CMS Proposal Would Overhaul Eligibility Rules for ACA Exchanges

The Centers for Medicare and Medicaid Services (CMS) is proposing significant changes to the way Affordable Care Act (ACA) health insurance exchanges verify consumer eligibility before federal subsidies are made available.  

Under existing rules established by the ACA, if an insurance exchange is unable to immediately verify a consumer's eligibility, federal financial assistance, in the form of advance premium tax credits (APTC) and/or cost-sharing reductions (CRSs), is available while documentation is gathered. The proposed rule, published October 27, 2026, would eliminate this front-end grace period and would require exchanges to verify the following before APTC or CSRs can be provided: 

• Household income and family size. 
• Citizenship, U.S. national status, or lawful presence. 
• Eligibility for or enrollment in other qualifying coverage. 
• State of residence. 

While consumers who cannot be immediately verified could still enroll in health coverage, they would not have access to federal financial assistance. For health plans, this could increase the number of unsubsidized or temporarily unsubsidized enrollees and is expected to reduce ACA individual-market enrollment. 

Here are four key changes called for in the proposed rule:  

1. An end to passive auto-reenrollment: People who have coverage through an exchange can be automatically reenrolled in a health plan, with their existing subsidy levels, if they do not actively participate in the annual open enrollment period. Under the proposed rule, automatic reenrollment with financial assistance would require the member to reverify eligibility each year. Members who do not reverify would be reenrolled without financial assistance. This is likely to increase member churn, particularly among lower-income enrollees who rely on subsidies but may have difficulty navigating the reverification process each year. 
2. New pre-enrollment eligibility verification: Federal and state-based insurance exchanges would be required to open a pre-open-enrollment verification window. Consumers would use this window to submit eligibility information for the upcoming coverage year before open enrollment begins. For health plans, the change could alter the timing and distribution of enrollment activity, with some consumers completing verification and making plan selections earlier in the cycle.  
3. Contingent health plans: The proposal would allow consumers to select a "contingent" plan during the annual open enrollment period. The contingent plan would activate only after the consumer is confirmed eligible for financial assistance. This creates a new enrollment scenario for health plans to administer that could span multiple months between the time the plan is selected and when coverage becomes effective. Health plans might need to update member communications, claims systems, and network access prior to activation. The rule preserves financial assistance during inconsistency periods for consumers whose special enrollment period (SEP) is triggered by birth, adoption, marriage, or loss of a dependent through divorce, separation, or death. For these individuals, subsidy amounts would be based on attested (i.e., not yet verified) information. 
4. Retroactive APTC and CSRs: For members already enrolled in a plan when their subsidy eligibility is confirmed, the proposal calls for APTC and CSRs to be applied retroactively to cover months when the subsidies were not available. Existing binder payment rules would apply to both prospective and retroactive enrollments arising under the new framework. Issuers would gain flexibility to set binder payment due dates for new enrollment configurations but will need to update plan documents, member communications, and billing workflows to reflect those changes. In addition, health plans will need to account for retroactive premium reconciliation and updated CSR calculations for affected members. This could create both a claims and finance administration challenge that will require close coordination between exchanges and health plans.  

This NPRM follows a series of actions by the executive and legislative branches focusing on potential fraud, waste, and abuse arising from ACA enrollment, including issuance by the U.S. Government Accountability Office (GAO) of reports on the topic, CMS’s recent announcement that it had ended coverage for 760,000 due to concerns about unauthorized enrollment, and extensive congressional debate and oversight stemming from related concerns. 

Comment Period Is Open Until November 25 

The proposed rule is open for public comment until November 25. Health plans and other stakeholders with concerns about the impact of the proposals on ACA eligibility, enrollment and the marketplace should engage in the comment process.