coverage since the availability of enhanced PTC subsidies was provided by the American Rescue Plan Act of 2021 and extended by the Inflation Reduction Act of 2022. However, these enhanced PTC subsidies are set to expire in 2025 unless Congress extends them further. The potential expiration of enhanced PTC subsidies is impacting CMS projected enrollment estimates for calculating the 2026 FFM and SBM-FP user fee rates. Therefore, CMS proposes that if these enhanced PTC subsidies are extended through the 2026 benefit year by March 31, 2025, the 2026 FFM user fee rate and the 2026 SBM-FP user fee rate would be set at lower rates to account for the projected higher enrollment in the Marketplaces. We propose that these alternative user fee rates would be set within a range between 1.8% and 2.2% of total monthly premiums for the FFM, and would be set within a range between 1.4 and 1.8 of total monthly premiums for SBM-FP with the intention to set a single set of rates of alternative rates in the final rule, if finalized, based on a better understanding of how open enrollment for the 2025 benefit year will impact these projections.
Continuing to Support Risk Adjustment
CMS proposes a risk adjustment user fee for the 2026 benefit year of $0.18 per member per month, the same user fee rate used for the 2025 benefit year. For 2026, HHS will be responsible for operating risk adjustment in every state and the District of Columbia. The costs associated with this user fee cover a wide range of activities that support risk adjustment program activities.
Connecting Actuarial Value Calculation to Levels of Coverage
CMS maintains an Actuarial Value (AV) Calculator to calculate an issuer’s level of coverage for a given cost-sharing plan design. CMS intends to revise its methodology for updating the AV Calculator, starting with the 2026 AV Calculator, so the agency would only publish a single, final version of the AV Calculator each plan year. Doing so would reduce administrative burden while still ensuring the accuracy of the AV Calculator. We would still seek public comment on the AV Calculator and would consider this feedback for incorporation into the following year’s AV Calculator.
Reducing the Risk that Issuer Insolvencies Pose to the Integrity of the FFMs
When health insurance issuers become financially insolvent, consumers lose out on critical health coverage options. CMS is seeking comment on ways to reduce the risk of issuer insolvencies. These approaches could include increasing coordination with State Departments of Insurance and the National Association of Insurance Commissioners to identify issuers that are at risk before issues arise.
Clarifying the Timeliness Standard for State Marketplaces to Review and Resolve Enrollment Data Inaccuracies
Accurate and efficient processing of an issuer’s enrollment data inaccuracies benefits consumers by ensuring accurate and timely payment of APTCs, which remain key to connecting consumers with affordable health care coverage. CMS proposes to formalize guidance for State Marketplaces on requirements to review and resolve enrollment data inaccuracies received from issuers.
Reconsidering Denied QHP Certifications
Certifying issuers of QHPs is critical to ensuring consumers can benefit from high-quality, affordable, person-centered health care coverage. Beginning in 2026, CMS proposes to clarify that a Marketplace may deny certification to any plan that does not meet applicable criteria. Additionally, CMS proposes to refine the FFM standards for requests for reconsideration of a certification denial. This proposed policy would require issuers to submit a written request for reconsideration, providing clear and convincing evidence that HHS’ determination that the plan did not meet the general certification criteria was in error.
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