Newsletter

STATUS OF ACA REGULATORY CHANGES, COURT CHALLENGES, AND WHAT THEY MEAN FOR 2027: OPEN ENROLLMENT COULD BE SHORTENED TO A SIX WEEK PERIOD

The Trump Administration has issued two major rules reshaping the ACA Marketplace — one in 2025 and one in 2026 — and both have been challenged in federal court by the same coalition of plaintiffs led by the City of Columbus.

A. The 2025 Rule And What Was Blocked (Columbus I) For Plan Year 2026

In June 2025, Medicare (CMS) issued the "Marketplace Integrity and Affordability Final Rule." The same month, a coalition including the cities of Columbus, Baltimore, and Chicago filed suit in the U.S. District Court for the District of Maryland (City of Columbus et al. v. Kennedy et al., Case No. 1:25-cv-02114 — "Columbus I").

In August 2025, the court issued a preliminary injunction blocking four specific provisions of the 2026 Rule. The government has appealed to the Fourth Circuit but the injunction remains in place. Here are summaries of the four rules the injunction blocked from being implemented for the 2026 plan year:

• Open Enrollment Period — shortens the Open Enrollment window to six weeks from ten weeks (from November 1 through January 15 for healthcare.gov to November 1 through December 15). The injunction reinstated the same 10-week open enrollment window on healthcare.gov for 2026 open enrollments (November through January 15) that has been in place since 2022.

• Pre-Enrollment Special Enrollment Period (SEP) Verification — requires proof of a qualifying life event before coverage begins for most new SEP enrollments.

• Past-Due Premium Rule — denies enrollment to consumers who owe past-due premiums to the same carrier.

• Stricter income Verification — limits self-attestation and imposes tighter documentation requirements

B. The 2027 Final Rule And The New Lawsuit (Columbus II)

In May 2026, CMS issued the "HHS Notice of Benefit and Payment Parameters for 2027," a sweeping new rule governing plan year 2027. On June 3, 2026, the same coalition filed an entirely new and separate lawsuit challenging the 2027 rule (Columbus II, Case No. 1:26-cv-02215). Oral argument is scheduled for July 8, 2026, with a ruling expected in late July 2026. As of this writing, no injunction has been issued in Columbus II. The 2027 rule's provisions therefore remain in effect unless and until the court acts. We are monitoring this closely and will issue updates when we receive hem.

C. Current Status Of 2027 Provisions

Challenged in Columbus II — currently in effect, ruling expected late July 2026:

• Shortened Open Enrollment Period —The rule shortened open enrollment for 2027 Affordable Care Act plans open enrollment on healthcare.gov to six weeks (November 1 through December 15, 2026) INSTEAD of the November 1-January 15 period that has existed since 2022.

• Pre-Enrollment SEP Verification — CMS re-finalized the requirement that HealthCare.gov verify qualifying life events for at least 75% of new SEP enrollments before coverage begins. Coverage would not begin until approval of the qualifying life event and payment of the first month's premium (called a "binder" payment). A similar provision was blocked in Columbus I for 2026.

• Past-Due Premium Rule — CMS again sought to allow carriers to deny enrollment to consumers with past-due premiums. Blocked in Columbus I for 2026; re-finalized for 2027.

• Stricter Income Verification — CMS again tightened income documentation and limited self-attestation. Blocked in Columbus I for 2026; re-finalized for 2027.

These Changes Were Not Challenged And Will Be Effective For 2027

• Lower Exchange User Fees — fees drop from 2.5% to 1.9%, intended to put modest downward pressure on premiums.

• More State Flexibility — state-based exchanges gain greater authority over plan certification and network adequacy standards.

• Elimination Of Standardized Plan Requirements — insurers have more design flexibility, though plan comparisons may become harder for consumers.

• Higher Bronze Plan Out-Of-Pocket Maximums — some Bronze plans may carry individual MOOPs (maximum out-of-pocket limits) up to $15,600 (130% of the standard $12,000 cap) in exchange for lower premiums; insurers offering this must also offer at least one standard Bronze plan within the regular cap.

• Multi-Year Catastrophic Plans — plans of up to ten consecutive years are now permitted; benefit design is locked in but premiums remain subject to annual review and adjustment.

D. What To Watch For

The Columbus II ruling, expected in late July 2026, could change the 2027 enrollment landscape significantly. The court is expected to rule on the challenges before the end of this month. We will provide updates concerning any court order that affects enrollment dates, SEP verification, or other 2027 provisions.

The single most time-sensitive issue for clients is the open enrollment period.

Until a court rules otherwise, the 2027 open enrollment window is November 1 through December 15, 2026. If that changes, we will communicate it immediately.

Please call us at 786-970-0740 (Cell) with any questions.

SUBSIDY ELIGIBILITY AND OUT-OF-POCKET MAXIMUMS FOR 2027 ACA PLANS

Out-Of-Pocket Maximum

ACA plans have a maximum "out-of-pocket limit" — the most you can pay toward covered in-network expenses in a calendar year. Once you reach this limit, the plan pays 100% of covered in-network costs for the rest of the year. The out-of-pocket maximum includes deductibles, copays, coinsurance, and prescription drugs included in the plan's formulary. It does not include your monthly premiums, and covered out-of-network charges may have no cap at all (a plan may count none, some, or all of those costs toward any maximum out-of-network limit).

The federal government sets a maximum permitted out-of-pocket limit each year that no ACA-compliant plan may exceed. These maximums have increased nearly every year the ACA has been in effect. The only exception was 2025, when the limits were reduced slightly from the 2024 amounts of $9,450 (individual) and $18,900 (family).

The 2027 limits represent the largest single-year dollar increase in the ACA's history — a $1,400 increase per individual (total of $12,000) and $2,800 per family (total of $24,000) — driven in part by the significant premium increases that occurred in 2026. Note: this assumes that carriers will not offer even higher out-of-pocket maximums for Bronze plans (up to $15,600 for individuals and $31,200 for families) in exchange for lower premiums (see first article). 

Subsidy Eligibility

The Federal Poverty Level ("FPL") is used to determine eligibility for a tax subsidy that reduces the gross premium. Affordable Care Act subsidies for 2027 are based on projected income for 2027. Income is defined as "Modified Adjusted Gross Income" (MAGI) which can be a higher number than earned income (most investment and all Social Security income are included in MAGI).

How The FPL Works For ACA Subsidies: There is a one-year lag in how FPL numbers are applied. The FPL published in January of one year is used to determine subsidy eligibility for ACA plans effective the following year. So, the 2026 FPL figures (published January 2026) will be used for 2027 plans.

Eligibility for a subsidy occurs if household MAGI is:

• At or above 100% FPL (non-Medicaid expansion states, including Florida) or above 138% FPL (Medicaid expansion states), AND

• No more than 400% FPL

The 400% income cap (the "subsidy cliff") returned in 2026 after Congress allowed the enhanced subsidies to expire at the end of 2025. If income is even one dollar above 400% FPL, there is no federal subsidy at all.

Important Change — No Repayment Cap

Starting with the 2026 tax year, if you underestimate your income and receive more in advance premium tax credits (APTC) than you are entitled to, you must repay the full excess amount when you file your taxes. Prior law capped the repayment amount for most households; that cap no longer exists. Exception: If your actual income for the year ends up falling below 100% of FPL, you are not required to repay the APTC you received — provided you enrolled in good faith based on a reasonable income projection at the time of enrollment and did not intentionally misrepresent your income.

2027 Subsidy Eligibility Chart [Based On 2026 Federal Poverty Levels (FPL)]

Note: Household size means the total number of people in the household for tax purposes, regardless of how many are enrolling in an ACA plan.

Subsidy (Advance Premium Tax Credit)

The ACA provides subsidies to help individuals and families pay their monthly health insurance premiums. Depending on age and county of residence, an unmarried individual or a family filing a joint return who earns between 100% (or 138% in Medicaid expansion states) and 400% of the FPL will generally be eligible for a subsidy — unless affordable employer group coverage has been offered to them.

Federal Poverty Level and Cost Sharing Reductions

Cost Sharing Reductions are offered only on Silver plans. These plans offer lower deductibles, co-pays, and out-of-pocket maximums at no additional cost to the policyholder. The following thresholds determine eligibility for each CSR level:

• Level 6 (strongest reduction): MAGI between 100/138% and 150% FPL
• Level 5: MAGI between 150% and 200% FPL
• Level 4: MAGI between 200% and 250% FPL

WHAT HAS HAPPENED TO 2026 ACA ENROLLMENT SINCE THE AMERICAN RESCUE PLAN ACT (ARPA) EXTENSION EXPIRED ON DECEMBER 31, 2025

The Affordable Care Act (ACA) saw record enrollment in 2022–2025 because the American Rescue Plan Act (ARPA) temporarily made Marketplace coverage much more affordable. ARPA lowered premiums for nearly everyone and eliminated the old “subsidy cliff,” allowing higher‑income households to qualify for help.

But ARPA was always temporary — and because Congress did not extend it, the enhanced subsidies expired on January 1, 2026. Now we’re seeing the full impact on 2026 enrollment.

Here’s what’s happening.

 1. Premiums Increased For Millions Of Households

When ARPA expired, the old subsidy formula snapped back into place. That means:

• People with middle and higher incomes lost part or all their premium tax credits.

• Some households saw premiums rise by $100–$300 per month (or considerably more).

• Older adults (50–64) were hit hardest because their unsubsidized premiums are the highest.

Result: Many consumers who stayed enrolled in 2026 are now shopping harder, downgrading plans, or dropping coverage entirely for 2026. Others have left the marketplace and enrolled in lower-cost alternatives like short-term health insurance or ERISA-covered plans like group plans built on an individual chassis. Per Kaiser Family Foundation, the Wakely Cosulting Group estimates Affordable Care Act enrollment will drop 4.8 million this year (from 22.3 million enrolled in 2025, a drop of over 21%).

2. The “Subsidy Cliff” Returned

Under ARPA, no one paid more than 8.5% of household income for the benchmark plan.

Now that ARPA is gone:

• Households above 400% of the Federal Poverty Level have lost subsidies completely.

• A 60‑year‑old couple making $80,000 can now face $1,500–$2,000 monthly premiums or more with no help.

Result: Enrollment among higher‑income older adults is declining sharply for 2026. As mentioned above, others have left the marketplace and enrolled in lower-cost alternatives like short-term health insurance or ERISA-covered plans like group plans built on an individual chassis.

3. More People Are Switching To Lower‑Cost Plans

Consumers who remain in the Marketplace are shifting to:

• Bronze plans

• High‑deductible plans

• Plans with narrower networks

• Catastrophic‑style options

Result: Enrollment numbers may stay high, but plan quality and coverage levels are dropping.

4. Low‑Income Enrollment Is Holding Steady

This group still receives very strong subsidies, even without ARPA.

Result: Enrollment among low‑income individuals remains stable — the biggest declines are in the middle‑income and older‑adult segments.

5. Overall Impact On 2026 Enrollment

Here’s the big picture:

Enrollment Is Becoming More Polarized.

• Low‑income enrollment: steady

• Middle‑income enrollment: declining

• Older adults without subsidies: sharply declining

• Plan switching: increasing

• Average premiums paid by consumers: rising

Why?

Because ARPA’s enhanced subsidies were the single biggest driver of ACA affordability — and without them, many households simply can’t absorb the higher costs.

Bottom Line

The expiration of ARPA’s enhanced subsidies has reshaped the ACA landscape for 2026:

• Affordable Care Act enrollment is projected to drop more than 21%

• Premiums are higher

• Subsidies are smaller

• The subsidy cliff is back

• More people are downgrading plans or switching to non-ACA-qualified plans

• Enrollment is shifting toward lower‑income groups

• Middle‑income and older adults are feeling the squeeze

This means more people need help navigating higher costs.

About Paul Cholak

Paul has over forty years of benefits experience and has been Director of Employee Benefits for large companies, as well as a benefits consultant with major consulting firms. He understands the health and life insurance needs of individuals and families of all ages. He also has considerable experience in selling health and life insurance to employer groups.

He guides you through the steps of getting health and/or life insurance and is available to help you both BEFORE and AFTER you've made your purchase decision.