Proposed 2026 Payment Notice: Marketplace Standards And Insurance Reforms

By Sabrina Corlette and Jason Levitis

On October 4, 2024 the Centers for Medicare & Medicaid Services (CMS) released its draft Notice of Benefit & Payment Parameters (NBPP) for plan year 2026. This annual regulation, referred to informally as the “Payment Rule” or “Payment Notice,” prescribes standards and rules that govern insurers and health insurance Marketplaces under the Patient Protection & Affordable Care Act (ACA).

In addition to the draft Payment Notice, CMS released a fact sheet and draft 2026 Letter to Issuers. Comments on the proposed Payment Notice are due within 30 days of its publication in the Federal Register, and comments on the draft Letter to Issuers are due on November 4, 2024.

The 2026 Payment Notice is expected to be the Biden Administration’s last significant rulemaking on the ACA, and a final rule is likely to be issued by January, before a new Administration takes office. The proposal builds on the Biden Administration’s efforts to expand access to affordable, comprehensive health insurance while reducing administrative burdens and advancing health equity. It also attempts to reduce the incidences of broker-driven unauthorized enrollments and plan switching, a problem that has increasingly plagued the federally run Marketplaces.

In this Forefront article, we focus on policies related to Marketplaces, insurance reforms, and Advance Premium Tax Credits (APTC). An article by Matthew Fiedler will review CMS’ changes to the ACA’s risk adjustment program.

Reducing Fraudulent Enrollments And Improving Program Integrity

In the first six months of 2024, CMS received over 200,000 complaints from consumers about unauthorized Marketplace enrollments or plan switches. These transactions are driven by unscrupulous brokers and agents who receive insurance company commissions when they enroll someone in a new plan. Although CMS has suspended hundreds of brokers and agents and at least two enrollment platforms from conducting Marketplace enrollments, members of Congress and others have called upon the agency to do more to crack down on these fraudulent enrollments.

CMS proposes several changes to boost their ability to identify and respond to unauthorized enrollment and plan switching, and to hold brokers, agents, and web-brokers accountable for such fraud. These include clarifying CMS’ authority to (1) pursue enforcement actions against both the individual broker or agent committing the fraud and the agency where that broker or agent works, and (2) suspend a broker or agency’s ability to conduct transactions with the health insurance Marketplace in instances where CMS identifies “unacceptable risk.” In addition, CMS proposes to update the Model Consent Notices that brokers, agents, and web-brokers may use to document consumers’ consent. CMS also proposes provisions that aim to improve the timeliness of Marketplace reporting on enrollment data corrections and the transparency of Marketplace data on key performance metrics.

Agency-Level Enforcement

CMS proposes to clarify its authority to hold “lead agents”—the directors or officers of a broker agency—accountable for the behavior of the agents or brokers who work at their agency. Many enrollments in the federally facilitated Marketplaces (FFM) and state Marketplaces on the federal platform (SBM-FP) are facilitated by an individual agent or broker that works for an agency. CMS finds that in approximately 4 percent of Marketplace enrollments, it is the agency’s “National Producer Number” (NPN) that is recorded on the consumer’s eligibility application.

CMS proposes to use the same authorities and tools it currently uses to conduct oversight of and enforcement against individual agents, brokers, and web-brokers and apply them to the lead agents that direct or oversee the work of the brokers, agents, or web-brokers that they employ or contract with. Just as with individual agents, brokers, or web-brokers, CMS proposes that lead agents face suspension or termination when there are (1) specific findings or patterns of noncompliance, (2) failures to maintain proper state licensure, and (3) fraud or abusive conduct.

To determine if an enforcement action should be taken against a lead agent, CMS would first determine whether there has been agency-level endorsement of or involvement in the misconduct. CMS notes that explicit agency endorsement could include written directives to engage in non-compliant behavior, while implicit endorsement would involve, for example, the agency continuing to employ an agent, broker, or web-broker whom they know has submitted consumer applications without first obtaining and documenting consent. In addition to reviewing data metrics and monitoring their systems to identify potential misconduct, CMS reviews agency resources for brokers, agents, and web-brokers, such as company directives, training manuals, and marketing materials. For example, CMS notes that it has found agencies instructing their agents and brokers to fabricate enrollee incomes and advising them not to speak to consumers before enrolling them in a plan.

CMS requests comment on these provisions, particularly from the state insurance departments that license insurance agents and brokers. CMS also asks for input on how states define the term “lead agent” as well as suggestions from states on ways to enhance federal-state collaboration on oversight of and enforcement against the agencies that facilitate Marketplace enrollments.

System Suspension Authority

CMS proposes to clarify its authority to suspend an agent or broker’s ability to conduct Marketplace transactions when CMS discovers circumstances that pose an “unacceptable risk.” This risk could be to the accuracy of eligibility determinations, Marketplace operations, applicants, or enrollees, or to Marketplace information technology systems, including risks related to data privacy and security. Of note, such a suspension, by itself, does not pause or terminate the agent or broker’s agreement with the Marketplace. A broker or agent under system suspension could continue to assist with enrollments using the Marketplace call center or by supporting a consumer with their HealthCare.gov application (referred to as the “Side-by-Side” Marketplace pathway).

CMS uses several different factors to assess whether the broker or agent deserves system suspension, or whether he or she is simply in need of technical assistance. These factors include the number of times data indicate that an agent or broker has engaged in misconduct, the number of consumers impacted by the suspected misconduct, and the severity of the alleged misconduct. If suspension is warranted, CMS would notify the agent or broker, who would than have an opportunity to submit evidence or otherwise demonstrate that the suspension should be lifted. If the agent or broker cannot provide such evidence, then CMS would pursue a suspension or termination of their Marketplace agreement.

Model Consent Form Updates

In 2023, CMS released a Model Consent Form for agents, brokers, and web-brokers to use to document consumer consent. Use of this form is voluntary and is intended to make it easier for brokers, web-brokers, and agents to comply with consent documentation requirements. The draft 2026 Payment Notice proposes updates to the Model Consent Form, including a section for brokers, agents, and web-brokers to document a consumer’s review and confirmation of the accuracy of the information submitted on their application, as well as scripts that brokers, agents, and web-brokers can use when communicating with consumers about the consent requirements. CMS argues that these updates will help ensure that agents, brokers, and web-brokers are following regulatory requirements and reduce unauthorized enrollments.

Clarifying Timelines For Resolving Enrollment Data Corrections

CMS proposes to codify recent guidance clarifying the timeline for state Marketplaces to adjudicate and report enrollment corrections to CMS. Under this guidance, which was released in August 2024, state Marketplaces have 60 days from when they receive a complete report of the inaccuracy from an insurer to assess and resolve the case and report any correction to CMS. Such corrections may arise due to a range of situations where the Marketplace may not have been initially aware of an individual’s enrollment status, or this status changed retroactively. Enrollment reporting by Marketplaces to CMS is the basis for payment of advanceable PTCs to insurers, so accurate and up-to-date data is crucial for program integrity and effective operations.

Publishing State Marketplace Operational Reporting

CMS proposes to release information collected from state Marketplaces about their operations and performance. Long-standing regulations require state Marketplaces to annually provide CMS with detailed information about their functioning and compliance using the State Marketplace Annual Reporting Tool (SMART). They must also provide annual financial and programmatic audits. In addition, state Marketplace regularly report to CMS on key performance metrics like website and call center traffic. CMS uses this information to identify risks, provide technical assistance and corrective actions, and inform policy development. But this information has not generally been released publicly. CMS now proposes to release this information, as well as documentation of corrective actions or open findings. CMS would begin releasing information in the spring of 2025 with the SMART reports for plan year 2023.

Supporting Consumer Decision-Making And Improved Plan Choices

CMS proposes changes to standardized plans and limits on the number of non-standardized plans to help consumers make more informed decisions when selecting a Marketplace plan. The agency is also clarifying its authority to decline to certify plans for Marketplace participation, seeking comment on ways to mitigate the risk of insurer insolvencies, proposing improvements to its oversight of essential community provider standards, and proposing to publish more information about plans’ quality improvement strategies.

Standardized benefit designs

In 2023, CMS unveiled standardized plan options for the FFM and SBM-FPs to ease the comparability of plan options. Each year since then, CMS has made only minor changes to the standardized plans to ensure that they continue to have an actuarial value within the permissible de minimis range for each metal level (bronze, silver, gold, and platinum). CMS has refrained from more significant plan design changes to maintain continuity and avoid consumer disruption. For the 2026 draft Payment Notice, CMS once again proposes only modest changes to the standardized plans.

However, CMS proposes to require insurers that offer multiple standardized plan options within the same product network type, metal level, and service area to ensure that there is a “meaningful difference” among these plans in terms of benefits, provider networks, and/or formularies. The meaningful difference standard was introduced in 2015 and intended to reduce consumer confusion by preventing a proliferation of duplicative plan offerings. The Trump administration discontinued the meaningful difference standard in 2019.

Since then, CMS has observed that several insurers are offering “indistinguishable” standardized plan options, leading to significant consumer confusion and unnecessary plan proliferation. The agency is therefore proposing to re-introduce the meaningful difference standard. A plan will be considered meaningfully different from other plans in the same service area and metal level if the plan has at least one of the following characteristics:

• A different provider network;
• A different formulary;
• A different maximum out-of-pocket cap (specifically, an integrated medical and drug maximum out-of-pocket cap versus a separate medical and drug maximum out-of-pocket cap);
• A different deductible type (specifically, an integrated medical and drug deductible versus a separate medical and drug deductible);
• A difference in the number of in-network tiers;
• A $500 or more difference in the maximum out-of-pocket cap;
• A $250 or more difference in deductible; or
• A difference in benefit coverage.

If finalized, CMS would monitor insurers’ plan designs to assess whether they are offering plans that technically meet the meaningful difference standard but are nearly identical. If so, then CMS would pursue future rulemaking to require greater variation among plans.

Limits On Non-Standardized Plan Options

In 2024, insurers were required to limit the number of non-standardized plans they offered in the FFM and SBM-FPs to four plans in each the following four categories:

• product network type;
• metal level;
• inclusion of dental and/or vision benefits; and
• service area

For 2025 and subsequent years, the limit was reduced to two plans per category. At the same time, CMS created an exceptions process, allowing insurers in the FFM and SBM-FP to offer more than two non-standardized plan options per category if they could demonstrate that the additional plans had specific design features that would “substantially benefit consumers with chronic and high-cost conditions.” Under the non-standardized plan limits, if an insurer wanted to offer the maximum number of non-standardized plans, and offered plans with two network types (like HMO and PPO), they could theoretically offer a maximum of 32 plans in a given metal level and service area.

In describing the four categories above, CMS notes that it “failed to properly distinguish” between adult and pediatric dental benefits. In this proposed rule CMS would allow insurers to make that distinction. Thus, insurers would be limited to offering two non-standardized plans per product network type, metal level, and inclusion of adult dental, pediatric dental, and/or adult vision benefit coverage. CMS argues that, operationally, such distinctions have already been permitted.

Certification Standards For Marketplace Health Plans

The ACA provides the Marketplaces with the authority to certify a plan for Marketplace participation (referred to as a “qualified health plan” or QHP) if the plan meets certification requirements and if the Marketplace determines that its inclusion is “in the interests of” consumers. However, even though a plain reading of the ACA makes clear that the Marketplaces have the authority to deny certification to a plan, that authority is not made explicit in the current Marketplace regulations. CMS would therefore revise its current rules to more fully and accurately state that Marketplaces may deny certification of any plan that does not meet the required certification criteria or whose participation would not be in the interests of enrollees.

To date, CMS has denied certification to only a small number of insurers. These insurers are permitted to seek a reconsideration of the denial, and in this proposed rule CMS states that it would be helpful to provide more “structure” to that process. Specifically, CMS proposes to clarify that the burden is on the insurer receiving the denial to provide “clear and convincing” evidence that CMS’ determination was in error.

Reducing The Risk Of Insurer Insolvency

In 2023, consumers in several Marketplaces were informed that two insurance companies—Bright Health and Friday Health Plans—were facing insolvency and would no longer be a coverage option. Such insolvencies cause significant disruption for consumers who must find a new coverage option, as well as for providers and patients who may find themselves with unpaid bills. State insurance departments serve as the frontline protection against insurance company insolvency, but here CMS seeks comment on how it can better partner with state regulators to mitigate the risk that an insurer’s insolvency poses to the integrity of the FFM.

CMS seeks comment on how to increase their coordination with state insurance departments and the National Association of Insurance Commissioners (NAIC), particularly for multi-state insurers. For example, CMS could review insurers’ QHP applications in FFM states to identify those at risk of solvency-related difficulties. Insurers’ financial data is included in annual filings to the NAIC that are available to CMS. For insurers that may be insufficiently capitalized, CMS would work with relevant state regulators to impose regulatory interventions, such as suppressing the insurer’s plans on HealthCare.gov, capping enrollment, denying QHP certification, or decertifying existing QHPs.

Additionally, CMS notes that it could partner with states to identify insurers that are experiencing levels of enrollment growth that risk exceeding their capitalization rates. This often happens when an insurer has set its premiums too low relative to the market. One contributing factor in past insurer insolvencies has been that the low-cost insurers attracted comparatively low-risk enrollees. As a result, these insurers owed higher-than-expected risk adjustment charges that they did not have the funds to pay. Going forward, CMS could work with state regulators to discuss whether or not such insurers should have plans certified for the FFM, and whether the financial capacity exception to the ACA’s guaranteed issue requirement should be invoked.

CMS notes that it would engage in the above-described activities only for insurers operating in the FFM, not for insurers in the SBMs or SBM-FPs. The agency argues that SBMs and SBM-FPs are best positioned to understand their respective markets and may have policies that differ from the FFM, which CMS would not want to impede.

In seeking comment on expanding CMS’ role in the oversight and mitigation of insolvency risk, CMS notes that states are “best positioned” to exercise these responsibilities, but that as the operator of the FFM and the ACA’s risk adjustment program, CMS can serve a useful role partnering with state regulators about the advisability of certifying plans that could be at risk.

Federal Review Of Compliance With Essential Community Provider Standards

Under the ACA, Marketplace health plans must include as part of their networks “essential community providers” (ECPs) that serve predominantly low-income, medically underserved individuals. To date, due to systems limitations, CMS has had to rely on states that perform Marketplace plan management functions to assess whether insurers are complying with ECP requirements. However, CMS has recently been able to improve its information technology systems and is now able to collect ECP data directly from insurers in states that perform plan management functions. This allows CMS to conduct its own evaluations of plan networks.

CMS therefore proposes to conduct federal reviews of plan compliance with ECP standards for the FFM, including in FFM states that perform plan management functions. The agency argues that doing so would ensure more consistent oversight of ECP data and strengthen data integrity across the FFM.

Publicizing Insurers’ Quality Improvement Strategies

The ACA requires Marketplace health plans to implement a quality improvement strategy (QIS). A QIS can be a payment structure or other incentives designed to improve health outcomes for enrollees, and/or activities to prevent hospital readmissions, improve patient safety, reduce medical errors, promote wellness, and reduce health disparities. Of note, CMS operates quality programs and initiatives across Medicare, Medicaid, and the Marketplaces, and has promoted publicizing health care quality information relevant to all three coverage programs.

CMS proposes in the 2026 Payment Notice to share aggregated, summary-level QIS information publicly. The agency argues that doing so would promote transparency and help drive innovation, as well as support alignment efforts across coverage programs. The QIS data would be shared in annual reports that include:

• Value-based payment models used by the QHP insurer;
• QIS topic area;
• QIS market-based incentive types;
• Clinical areas addressed by the QIS;
• QIS activities; and
• Measures used in the QIS.

CMS does not receive QIS information from the SBMs or SBM-FPs, so these reports would reflect only QIS information for insurers in the FFM. The agency seeks comment on the types of QIS data to release in an annual report, the timeline for releasing such reports, and other potential mechanisms to present QIS information publicly.

Efforts To Improve Consumers’ Experiences Obtaining And Maintaining Affordable Coverage

The proposed 2026 Payment Notice includes several proposals designed to ease administrative burdens, improve communications with consumers, and help ensure coverage affordability.

More Flexibility On Premium Payment Thresholds

CMS proposes to give insurers additional options to avoid terminating coverage when enrollees under-pay premiums by a de minimis amount, while also clarifying what thresholds are permissible under the existing option. The ACA generally requires payment of the full premium to effectuate enrollment (referred to as a “binder payment”) or avoid triggering a 3-month grace period or termination. Under existing regulations, insurers may set a minimum percentage of the consumer’s premium share that they will accept for these purposes (a “net premium percentage threshold”). For example, if the net premium threshold is 95 percent and the full premium is $400, of which APTC covers $300, then the consumer satisfies the threshold so long as they pay at least $95 (95% of the $100 net premium).

A threshold must be applied uniformly and must be reasonable. CMS has not previously defined “reasonable” for this purpose but has indicated that 95 percent is reasonable. The threshold may be applied for purposes of a binder payment, for triggering a grace period, and for triggering coverage loss.

CMS now proposes to allow two other options for thresholds, while also defining “reasonable” for all three options. For the existing option, a threshold of at least 95 percent of the net premium would be considered reasonable. CMS proposes to also allow thresholds based on the percentage of the total premium paid by APTC and the consumer (a “gross premium percentage threshold”). These thresholds would need to be at least 99 percent. For example, with a 99 percent gross premium threshold, if the total premium was $400 and APTC was $300, the consumer would need to pay at least $96, since $396 is 99 percent of $400. CMS also proposes to allow insurers to set a dollar value of permissible non-payment threshold (a “fixed-dollar threshold”), which must be no more than $5. The two new options would apply for purposes of triggering grace periods and coverage loss, but not for binder payments. CMS proposes to allow insurers to choose any of the three threshold options, but not to use more than one.

All of these options would be based on the accumulated non-payment. For example, if the insurer has a dollar-value threshold of $5 and a consumer under-pays by $3 for two consecutive months, the consumer would fall outside the threshold in the second month, since the total shortfall of $6 exceeds the $5 threshold.

CMS explains that that it proposes adding the new options to address situations where the consumer owes only a minimal amount even though have not met the 95 percent net premium threshold. For example, if the premium was $400, APTC was $398, and the consumer paid none (or even $1.50) of their $2 share, a net premium threshold of 95 percent would not protect the consumer, since they would not have paid 95 percent of their $2 net premium. The new options could cover this situation.

While these new options may be helpful, making them not apply to binder payments is an important limitation. Under the requirement to use only one of the three threshold options, using either of the new options would mean that a consumer that very slightly underpays a binder payment could not have coverage effectuated. CMS specifically requests comments on these issues, raising the prospect that the final regulations may be less limiting in this respect.

On a related note, the Treasury Department and the IRS recently proposed regulations under the premium tax credit (PTC), clarifying that a consumer who pays less than the full premium may still be eligible for PTC so long as they maintain coverage, including pursuant to a permissible premium payment threshold. This addresses potential situations where a consumer who is unable to pay a small share of the premium may be deemed ineligible for PTC and therefore owe back substantial APTC at reconciliation.

Leveraging Consumer Assisters To Connect Consumers With Medical Debt Relief

The Consumer Financial Protection Bureau estimates that $88 billion worth of outstanding medical debt is currently in collections, affecting one in five Americans. This debt can be devastating, resulting in financial distress, personal bankruptcy, and delayed or forgone medical care. In this proposed rule, CMS notes that the burden of medical debt falls disproportionately on vulnerable and underserved individuals, including young adults, veterans, those with low incomes, and Black and Hispanic families.

Hospitals and health systems are the primary sources of medical debt; at the same time, these entities often have staff who serve as Certified Application Counselors (CACs) or non-Navigator consumer assisters to help people enroll in Marketplace coverage. CMS seeks comment on whether these assister personnel could, within the bounds of the ACA, be asked to refer consumers to programs designed to reduce medical debt.

Request For Comments On Silver Loading Codification

CMS requests comments on whether and how to clarify in regulations that insurers may increase silver premiums to account for their costs for cost-sharing reductions (CSRs), so long as these adjustments are reasonable and actuarially justified. The ACA’s CSR rules require insurers to reduce cost-sharing in silver plans for certain eligible individuals. The ACA calls for CMS to reimburse insurers for the cost of CSRs, but in 2017 the Department of Justice determined that there was not a valid appropriation for these payments, and CMS halted them. To satisfy the requirements for actuarially justified rates, CMS then permitted insurers to increase premiums to account for the cost of CSRs, generally by “loading” the cost onto silver plans. CMS has repeatedly affirmed that this is permissible but has never codified this rule into regulations. CMS now once again affirms this position, indicates that it is considering codifying the rule, and requests comments on whether and how to do so.

Further Clarity On FTR Notices

CMS proposes to clarify Marketplaces’ options for notifying enrollees about potential eligibility loss due to failure to comply with the requirement that APTC recipients file a tax return and reconcile their APTC, a set of rules referred to as “failure to reconcile,” or FTR. The 2024 Payment Notice modified FTR rules to deny APTC only after two consecutive years of receiving APTC and then failing to reconcile them on the tax return. The 2025 Payment Notice clarified that Marketplaces have two options for notifying consumers who have failed to file and reconcile for one year: a direct notice to the tax filer clearly indicating FTR status (if they can do so in keeping with tax privacy rules), or a more general notice that explains FTR rules and warns of potential APTC loss without specifying the reason—an approach that sidesteps tax privacy rules because such notices do not count as protected tax information.

The proposed rule provides the same clarity with respect to consumers who have failed to file and reconcile for two years. Again, the Marketplace may provide a notice to the taxpayer warning of immediate eligibility loss and explaining the reason, or a more general notice warning of potential eligibility loss for one of several reasons and explaining FTR rules, without specifying the reason.

The proposed rule also notes that Marketplaces on the federal platform will, and state-based Marketplaces are encouraged to, provide additional communications beyond the ones required by this rule. The federal notices, which SBMs may use as a model, have been posted on the CMS website.

Easing The Appeals Process

CMS regulations permit a family member or authorized representative to apply for coverage on behalf of an individual seeking coverage. But where the application filer is not seeking coverage for themselves, current regulations prohibit the application filer from appealing an eligibility determination without additional administrative steps by the individual(s) seeking coverage.

This limitation puts a burden on consumers. When the application filer submits the appeal, they may be dismissed based on lack of standing, requiring the applicant or enrollee to resubmit the appeal or to designate the application filer as their authorized representative. Under the proposed change, application filers would be allowed to submit appeal requests on behalf of applicants and enrollees, which would streamline the appeals process. This change would be applied across the FFM and SBMs. CMS does not anticipate that it would increase administrative burdens for the SBMs.

Other Proposals

The 2026 draft Payment Notice also highlights CMS’ challenges setting Marketplace user fees in light of the potential expiration of the enhanced PTCs in 2026, proposes to provide insurers more time to access and use the Actuarial Value Calculator, and clarifies CMS’ payment methodology under the ACA’s Basic Health Program.

User Fee Uncertainty

CMS proposes to increase the user fees for Marketplaces on the federal platform. However, the size of increases depends on developments related to the PTC enhancements that were enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022. The enhancements are scheduled to expire at end of the 2025, but there are efforts underway to extend them. If the enhancements expire as scheduled, CMS projects that resulting enrollment declines would require it to raise the FFM user fee from 1.5 percent in 2025 to 2.5 percent in 2026, and the SBM-FP user fee from 1.2 percent to 2.0 percent. If Congress acts by March 31, 2025 to extend the enhancements through 2026, CMS expects that it would set the FFM user fee somewhere between 1.8 percent and 2.2 percent, and the SBM-FP user fee somewhere between 1.4 and 1.8. However, CMS emphasizes that there is substantial uncertainty about enrollment and premiums under both scenarios and that the user fee rates could depart from these forecasts.

User fees are paid by Marketplace insurers to support the operations of the FFM and federal platform. The fee is calculated as a percentage of Marketplace premiums collected. The fee supports Marketplace activities that benefit insurers on the federal platform, including eligibility and enrollment processes; outreach and education; managing navigators, agents, and brokers; consumer assistance tools; and certification and oversight of Marketplace plans.

CMS notes several reasons for likely user fee rate increases and attendant uncertainty. User fee rates are likely to increase even if the PTC enhancements are quickly extended due to factors like states transitioning from FFEs to SBM-FPs and SBMs, lower premium projections, and increased costs for oversight of agents and brokers. However, the most important factor is the potential expiration of the enhancements. CMS describes the enrollment projections as “uniquely uncertain” due to the potential expiration or belated extension of the PTC enhancements, which could affect everything from insurers’ premium filings and consumer behavior to pass-through funding under section 1332 waivers and program parameters under Basic Health Programs.

CMS requests comments on the March 31 deadline for extension of the PTC enhancements to move forward with the lower user free rates.

Streamlining The Release Of The Actuarial Value Calculator

Under the ACA, non-grandfathered individual and small-group market health insurance must adhere to prescribed levels of coverage, referred to as the metal levels (bronze, silver, gold, and platinum). Each level of coverage is determined based on the actuarial value (AV) of the plan, which reflects the percentage of total average costs for benefits covered by the plan. To implement this provision of the ACA, CMS created an AV Calculator, and insurers are required to use it to determine the AV of their health plans.

Beginning in 2015, CMS annually released a draft version of the AV Calculator and its methodology and sought public comment before releasing the final version. However, CMS has received feedback from some stakeholders that they would prefer it if the AV Calculator could be released earlier in the year, in anticipation of state filing deadlines. CMS also notes that it receives only a few comments each year on the draft AV Calculator and methodology. Therefore, the agency is proposing to only release the single, final version of the AV Calculator for the next plan year. There would still be an opportunity for the public to comment on the AV Calculator, but any feedback would only be incorporated in the development of the following year’s AV Calculator. This would allow CMS to release the final AV Calculator earlier in the year.

BHP Payment Methodology Clarifications

CMS proposes to clarify the Basic Health Program (BHP) payment rules for situations where a state partially implements the BHP in the first year.

The ACA give states the option to establish a BHP to cover relatively low-income residents (those with incomes up to 200 percent of FPL) who would otherwise be eligible for the PTC. States have flexibility over BHP design so long as it is generally no less generous or affordable than Marketplace coverage at the same income level. BHP coverage is funded through federal payments to the state that are generally equal to 95 percent of the PTC enrollees would have otherwise received. A state can generally choose whether this calculation is based on current-year or prior-year premiums.

Since the 2017 termination of federal CSR payments, insurers generally increase silver premium to account for the cost of CSRs—a practice referred to as “silver loading.” This generally increases PTC amounts, which are tied to silver premiums. However, silver loading is typically minimal in BHP states, since virtually everyone with income that would normally make them eligible for substantial CSRs is instead eligible for the BHP. As a result, silver premiums and PTC are depressed in BHP states, all else equal.

To prevent this discrepancy from depressing BHP payments, the BHP payment regulations include an adjustment intended to capture the impact of silver loading on PTC in other states. In a state transitioning to a BHP, this adjustment applies to the first BHP year if the payment is based on current-year premiums, but not if is based on prior year-incomes, since silver loading still had its full impact in that year. This rule generally avoids both underpayment and double-counting. But this rule does not account for cases where a state partially implements the BHP in the first year and thus silver loading is only partially reduced. The proposed regulations permit the silver loading adjustment to be applied in part in such cases. This change appears aimed at Oregon, which is undergoing a phased transition to a BHP.

The proposed regulations also clarify how the BHP methodology addresses cases where there are multiple benchmark silver premiums within a county. Codifying its long-standing practice, CMS proposes to clarify that, in such cases, the payment calculations uses the benchmark premium appliable to the largest fraction of county residents.

Authors’ Note

Sabrina Corlette and Jason Levitis received support for their time and work on this piece from the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation, the Urban Institute, or Georgetown University.

Sabrina Corlette and Jason Levitis “Proposed 2026 Payment Notice: Marketplace Standards And Insurance Reforms,” October 8, 2024, https://www.healthaffairs.org/content/forefront/proposed-2026-payment-notice-marketplace-standards-and-insurance-reforms. Copyright © 2024 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.