Proposed Rule2026-21891
Patient Protection and Affordable Care Act, Exchange Pre-Eligibility Verification
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 27, 2026
Issuing agencies
Health and Human Services Department
Abstract
This proposed rule would implement new requirements specified under the Working Families Tax Cut (WFTC) legislation related to Exchange eligibility and verification. This proposed rule contains related updates to provisions affecting inconsistency periods, inconsistency verification procedures, annual eligibility redeterminations and eligibility redeterminations during the plan year, as well as expanding enrollment methods during the verification process and establishing new coverage effective dates.
Full Text
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[Federal Register Volume 91, Number 206 (Tuesday, October 27, 2026)]
[Proposed Rules]
[Pages 67656-67717]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-21891]
[[Page 67655]]
Vol. 91
Tuesday,
No. 206
October 27, 2026
Part II
Department of Health and Human Services
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45 CFR Part 155
Patient Protection and Affordable Care Act, Exchange Pre-Eligibility
Verification; Proposed Rule
Federal Register / Vol. 91 , No. 206 / Tuesday, October 27, 2026 /
Proposed Rules
[[Page 67656]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 155
[CMS-9873-P]
RIN 0938-AW03
Patient Protection and Affordable Care Act, Exchange Pre-
Eligibility Verification
AGENCY: Centers for Medicare & Medicaid Services (CMS), Department of
Health and Human Services (HHS).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement new requirements specified
under the Working Families Tax Cut (WFTC) legislation related to
Exchange eligibility and verification. This proposed rule contains
related updates to provisions affecting inconsistency periods,
inconsistency verification procedures, annual eligibility
redeterminations and eligibility redeterminations during the plan year,
as well as expanding enrollment methods during the verification process
and establishing new coverage effective dates.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by November 27, 2026.
ADDRESSES: In commenting, please refer to file code CMS-9873-P.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="https://www.regulations.gov/docket/CMS-2026-3367">https://www.regulations.gov/docket/CMS-2026-3367</a>. Follow
the ``Submit a comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9873-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9873-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Jeff Wu, <a href="/cdn-cgi/l/email-protection#a0eac5c6c68ef7d5e0c3cdd38ec8c8d38ec7cfd6"><span class="__cf_email__" data-cfemail="94def1f2f2bac3e1d4f7f9e7bafcfce7baf3fbe2">[email protected]</span></a>, Grace
Bristol, <a href="/cdn-cgi/l/email-protection#7433061517115a36061d07001b18341719075a1c1c075a131b02"><span class="__cf_email__" data-cfemail="1b5c697a787e35596972686f74775b78766835737368357c746d">[email protected]</span></a>, or Dan Brown,
<a href="/cdn-cgi/l/email-protection#682c0906010d04462a1a071f06280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="1155707f78747d3f53637e667f51727c623f7979623f767e67">[email protected]</span></a>, for general information.
Leah Nason, <a href="/cdn-cgi/l/email-protection#a3efc6c2cb8dedc2d0cccde3c0ced08dcbcbd08dc4ccd5"><span class="__cf_email__" data-cfemail="9cd0f9fdf4b2d2fdeff3f2dcfff1efb2f4f4efb2fbf3ea">[email protected]</span></a>, or Maria Liddane,
<a href="/cdn-cgi/l/email-protection#9cd1fdeef5fdb2d0f5f8f8fdf2f9dcfff1efb2f4f4efb2fbf3ea"><span class="__cf_email__" data-cfemail="85c8e4f7ece4abc9ece1e1e4ebe0c5e6e8f6abededf6abe2eaf3">[email protected]</span></a>, for matters related to eligibility process
and annual re-enrollment.
Claire Curtin, <a href="/cdn-cgi/l/email-protection#efac838e869d8ac1ac9a9d9b8681af8c829cc187879cc1888099"><span class="__cf_email__" data-cfemail="dc9fb0bdb5aeb9f29fa9aea8b5b29cbfb1aff2b4b4aff2bbb3aa">[email protected]</span></a>, Marisa Beatley,
<a href="/cdn-cgi/l/email-protection#ace1cddec5dfcd82eec9cdd8c0c9d5eccfc1df82c4c4df82cbc3da"><span class="__cf_email__" data-cfemail="eaa78b9883998bc4a88f8b9e868f93aa898799c4828299c48d859c">[email protected]</span></a>, or Arshdeep Dhanoa,
<a href="/cdn-cgi/l/email-protection#472635342f2322223769232f2629282607242a34692f2f3469202831"><span class="__cf_email__" data-cfemail="157467667d717070653b717d747b7a74557678663b7d7d663b727a63">[email protected]</span></a>, for matters related to residency
verification.
Grace Platt, <a href="/cdn-cgi/l/email-protection#a0e7d2c1c3c58ef0ccc1d4d4e0c3cdd38ec8c8d38ec7cfd6"><span class="__cf_email__" data-cfemail="3d7a4f5c5e58136d515c49497d5e504e1355554e135a524b">[email protected]</span></a>, Hollynd Boyden,
<a href="/cdn-cgi/l/email-protection#b2fadddedecbdcd69cf0ddcbd6d7dcf2d1dfc19cdadac19cd5ddc4"><span class="__cf_email__" data-cfemail="d49cbbb8b8adbab0fa96bbadb0b1ba94b7b9a7fabcbca7fab3bba2">[email protected]</span></a>, or Katherine Bentley,
<a href="/cdn-cgi/l/email-protection#6823091c000d1a01060d462a0d061c040d115a280b051b4600001b460f071e"><span class="__cf_email__" data-cfemail="652e04110d00170c0b004b27000b1109001c57250608164b0d0d164b020a13">[email protected]</span></a>, for matters related to data matching
issues and inconsistency periods.
Mary Evans, <a href="/cdn-cgi/l/email-protection#d19cb0a3a8ff94a7b0bfa2e091b2bca2ffb9b9a2ffb6bea7"><span class="__cf_email__" data-cfemail="662b07141f4823100708155726050b15480e0e1548010910">[email protected]</span></a>, for matters related to family
size special enrollment period waiver.
Asfiya Mariam, <a href="/cdn-cgi/l/email-protection#d293a1b4bbabb3fc9fb3a0bbb3bf92b1bfa1fcbabaa1fcb5bda4"><span class="__cf_email__" data-cfemail="266755404f5f47086b47544f474b66454b55084e4e5508414950">[email protected]</span></a>, for matters related to
eligibility redeterminations during a benefit year.
Dena Nelson, <a href="/cdn-cgi/l/email-protection#b0f4d5ded19efed5dcc3dfdef0d3ddc39ed8d8c39ed7dfc6"><span class="__cf_email__" data-cfemail="2d6948434c036348415e42436d4e405e0345455e034a425b">[email protected]</span></a>, or Kathryn Martucci,
<a href="/cdn-cgi/l/email-protection#723913061a000b1c5c3f1300060711111b32111f015c1a1a015c151d04"><span class="__cf_email__" data-cfemail="dd96bca9b5afa4b3f390bcafa9a8bebeb49dbeb0aef3b5b5aef3bab2ab">[email protected]</span></a>, for matters related to annual pre-open
enrollment verification period.
Claire Curtin, <a href="/cdn-cgi/l/email-protection#eead828f879c8bc0ad9b9c9a8780ae8d839dc086869dc0898198"><span class="__cf_email__" data-cfemail="b5f6d9d4dcc7d09bf6c0c7c1dcdbf5d6d8c69bddddc69bd2dac3">[email protected]</span></a>, for matters related to
family size verification.
Morgan Schonfeld, <a href="/cdn-cgi/l/email-protection#5815372a3f3936760b3b3037363e3d343c183b352b7630302b763f372e"><span class="__cf_email__" data-cfemail="6e23011c090f00403d0d060100080b020a2e0d031d4006061d40090118">[email protected]</span></a>, or Dan Brown,
<a href="/cdn-cgi/l/email-protection#e2a6838c8b878ecca0908d958ca2818f91cc8a8a91cc858d94"><span class="__cf_email__" data-cfemail="5e1a3f30373b32701c2c3129301e3d332d7036362d70393128">[email protected]</span></a>, for matters related to coverage effective
dates.
John Kenna, <a href="/cdn-cgi/l/email-protection#793316111757321c171718391a140a5711110a571e160f"><span class="__cf_email__" data-cfemail="084267606626436d666669486b657b2660607b266f677e">[email protected]</span></a>, or Marisa Beatley,
<a href="/cdn-cgi/l/email-protection#3a775b4853495b14785f5b4e565f437a59574914525249145d554c"><span class="__cf_email__" data-cfemail="8cc1edfee5ffeda2cee9edf8e0e9f5ccefe1ffa2e4e4ffa2ebe3fa">[email protected]</span></a>, for matters related to pended plan
selections.
Nicholas Eckart, <a href="/cdn-cgi/l/email-protection#eda3848e8582818c9ec3a88e868c9f99ad8e809ec385859ec38a829b"><span class="__cf_email__" data-cfemail="a1efc8c2c9cecdc0d28fe4c2cac0d3d5e1c2ccd28fc9c9d28fc6ced7">[email protected]</span></a>, for matters related
to payment of binder for new enrollments.
Courtney De La Mater, <a href="/cdn-cgi/l/email-protection#97d4f8e2e5e3f9f2eeb9d3f2dbf6daf6e3f2e5d7f4fae4b9ffffe4b9f0f8e1"><span class="__cf_email__" data-cfemail="85c6eaf0f7f1ebe0fcabc1e0c9e4c8e4f1e0f7c5e6e8f6abededf6abe2eaf3">[email protected]</span></a>, or Jenny
Chen, <a href="/cdn-cgi/l/email-protection#c389a6adadbaed80aba6ad83a0aeb0edababb0eda4acb5"><span class="__cf_email__" data-cfemail="7f351a111106513c171a113f1c120c5117170c51181009">[email protected]</span></a>, for matters related to the approval and
establishment of State Exchanges.
Riley Strayer, <a href="/cdn-cgi/l/email-protection#1b4972777e6235486f697a627e695b78766835737368357c746d"><span class="__cf_email__" data-cfemail="faa893969f83d4a98e889b839f88ba999789d4929289d49d958c">[email protected]</span></a>, for matters related to
Collection of Information Requirements and Regulatory Impact Analysis.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following
website as soon as possible after they have been received: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Follow the search instructions on that website to
view public comments. We will not post on <a href="http://Regulations.gov">Regulations.gov</a> public
comments that make threats to individuals or institutions or suggest
that the commenter will take actions to harm an individual. We continue
to encourage individuals not to submit duplicative comments. We will
post acceptable comments from multiple unique commenters even if the
content is identical or nearly identical to other comments. We
encourage commenters to include supporting facts, research, and
evidence in their comments. When doing so, commenters are encouraged to
provide citations to the materials referenced, including active
hyperlinks. Likewise, commenters who reference materials that have not
been published are encouraged to upload relevant data collection
instruments, data sets, and detailed findings as a part of their
comment. Providing such citations and documentation will assist CMS in
analyzing the comments.
Plain Language Summary: In accordance with 5 U.S.C. 553(b)(4), a
plain language summary of this rule may be found at <a href="https://www.regulations.gov/">https://www.regulations.gov/</a>.
I. Executive Summary
A. Purpose
This proposed rule would update provisions related to Exchange
eligibility and verification consistent with new requirements specified
under section 71303 of Public Law 119-21 (July 4, 2025), which we refer
to as the Working Families Tax Cut (WFTC) legislation. We solicit input
on ways Exchanges can strengthen certain verifications to promote
program integrity while minimizing unnecessary or duplicative
administrative burdens to the extent practicable. This proposed rule
also contains related updates to provisions affecting inconsistency
periods, enrollment options during inconsistency verification
procedures, annual eligibility redeterminations and eligibility
redeterminations during the plan year. It also expands enrollment
methods during the verification process and establishes new effective
dates.
B. Summary of Major Provisions
We propose to modify 45 CFR 155.106 to require that the 15-month
requirement for a State to submit its application for HHS' review and
approval be oriented around when a State begins operations as a State
[[Page 67657]]
Exchange for the pre-open enrollment (pre-OE) verification period,
instead of the Open Enrollment period (OEP).
We propose to retain the existing regulatory requirements in Sec.
155.315(d) related to verification of residency. We seek comment on how
HHS might strengthen requirements for Exchanges to verify residency in
the short and long term to improve program integrity, and ideas on how
Exchanges can move away from primarily accepting self-attestation of
residency without further verification.
We propose to amend Sec. 155.315(f)(4)(ii) to state that Exchanges
would not be able to authorize payment for advance payments of the
premium tax credit (APTC) and cost-sharing reductions (CSRs) for
applicants who have data matching issues (DMIs) described in Sec.
155.315(c) for citizenship \1\ and lawful presence status; Sec.
155.315(d) for residency; Sec. 155.320(b) for non-employer sponsored
minimum essential coverage (MEC); \2\ Sec. 155.320(c)(3) for annual
household income, family size, and eligible noncitizen status; and
Sec. 155.320(d) for employer-sponsored plans, until such DMIs are
adjudicated by the Exchange, if otherwise eligible. Additionally, we
propose in Sec. 155.315(f)(4)(ii) that the above requirement would not
apply if the applicant's tax household is eligible for a special
enrollment period (SEP) described in Sec. 155.420(d)(2)(i) or (ii).
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\1\ When referring to verification of ``citizen'' or
``citizenship'' status in this proposed rule, we are also referring
to verification of status as a U.S. National. U.S. Nationals are
defined as ``A person who, though not a citizen of the United
States, owes permanent allegiance to the United States (for example,
persons born in American Samoa or Swains Island).'' Please see
<a href="https://www.uscis.gov/glossary-term/50718">https://www.uscis.gov/glossary-term/50718</a>.
\2\ References to minimum essential coverage or MEC throughout
this rule may refer to coverage through an employer-sponsored plan
or other coverage, such as Medicaid. References to ``other MEC''
throughout this rule are intended to refer to coverage other than
Exchange coverage.
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We propose to add new Sec. 155.315(f)(4)(iii) to describe the
requirements related to providing APTC and CSRs for enrollees who have
reported a change to eligibility criteria during the plan year after an
Exchange has completed verification of those same criteria. We also
propose to add new Sec. 155.315(f)(4)(iv) to specify that Exchanges
would be required to determine eligibility for APTC and CSRs on behalf
of an applicant following successful verification of information as
described in proposed new Sec. 155.315(f)(4)(ii) and to establish
effective dates of those eligibility determinations or
redeterminations. We also propose to add new Sec. 155.315(f)(4)(v) to
state that applicants with DMIs unrelated to the information outlined
in proposed Sec. 155.315(f)(4)(ii) receive APTC and CSRs during an
inconsistency period if otherwise eligible, as currently required. We
further propose to add new Sec. 155.315(f)(4)(vi) to move the
requirement that a tax filer must acknowledge that any APTC are subject
to reconciliation that is already outlined in existing Sec.
155.315(f)(4)(ii). Finally, we propose to amend Sec. 155.315(f)(4)(i)
to remove language around proceeding with all other elements of
eligibility determination to align with proposed changes to Sec.
155.315(f)(4)(ii).
We propose to retain the existing regulatory requirements at Sec.
155.320(c) related to verification of family size, and we seek comment
on how we might strengthen requirements for Exchanges to verify family
size to improve program integrity.
We propose to amend Sec. 155.330(f) to specify effective dates for
eligibility redeterminations during the plan year. Specifically, we
propose that eligibility redeterminations resulting from enrollee-
reported changes would be effective on the first day of the month
following the eligibility redetermination, unless the enrollee
qualifies for certain SEPs. At Sec. 155.330(f)(2), we propose to add
cross-references to the newly proposed effective date rules at Sec.
155.315(f)(4)(iv) that apply when an Exchange resolves a consumer's DMI
described in Sec. 155.315(f)(4)(ii) or Sec. 155.315(f)(4)(iii)(A).
Finally, at Sec. 155.330(f)(3), we propose effective date rules for
consumers whose DMIs are expired because they do not submit sufficient
documentation.
We propose to amend Sec. 155.335 to require that Exchanges
continue redetermining the eligibility of an enrollee on an annual
basis but newly require that an Exchange may not redetermine an
enrollee eligible for APTC and CSRs for the subsequent plan year unless
the enrollee or the enrollee's application filer provides or confirms
household income and family size; U.S. citizenship or status as an
eligible noncitizen; eligibility for or enrollment in other MEC; and
place of residence for the subsequent plan year on or after August 1
and no later than December 31 of the year preceding the applicable plan
year, and the Exchange would be required to attempt to verify the
specified eligibility information using the processes in Sec. Sec.
155.315 and 155.320, including the relevant provisions in those
sections regarding DMIs.
We also propose to amend Sec. 155.335(b) to state the annual
eligibility redetermination would be effective on the first day of the
applicable plan year, and the Exchange would be required to adhere to
the existing notification standard for eligibility determinations under
Sec. 155.310(g). We propose an exception in instances where an
enrollee has an unresolved DMI under Sec. 155.315(f)(4)(ii) as of
December 31 of the year preceding the plan year and for whom APTC and
CSRs are not provided during the inconsistency period. In these cases,
we propose that the redetermination of APTC and CSRs take effect in
accordance with Sec. Sec. 155.315(f)(4)(iv)(A) or 155.330(f)(3), as
applicable. We propose to remove Sec. 155.335(c) through (i);
redesignate Sec. 155.335(j) as new Sec. 155.335(c); and remove Sec.
155.335(k) through (n).
We propose to modify Sec. 155.400(e) to account for new enrollment
requirements proposed in this rule. Specifically, we propose that
Exchanges may, and the Federally-facilitated Exchange (FFE) and State-
based Exchanges on the Federal platform (SBE-FPs) would be required to,
make retroactive enrollments under proposed Sec. Sec.
155.410(f)(5)(i)(A) and (B), 155.410(f)(ii)(A) and (B), and
155.420(b)(6)(i), subject to the current binder payment rules for
retroactive enrollments under Sec. 155.400(e)(1)(iii). We also propose
to make conforming amendments at Sec. 155.400(e)(1), including
combining current (i) and (ii) as proposed (i), and redesignating
current (iii) as proposed (ii).
We propose to add new Sec. 155.400(i) to require that Exchanges
permit applicants and enrollees to ``pend'' their plan selection such
that the plan selection would only be sent to the issuer, and qualified
health plan (QHP) coverage only becomes effective, after the Exchange
determines the applicant or enrollee eligible for APTC and CSRs, as
applicable, as described by Sec. 155.315(f)(4)(iv).
We propose to add Sec. 155.410(h) to require all Exchanges to
provide a pre-OE verification period during which Exchanges would
enable consumers to choose to provide certain eligibility information
for the subsequent plan year. Exchanges would be required to attempt to
verify such information provided. We propose that the pre-OE
verification period for all Exchanges begin each year on August 1 and
continue until an Exchange's OEP begins.
We propose new effective date rules for pended plan selections made
during the annual OEP or during an SEP, in Sec. 155.410(f)(5) and
Sec. 155.420(b)(6), respectively. These rules would provide
[[Page 67658]]
that, in general, if an Exchange resolves all of a consumer's DMIs
described in Sec. 155.315(f)(ii) by the 15th of the month following
the consumer's otherwise prescribed effective date under Sec.
155.410(f)(5) or Sec. 155.420(b)(6), then the consumer can maintain
that coverage effective date. If, however, they do not resolve all of
their DMIs by the 15th of the month following their otherwise
prescribed effective date, then their coverage effective date would
depend on when their DMIs were resolved. If their DMIs were resolved by
the 15th of the month, their coverage effective date would be the first
of the month of resolution. If their DMIs are resolved between the 16th
and the end of the month, then their coverage effective date would be
the first of the following month.
We are considering expanding the application submission timeframe
described in the SEP at Sec. 155.420(d)(11), which is commonly
referred to as the Medicaid denial SEP, and seek comment on this
possible change. For this SEP, if a consumer applies for Medicaid and
CHIP coverage, either through the Marketplace eligibility application
or directly with the State Medicaid or CHIP agency during the OEP and
is denied Medicaid and CHIP, the consumer is granted an SEP to gain
access to Exchange coverage. Specifically, we seek comment on whether
consumers who apply for Medicaid or CHIP during the pre-OE verification
period should also be eligible for this SEP, if otherwise eligible.
II. Background
A. Legislative Overview
The Patient Protection and Affordable Care Act (Pub. L. 111-148)
was enacted on March 23, 2010. The Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised
several provisions of the Patient Protection and Affordable Care Act,
was enacted on March 30, 2010. In this proposed rule, these statutes
are collectively referred to as the Affordable Care Act.
Section 1311(b) and (c)(6) of the Affordable Care Act outlines
provisions for the establishment of Exchanges that facilitate the
purchase of insurance coverage by qualified individuals through QHPs
during an annual OEP or SEP. Section 1401 of the Affordable Care Act
created section 36B of the Internal Revenue Code (Code), which provides
for a premium tax credit (PTC) for eligible individuals who enroll in a
QHP through an Exchange. Section 1402 of the Affordable Care Act
establishes provisions to reduce the cost-sharing obligations of
certain eligible individuals enrolled in a QHP offered through an
Exchange through the provision of CSRs.
Under section 1411 of the Affordable Care Act, the Secretary of HHS
is directed to establish a program for determining whether an
individual meets the eligibility standards for enrollment in a QHP
through an Exchange, APTC, and CSRs. Section 1411(b) of the Affordable
Care Act specifies the information to be provided by applicants for
enrollment in QHPs offered through an Exchange, including what is
required for applicants seeking APTC and CSRs. This applicant
information may include names, addresses, dates of birth, and Social
Security Numbers; information about citizenship and immigration status;
and, for individuals applying for APTC and CSRs, information about
household income, family size, and offers of health coverage from
employers. Section 1411(c) of the Affordable Care Act requires
Exchanges to submit certain applicant information to specified data
sources for verification of its accuracy. Section 1411(c)(4) of the
Affordable Care Act generally requires verifications of certain
applicant information to be performed electronically using online
systems. However, section 1411(c)(4)(B) of the Affordable Care Act
grants HHS flexibility to modify the methods of such verifications to
reduce administrative costs and burden on applicants, and section
1411(d) of the Affordable Care Act delegates to HHS responsibility for
the manner in which certain other verifications are completed.
Consistent with the requirements of section 1411 of the Affordable
Care Act, when an applicant applies through an Exchange, they attest to
information on the application, such as their citizenship or
immigration status, and their household's expected annual income. As
part of the application process, Exchanges check trusted data sources
to determine if application information is reasonably compatible with
information from those data sources. In cases where the information is
not reasonably compatible or data is unavailable, generally the
applicant will receive notification of a data matching issue (DMI).
Consistent with additional requirements of section 1411(e) described
below, the applicant will have 90 or 95 days to resolve the DMI by
submitting requested documentation. The applicant will be provided 95
days for document submission for DMIs related to the verification of
citizenship or immigration status. Throughout this proposed rule, we
refer to this 90/95-day period as an ``inconsistency period,'' and we
refer to instances where an applicant has an inconsistency as the
applicant having a DMI.
Section 1411(e)(2)(A) of the Affordable Care Act establishes that
when certain information has been verified, an applicant becomes
eligible to enroll in a QHP through an Exchange, and for APTC and CSRs,
as applicable. Section 1411(e)(3) of the Affordable Care Act specifies
the process Exchanges must follow when applicants have a DMI related to
citizenship or immigration status by referencing section 1902(ee) of
the Social Security Act. In the March 27, 2012 Federal Register (77 FR
18310) (Exchange Establishment Rule), we interpreted this to require
the Exchange to notify applicants of their DMI and provide them an
opportunity to submit evidence to verify their information within 95
days from the date the notice is received. In the Exchange
Establishment Rule, we also interpreted section 1411(e)(3) of the
Affordable Care Act as requiring Exchanges to make eligibility
determinations on the basis of information provided on the application
during an inconsistency period related to citizenship or immigration
status.
Similarly, section 1411(e)(4)(B)(i) of the Affordable Care Act
requires that Exchanges make eligibility determinations on the basis of
information provided on the application during an inconsistency period
related to information other than citizenship or immigration status.
This means that applicants with a DMI may be able to enroll in a QHP
and receive APTC and CSRs during an inconsistency period, if eligible
based on the information provided on their application. Section
1411(e)(4) specifies the process Exchanges must follow when applicants
have DMIs, other than those related to citizenship or immigration
status, including notifying applicants and providing them an
opportunity to submit evidence to verify their information within 90-
day inconsistency periods.
Under section 36B of the Code, a taxpayer is only allowed a PTC for
months that are coverage months for the taxpayer or other individuals
in the taxpayer's family (a taxpayer's family consists of the taxpayer,
the taxpayer's spouse if filing a joint tax return, and the taxpayer's
tax dependents). Section 71303(a) of the WFTC legislation amends
section 36B of the Code to provide additional requirements before a
month can be a coverage month, effective for tax years beginning after
[[Page 67659]]
December 31, 2027.\3\ Effective January 1, 2028, section 36B(c)(5)(A)
of the Code provides that a month is generally not a coverage month for
an enrollee in a QHP unless an Exchange ``verifies'', ``using
applicable enrollment information that shall be provided or verified by
the applicant,'' the enrollee's eligibility to enroll in a QHP through
an Exchange and, to the extent relevant, for APTC for the coverage for
that month. In this proposed rule, we use the term ``confirm'' as a
synonym to ``verify'' when referring to the requirement in section
36B(c)(5)(A) of the Code that information shall be ``verified by the
applicant.'' We reserve the term ``verify'' to describe the section
36B(c)(5)(A) of the Code requirement for Exchanges to verify
eligibility. This terminology avoids confusion throughout this proposed
rule about which subject of the statute (that is, ``the Exchange'' or
``the applicant'') is the subject of the term ``verify.'' Section
36B(c)(5)(B) of the Code provides, ``applicable enrollment
information'' referenced in subsection (c)(5)(A) includes, to the
extent relevant: (i) household income and family size of the enrollee,
(ii) whether the enrollee is an eligible alien, (iii) any health
coverage status or eligibility for coverage, (iv) the enrollee's place
of residence, and (v) such other information as may be determined by
the Secretary of the Treasury (in consultation with the Secretary of
HHS) as necessary to the verification prescribed under section
36B(c)(5)(A) of the Code.
---------------------------------------------------------------------------
\3\ See section 71303(c) of the WFTC legislation.
---------------------------------------------------------------------------
Section 36B(c)(5)(C) of the Code allows months that begin before
the verification required by section 36B(c)(5)(A) of the Code to be
considered coverage months if an Exchange completes the required
verification for those months. Section 36B(c)(5)(D) of the Code
provides that a consumer must not be treated as ineligible to enroll in
a QHP solely for failing to meet the requirements of section 36B(c)(5)
of the Code for a month. Section 36B(c)(5)(E) of the Code delegates to
the Secretary of the Treasury authority to waive the verification
requirements of section 36B(c)(5)(A) of the Code for individuals who
enroll in a QHP during an SEP granted due to a change in family size.
Section 71303(b) of the WFTC legislation added new section
36B(c)(3)(A)(ii) of the Code. This change modifies the definition of
QHP for the purpose of section 36B of the Code. Specifically, it
excludes from the definition of QHP any plan that is enrolled in
through an Exchange that does not provide a process through which any
consumer may verify their household income and eligibility for QHP
enrollment for the following plan year. This process must be in place
no later than August 1, 2027 (and by August 1 for each subsequent year)
to ensure applicants and current enrollees in QHP coverage who are
seeking QHP coverage with APTC for plan year (PY) 2028 and subsequent
years remain eligible for PTC and APTC, if otherwise eligible.
Section 71305 of the WFTC legislation removed section 36B(f)(2)(B)
of the Code. This change eliminated the limitation on repayment of
excess APTC for tax years after December 31, 2025.
III. Provisions of the Proposed Regulations
A. Part 155--Exchange Establishment Standards and Other Related
Standards Under the Affordable Care Act
1. Election To Operate an Exchange After 2014 (Sec. 155.106)
We propose to amend Sec. 155.106(a)(2) to require an Exchange
submitting a Blueprint application to do so at least 15 months prior to
the date on which it proposes to begin its pre-OE verification period
instead of at least 15 months prior to the date on which it proposes to
begin its OEP. In section III.A.9.c. of this proposed rule, we are
proposing to add Sec. 155.410(h) to require that all Exchanges permit
consumers to provide eligibility information to Exchanges for the
upcoming plan year prior to the beginning of the OEP each year,
beginning on August 1, 2027, for PY 2028 and August 1 of each
subsequent year. Accordingly, we have considered the implication of the
new proposed pre-OE verification period on our current requirements and
process for approval of States currently utilizing the Federal
platform, as an FFE or SBE-FP, that wish to establish a State Exchange.
As part of the State Exchange establishment process under 45 CFR
Part 155, subpart B, we currently require at Sec. 155.106(a)(2) that
any State on the Federal platform that intends to establish and operate
a State Exchange must submit its Exchange Blueprint application to HHS
for review and approval 15 months prior to when the State intends to
begin OEP operations as a State Exchange. The State Exchange Blueprint
continues to serve as a vehicle for a State to document its progress
toward implementing its intended Exchange operational model. HHS
approves a State's Exchange Blueprint Application and subsequently
provides approval for a State to operate a State Exchange, based upon a
State meeting the State Exchange implementation requirements noted in
the Blueprint Application.
Under the proposed pre-OE verification period requirement, the
proposed pre-OE verification period would immediately precede the OEP.
Accordingly, an Exchange would not only need to be responsible for its
OEP activities but would also need to be responsible for the proposed
pre-OE verification period activities. We are of the view that a State
that is in the process of establishing a State Exchange should be
responsible for its pre-OE verification activities as well as its OEP
activities, since eligibility determinations made during the pre-OE
period also would relate to eligibility for enrollment in the following
plan year. We therefore determined that a State that is in the process
of establishing a State Exchange should be ready to do so by the
beginning of the pre-OE verification period, instead of by OEP, as
currently required. As such, in HHS' State Exchange Blueprint
application review and State Exchange approval process, we would need
to account for assessing the readiness of a transitioning State
Exchange to conduct the proposed pre-OE verification period functions
for the August 1 timeframe. HHS' existing review and approval timeline
has been oriented around the first OEP for a transitioning State
Exchange. This is when a new State Exchange becomes operational (that
is, ``goes live'') and accordingly, HHS notifies a transitioning State
Exchange of its decision prior to the OEP start date. HHS' decision is
based on a 15-month period of time that HHS needs to sufficiently
assess the readiness of a transitioning State Exchange to operate its
own Exchange platform and perform the essential functions of an
Exchange and allow for a sufficient period of time for HHS to then
remove the transitioning State Exchange and its State Medicaid agency
from the Federal Exchange platform. Due to the August 1 timeframe
associated with this new proposal that needs to be included into the
State Exchange readiness assessment, the overall timeline for HHS'
review and assessment of State Exchange functionality would need to be
moved up so that notification to a transitioning State Exchange of HHS'
decision occurs earlier than August 1, rather than prior to the start
of the OEP, since the start of the pre-OE verification period would be
the new date for when an approved transitioning State Exchange first
becomes operational.
Accordingly, in conjunction with the proposed addition of Sec.
155.410(h), we are proposing to modify Sec. 155.106 to
[[Page 67660]]
provide that a State seeking to operate as a State Exchange would be
required to submit its Blueprint application 15 months before the date
it proposes to begin its pre-OE verification period, rather than the
date it proposes to begin its OEP. We are of the view that this rule,
if finalized, would not materially burden States, as any State offering
an FFE or SBE-FP that is considering establishing a State Exchange, and
that has not yet submitted a State Exchange Blueprint application to
HHS, would have sufficient time after the release of the final rule to
include the new pre-OE verification period requirements into their
planning and decision-making leading up to submitting a State Exchange
Blueprint application and establishing a State Exchange. Building the
pre-OE verification period in tandem with the initial OEP may require
some more start-up effort for a State newly establishing a State
Exchange, in comparison to an initial OEP only, but we are of the view
that this would be minimal and less burdensome overall than if a State
were to first establish an OEP as a State Exchange and then
subsequently build out the pre-OE verification period as a State
Exchange.
We seek comment on this proposal.
2. Definitions and General Standards for Eligibility Determination
(Sec. 155.300)
We propose a non-substantive edit to update a cross reference in
Sec. 155.300(c)(2) from Sec. 155.315(f)(4)(ii) through
155.315(f)(4)(vi). We make this proposal because elsewhere in this rule
we propose to move the content of Sec. 155.315(f)(4)(ii)--which
describes an attestation for APTC reconciliation--to Sec.
155.315(f)(4)(vi). This proposal is intended to ensure that the meaning
of Sec. 155.300(c)(2) remains the same.
We seek comment on this proposal.
3. Eligibility Process (Sec. 155.310)
We propose to add new cross references to Sec. 155.310(f) to
account for new effective dates proposed in this rule. The proposed
revisions to Sec. 155.310(f) would require Exchanges to implement
determinations of a consumer's eligibility for enrollment in a QHP
through the Exchange, for APTC, and for CSRs, as applicable, in
accordance with the effective date rules specified in other subsections
of part 155. Currently, Sec. 155.310(f)(1) requires that Exchanges
make initial eligibility determinations in accordance with the dates
specified in Sec. Sec. 155.410(c) and (f) and 155.420(b), and Sec.
155.310(f)(2) requires that Exchanges make redeterminations in
accordance with the dates specified in Sec. 155.330(f) and (i), as
applicable.
First, we propose to update Sec. 155.310(f)(1), regarding
effective dates for initial eligibility determinations, so that it also
cross-references proposed Sec. 155.315(f)(4)(iv). As described in
detail in section III.A.4.b.iv. of this proposed rule, we propose at
Sec. 155.315(f)(4)(iv) new effective date rules that would apply to
certain initial eligibility determinations for consumers who resolve
DMIs described in proposed Sec. 155.315(f)(4)(ii). This additional
cross-reference ensures that Sec. 155.310(f)(1) includes a complete
list of the places within part 155 where effective dates for initial
eligibility determinations would be specified.
Second, we propose to update a cross-reference currently at Sec.
155.310(f)(2), regarding eligibility redeterminations. Specifically, we
propose to update the current cross-reference from Sec. 155.335(i) to
Sec. 155.335(b). This is a technical update that is needed because, as
part of our proposed updates to Sec. 155.335 described in detail in
section III.A.7. of this proposed rule, the proposed effective dates
for annual redeterminations would be covered in proposed Sec.
155.335(b). As a result, this proposed update is needed to ensure that
the cross-reference in Sec. 155.310(f)(2) remains accurate.
We seek comment on this proposal.
4. Verification Process Related to Eligibility for Enrollment in a QHP
Through the Exchange (Sec. 155.315)
a. Verification of Residency
We are not proposing any changes to the existing regulatory
requirements in Sec. 155.315(d) related to verification of residency
for the reasons described further in this section. However, we are
considering the feasibility of new residency verification requirements
and are seeking comment on whether the existing requirements to verify
residency should be updated in the final rule or in future rulemaking
to reflect advancements in technology and the availability of new data
sources or alternative verification methods. We acknowledge that
historically, verifying residency has been challenging for Exchanges
due to a variety of reasons that we discuss in this section, however,
we are seeking comment on whether there are ways to overcome these past
challenges to allow Exchanges to begin to transition from primarily
accepting an applicant's self-attestation of residency without
verification, except in limited circumstances where an Exchange has no
other option.
Since the establishment of the Exchanges in 2014, the landscape has
changed significantly, and, due to challenges Exchanges have faced over
time, we have reevaluated our position that permitting Exchanges to
accept an applicant's attestation of residency without further
verification may no longer be appropriate and a risk to Exchange
program integrity. We hold this view because of the increased number of
unauthorized enrollments of consumers in Exchange coverage by agents,
brokers, and web-brokers, achieved in part through inaccurate residency
attestations. Therefore, we seek comment on how (1) Exchanges can move
away from primarily accepting self-attestation of residency without
further electronic or manual verification to an alternative
verification method or procedure; (2) how Exchanges can potentially
strengthen requirements to verify residency, including new methods that
Exchanges might employ in the short and long term to improve program
integrity; and (3) whether the final rule should require Exchanges to
adopt such methods so that accepting self-attestation of residency is
limited to circumstances where there is truly no other option for an
Exchange to electronically or manually verify residency. We may
finalize one or more of the approaches discussed in this section rather
than retaining the existing requirements at Sec. 155.315(d), or
consider alternative approaches suggested by commenters for future
rulemaking, if necessary. We acknowledge that any residency
verification method discussed in this section would require a period of
implementation that is likely not feasible to complete in time for PY
2028. Thus, we additionally solicit comment, particularly from State
Exchanges, on the anticipated time that would be needed to implement
any such residency verification methods. When providing comments, we
also welcome robust solutions that take into consideration ongoing
operational costs for States, the Federal Government, and Exchanges.
To be eligible for enrollment in a QHP, an applicant or enrollee
must reside in the State where an Exchange is established per section
1312(f) of the Affordable Care Act, and Sec. 155.305(a)(3) specifies
the residency requirements an applicant or enrollee must meet to be
eligible for enrollment in a QHP. Generally, with some exceptions, an
applicant or enrollee who is age 21 or over and not living in an
institution meets the residency requirements if the applicant or
enrollee (1) is living and intends to reside in the service area of the
Exchange; or (2) is living and has entered into a job commitment or is
[[Page 67661]]
seeking employment in the service area of the Exchange. An applicant or
enrollee under age 21 and not living in an institution generally meets
the residency requirements if they (1) reside in the service area of
the Exchange; or (2) reside with a parent or caretaker who has met the
residency standard for the service area of the Exchange. In addition,
applicants or enrollees are not required to have a fixed address to
meet the residency requirements; however, they must live in the State
where they are applying for coverage with the intent to reside in that
State. This is a critical protection for individuals experiencing
homelessness or housing instability.
Section 1411 of the Affordable Care Act does not specify the data
source or verification method that the Exchanges must use to verify
residency. Therefore, under section 1411(d) of the Affordable Care Act,
the Secretary of HHS has broad authority to specify any appropriate
manner of verification for Exchanges to verify the residency
requirements so long as it is accurate and appropriate. Generally, as
outlined in Sec. 155.315(d), if information provided by an applicant
regarding residency is reasonably compatible with other information
provided by the individual or in the records of the Exchange, an
Exchange may either verify information with an electronic data source
that is sufficiently current and accurate and minimizes administrative
costs and burdens, or by accepting the applicant or enrollee's
attestation without further electronic or manual verification. If the
information provided by the applicant or the enrollee regarding
residency is not reasonably compatible with other information provided
by the individual or in the records of the Exchange, the Exchange is
required to verify information with an electronic data source that is
sufficiently current and accurate and minimizes administrative costs
and burdens. If the information provided by the applicant or enrollee
does not match the information returned via the approved data source,
then a DMI is created in accordance with Sec. 155.315(f).
Currently, we have not identified any single data source to verify
residency for the FFE and SBE-FPs that is current, accurate, and
minimizes administrative costs and burdens. Using the flexibility
provided in section 1411 of the Affordable Care Act, we have
implemented operations for the FFE and SBE-FPs to validate that the
address provided by an Exchange applicant or enrollee is a real
address, but it does not validate that the applicant or enrollee
actually resides at that address. This validation process requires the
applicant or enrollee to provide a home address on their Exchange
application. Once the address is provided, the FFE or SBE-FP confirms
whether the home address is within the service area of the Exchange
where the applicant or enrollee is applying for coverage. The FFE or
SBE-FP then attempts to validate the home address to ensure it exists
by checking United States Postal Service (USPS) records, and the
applicant or enrollee is prompted to either agree with their provided
home address or accept a corrected address from USPS records. Address
validation provides HHS with benefits such as better data quality and
assurance that mail is delivered to a real address, which reduces
downstream administrative costs associated with incorrect addresses.
However, because it does not validate that an applicant lives at a
specified address and given our ongoing concerns regarding unauthorized
or potentially fraudulent enrollments, we are of the view that address
validation is not enough and relying on self-attestation without
further verification, is a program integrity risk and should only be
reserved for instances where Exchanges have no other option to verify
residency.
Over the years, we have explored options to successfully verify
residency for applicants or enrollees applying for Exchange coverage
and identified several challenges. The first challenge relates to the
lack of available data sources that are current, accurate, and would
minimize administrative burden. Historically, we have considered data
sources such as a single database that an Exchange could directly query
to verify information, similar to how Exchanges connect with Social
Security Administration (SSA) to verify Social Security Numbers (SSNs).
We have also considered verification services provided by third-party
companies that generally use multiple data sources or have their own
proprietary verification product or method to verify residency. This is
similar to the optional Verify Current Income Hub (or ``Hub'') service
Exchanges may use to verify a consumer's projected household income. As
we noted earlier in this section, there is no data source or other
verification method mentioned in the statute for the verification of
residency, although the Secretary of HHS may specify one as needed.
This means that to implement a stronger process for residency
verification, we would need to identify a suitable data source (or
multiple ones), verification service, or another process to
meaningfully verify a consumer's residency, as well as create a DMI
process to resolve verifications for any consumers for whom we cannot
verify residency through either a data source or a verification
service.
We are of the view that States and State Exchanges generally are
better positioned to verify residency for insurance affordability
programs such as Medicaid and CHIP and for QHP coverage because they
have access to a variety of State data that could be leveraged to
verify residency. For example, States and State Exchanges likely have
access to data sources specific to their State, such as the State
Directory of New Hires or quarterly wage and unemployment insurance
data from State workforce agencies (the underlying data that is
reported in the National Directory of New Hires (NDNH)), which are
currently unavailable to Exchanges on the Federal platform, in addition
to casework conducted in their State at the local level.
Another challenge to verifying residency is that we would need to
determine which document(s) would be acceptable to successfully verify
an applicant or enrollee's residency in accordance with Sec.
155.315(f), when any approved data source could not do so. Certain
populations may be harder than others to verify through documentation,
such as consumers living with roommates, consumers who sublease, or
consumers who move frequently. If we require a new residency
verification process, and we continue to be unable to electronically
verify residency for many applicants or enrollees, Exchanges would have
to establish a DMI process for residency to manually verify residency
through document submission for many applicants or enrollees. As a
result, total DMI volumes would increase, and could lead to increasing
operational costs for Exchanges.
After exploring the challenges related to implementing residency
verification, we considered several potential approaches to adjust
residency verification for applicants or enrollees applying for
Exchange coverage with APTC and CSRs. The first approach we considered
was imposing additional residency verification for all Exchange
consumers. In 2024, we conducted an address matching pilot with
LexisNexis to determine the feasibility and accuracy of using that
verification service for residency verification. This pilot was limited
to Exchanges on the Federal platform. During the pilot, we found that
data was only available for about half of the pilot population, likely
due to consumers who move frequently or do not update their addresses
in a
[[Page 67662]]
timely manner after a move. Based on the pilot and past experience with
DMIs, we estimate that about half of all Exchange applicants or
enrollees would receive a DMI and be required to submit documentation
to verify their residency, due to the lack of data available for
verifying residency. Ultimately, we determined that the low rate of
data matching combined with the potential costs of using the LexisNexis
service did not meet the regulatory standard for using LexisNexis as a
data source.
Another approach we considered to verify residency for all Exchange
applicants was contracting with the IRS, a data broker, or both, to
develop a Hub service that could verify residency. From our research,
we determined that, like our pilot with LexisNexis, any of the
available data brokers or government agencies that could create a Hub
service to verify residency would likely encounter similar coverage
rates and result in a large portion of consumers receiving residency
DMIs.
A third approach we considered was a risk-based approach to target
applications with a higher risk of insurance fraud. Based on our own
experience, residency fraud on the FFE is largely driven by instances
of residential health care providers, frequently associated with sober
living facilities, working with unlicensed agents (known as ``body
brokers'') to direct consumers to misrepresent their State of residence
so that the provider receives greater compensation from a plan with
more generous out-of-network benefits. This type of residency fraud
typically occurs in States where QHP issuers offer more generous out-
of-network benefits, usually in States that are large geographically
but have a small population. This fraud has been identified when QHP
issuers have requested QHP rescissions \4\ due to the applicant's or
enrollee's misrepresentation of their State of residence. We have also
identified other factors that could signal an application has a higher
fraud risk including mailing addresses outside of the State in which an
applicant or enrollee is applying for coverage, or applications in
States with high rates of fraud. However, we cannot identify
enrollments resulting from transactions with ``body broker'' agents
directly and efficiently. We estimate that to be able to adequately
identify such enrollments, we would need to use a broad sampling
methodology that casts a very wide net, such as verifying the
enrollments of entire States to uncover instances of fraudulent
activity. This would be costly and does not solve the challenges
Exchanges would still face regarding lack of reliable data sources to
use in a risk-based verification approach, or the challenges consumers
might face to secure suitable documentation to prove their residency,
examples of which are discussed above. Therefore, we concluded that a
risk-based approach may not be the best approach either, but we welcome
comment from interested parties, in particular States and State
Exchanges to share their experiences, if they have tried implementing
risk-based approaches.
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\4\ In accordance with Sec. 147.128.
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We are of the view that there may be additional solutions, such as
leveraging federated identity (ID) verification sources, that can
reasonably verify a consumer's provided address. Such solutions provide
Exchanges with a higher degree of assurance as addresses are associated
with applicants who have verified their identities through standards-
based identity proofing mechanisms. Similar to how other Federal
agencies use federated ID verification sources to link a claimed
identity with a real individual, we are of the view that Exchanges
could leverage such verification methods to verify both identity and
residency at once and may alleviate many of the challenges Exchanges
have faced in the past with limited coverage or out-of-date data
sources. Furthermore, because federated ID verification sources create
a unique digital identity tied to a specific individual, we are of the
view that this could reduce potential fraudulent activities and create
more trust in the self-attestations of residency that applicants with
verified identities provide on their applications. We are also of the
view that this verification method would deter bad actors from pursuing
some insurance fraud schemes. This solution could operate in addition
to the address validation checks that the FFE and SBE-FPs conduct today
to ensure that the provided address is standardized and deliverable. We
are considering requiring Exchanges to use federated ID verification
and invite comments on its use as a residency verification source.
Additionally, recognizing that availability of data between States
and Exchanges is a challenge, we are also interested in exploring the
idea of mutual data sharing between States and Exchanges, to the extent
permitted under applicable law, to alleviate the challenges States and
Exchanges all face regarding residency verification. One avenue to
achieve such mutual data exchange could be through the Hub, whereby
States and State Exchanges could make available State data sources
through the Hub for all requestors, namely the FFE, SBE-FPs, other
State Exchanges, and State Medicaid Agencies, to access. We are of the
view that access to more data streams could further mitigate
unauthorized enrollments and residency fraud. Therefore, we also seek
comment on whether States are able to share their residency data with
HHS to facilitate verifications for their State's consumers, as well as
any barriers that could prevent States from sharing data with HHS, such
as State law, and whether statutory or regulatory changes in their
respective State laws would be necessary for them to be able to do so.
We also invite comment on any data quality standards that we should
consider to ensure that these data are current, accurate, and minimize
administrative costs and burdens. Finally, we seek comment from State
Exchanges and State Medicaid agencies about their experiences with
verifying residency and any challenges they currently face.
Based on all the considerations laid out in this section, we are of
the view that without a more robust residency verification process, the
risk of applicants or enrollees, and potentially agent, broker, or web-
broker bad actors inappropriately attesting to residing in a State or
at a particular address to receive Exchange coverage remains. We want
to emphasize that it is imperative, to the extent practical, that
Exchanges exercise program integrity measures to discourage potentially
fraudulent behavior in this area and that is why we are considering
options for requiring new methods of residency verification, such as by
using federated ID verification and are seeking comment from interested
parties on other potential data sources that might be more economical
for States and/or the Federal Government to procure.
At this time, we do not propose changes to the current regulatory
requirements regarding verification of residency as outlined in Sec.
155.315(d); however, we may instead require new methods of residency
verification and are exploring options for Exchanges to strengthen
residency verification using these new methods or through improving
historically difficult to use data sources. We are using this proposed
rule to solicit additional ideas for consideration to inform the final
rule and potentially future policy and regulatory changes. We also seek
comment on any additional Exchange operational updates that could be
done in the near term for residency verification that could ultimately
[[Page 67663]]
strengthen program integrity while protecting Exchange risk pools.
We seek comment on these proposed plans and invite interested
parties to share their experiences with residency verification,
including challenges, risk for residency fraud, feasibility of other
verification approaches or methods such as risk-based approaches, and
cost/budget impacts.
b. DMIs
We propose to amend Sec. 155.315(f)(4)(ii) to state that Exchanges
would generally not be permitted to authorize payment for APTC and CSRs
for applicants who have DMIs described in Sec. 155.315(c) for
citizenship status or lawful presence status; Sec. 155.315(d) for
residency; Sec. 155.320(b) for eligibility for MEC other than through
an employer sponsored plan; Sec. 155.320(c)(3) for annual household
income, family size, and eligible noncitizen status; and Sec.
155.320(d) for enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan, until such DMIs are adjudicated and applicants are determined
eligible for APTC and CSRs, as applicable. We also propose in Sec.
155.315(f)(4)(ii) to exempt those who qualify for an SEP due to a
change in family size as described under Sec. 155.420(d)(2) from the
verification requirements described in proposed new Sec.
155.315(f)(4)(ii), which is described in section III.A.4.c. of this
proposed rule.
Additionally, we propose to add Sec. 155.315(f)(4)(iii) to
establish the requirements related to providing APTC and CSRs during
inconsistency periods described in Sec. 155.315(f)(4)(ii) created from
an eligibility redetermination when the information related to the DMIs
described in Sec. 155.315(f)(4)(ii) was previously verified for the
plan year. This is described in section III.A.4.d. of this proposed
rule. We also propose to add new Sec. 155.315(f)(4)(iv) to establish
that Exchanges would be required to determine eligibility for APTC and
CSRs on behalf of an applicant following successful verification of
information as described in proposed new Sec. 155.315(f)(4)(ii), and
to establish new effective dates of those eligibility determinations or
redeterminations. We additionally propose to add Sec. 155.315(f)(4)(v)
specifying that applicants with DMIs other than those described in
proposed Sec. 155.315(f)(4)(ii) are able to receive APTC and CSRs
during the inconsistency period if eligible based on the information
provided on their application. Finally, we propose to amend Sec.
155.315(f)(4)(i) to remove language around proceeding with all other
elements of eligibility determination to align with proposed changes to
Sec. 155.315(f)(4)(ii).
(i) Statutory and Regulatory Overview
(A) Applicable enrollment information
As described in section II.A. of this proposed rule, under section
36B(c) of the Code, a taxpayer is only allowed PTC for months that are
considered coverage months for the taxpayer or other individuals in the
taxpayer's family. Section 71303(a) of the WFTC legislation added
section 36B(c)(5) of the Code to provide that, starting in 2028, a
month is generally not a coverage month for an enrollee in a QHP for
any month that an Exchange fails to verify specific criteria related to
the enrollee's eligibility to enroll in a QHP through an Exchange and,
to the extent relevant, for APTC for the coverage for that month,
referred to as ``applicable enrollment information''. The specific
criteria include household income and family size, whether the
individual is an eligible alien, any health coverage status or
eligibility for coverage, place of residence, and other information
determined by the Secretary of the Treasury in consultation with the
Secretary of HHS. As outlined in the Department of Treasury's Premium
Tax Credit proposed rule (PTC proposed rule), ``any health coverage
status or eligibility for coverage'' refers to ``minimum essential
coverage'' as interpreted by the Department of Treasury (91 FR 65499),
which aligns with Sec. 155.20 which says the term MEC has the meaning
given in section 5000A(f) of the Code. Additionally, as explained later
in this section, the Secretary of the Treasury has proposed regulatory
changes to include lawful presence status and citizenship in addition
to the explicitly referenced criteria.
(B) Application to APTC and CSRs
Section 1411 of the Affordable Care Act outlines the requirements
for establishing eligibility for QHP \5\ and APTC. We interpret section
1411(a)(2)(A) of the Affordable Care Act as requiring Exchanges to make
APTC eligibility determinations consistent with the PTC eligibility
requirements of 36B of the Code,\6\ including for whether an applicant
has met the requirements for a month to be considered a coverage month.
Therefore, we read section 71303(a) of the WFTC legislation as
requiring verification of specified information before APTC can be
paid.
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\5\ When referencing QHP in this rule, this specifically refers
to coverage in an individual market QHP offered through an Exchange.
In accordance with section 1411(a)(1) of the Affordable Care Act,
Exchange eligibility requirements described in this proposed rule
would generally not apply to QHPs that are offered outside an
Exchange.
\6\ See, for example, in the 2027 Payment Notice proposed rule
(91 FR 6351).
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Additionally, section 1402 of the Affordable Care Act outlines
requirements for CSRs. Specifically, section 1402(g)(2) states that
CSRs cannot be allowed for months that are not coverage months for PTCs
as defined under section 36(B) of the Code. Given this, we have also
interpreted section 1402(g)(2) of the Affordable Care Act to require
that an Exchange only provide CSRs for months that qualify as coverage
months under section 36B of the Code, and therefore we find the new
eligibility limitations on APTC also apply to Exchange determinations
of eligibility for CSRs. As discussed later in this rule, there is an
exception for CSRs for American Indians and Alaska Natives (AI/AN) that
are not income based.
Therefore, given the changes outlined under section 36B of the Code
as amended by section 71303(a) of the WFTC legislation as discussed
above, we propose that Exchanges can no longer provide APTC and CSRs
for any month before an Exchange ``verifies, using applicable
enrollment information that shall be provided or verified by the
applicant'' the individual's eligibility to enroll in a QHP through an
Exchange and for APTC. Throughout this rule, ``DMI(s) related to
applicable enrollment information'' means a DMI for at least one of the
specific criteria set forth in proposed Sec. 155.315(f)(4)(ii), as
described in section III.A.4.b.i.A. of this proposed rule. For an
applicant who is not eligible for the family size SEP waiver as
described in section III.A.4.c. of this proposed rule, or for an
eligibility redetermination during the plan year as described in
section III.A.4.d. of this proposed rule, such a DMI prevents an
Exchange from providing or increasing any APTC and CSR amounts during
the inconsistency period. The term therefore excludes DMI for one of
the specific criteria set forth in proposed Sec. 155.315(f)(4)(ii)
when the family size SEP waiver applies, as discussed in section
III.A.4.c. of this proposed rule, as well as during an eligibility
redetermination during the plan year, as discussed in section
III.A.4.d.of this proposed rule.
(C) Requirement To Verify
Section 71303(a) of the WFTC legislation does not specify how
eligibility for enrollment in a QHP and for APTC and CSRs, as
applicable, must be ``verif[ied]'' using applicable
[[Page 67664]]
enrollment information. However, section 1411 of the Affordable Care
Act specifies detailed requirements for verifying eligibility for
enrollment in a QHP and for APTC and CSRs, which have been codified in
Sec. Sec. 155.315 and 155.320. Therefore, we read the term ``verify''
in section 71303(a) of the WFTC legislation to refer to verification
procedures under section 1411 of the Affordable Care Act, its
implementing regulations, and any successor or other applicable
regulations as may be issued.
Under section 1411 of the Affordable Care Act, applicants attest to
information related to eligibility for enrollment in a QHP offered
through the Exchange and APTC and CSRs, if applicable, on their
Exchange application, and Exchanges verify the attestations. For most
eligibility information, Exchanges must verify an applicant's
attestation by comparing it to a trusted data source. For other
eligibility information, Exchanges may accept attestation without
verification, although as discussed in other sections of this proposed
rule (section III.A.4.a. for residency verification and III.A.5. for
family size verification) we are considering adopting requirements that
would further limit instances where verification by self-attestation
would be permissible, unless there are no available data sources that
are current, accurate, and minimize administrative costs or burdens, or
methods to verify the information provided by a consumer. We describe
the verification process for different eligibility information below.
Section 1411 of the Affordable Care Act requires that Exchanges
verify certain information through specific government entities: the
Commissioner of Social Security and Secretary of Homeland Security for
citizenship and lawfully present immigration status, and, beginning in
PY 2027, eligible noncitizen \7\ statuses in section 1411(c)(2), and
the Secretary of Treasury for household income and family size in
section 1411(c)(3). Per current Exchange procedures, for citizenship
and immigration statuses under Sec. 155.315(c), and, beginning in PY
2027, eligible noncitizen status \8\ and household income under Sec.
155.320(c)(3), Exchanges are generally required to request information
from the specified trusted data sources, as applicable, to verify the
applicant's attestation. In the case of family size, current
requirements in Sec. 155.320(c)(3)(i) state that Exchanges are
generally permitted to accept the applicant's attestation without
further verification when family size cannot be verified through the
IRS.\9\ As described further in section III.A.5. of this proposed rule,
we are interested in comments related to the future state of family
size verification.
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\7\ See 91 FR 29601-29602.
\8\ See 91 FR 29601-29602.
\9\ The verification requirements for eligible noncitizen
status, household income, and family size apply only to applicants
applying for financial assistance.
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For other criteria, such as residency, enrollment in an eligible
employer-sponsored plan and eligibility for qualifying coverage in an
eligible employer-sponsored plan, and eligibility for MEC other than
through an eligible employer-sponsored plan, the Affordable Care Act
does not prescribe specific data sources to use, and instead section
1411(d) of the Affordable Care Act gives the Secretary of HHS the
flexibility to determine the verification process in any manner the
secretary determines appropriate.\10\ For residency under Sec.
155.315(d), Exchanges generally may accept attestation or may use any
electronic data sources that have been approved by HHS based on
evidence that they are sufficiently available, current, accurate, and
minimize administrative costs and burden. Currently, the FFE, SBE-FPs,
and some State Exchanges, accept attestation, while other State
Exchanges utilize data sources to request information and attempt to
verify attestation. However, we are interested in exploring potential
ways for Exchanges to move away from primarily accepting self-
attestation without further verification to verify residency through a
trusted data source or documentation in the near future. Further
information is available in section III.A.4.a. of this proposed rule.
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\10\ The verification requirements for enrollment in an eligible
employer-sponsored plan and eligibility for qualifying coverage in
an eligible employer-sponsored plan, and eligibility for MEC other
than through an eligible employer-sponsored plan apply only to
applicants applying for financial assistance.
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For enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan, under Sec. 155.320(d), Exchanges must use: (1) any electronic
data sources that HHS has approved as being sufficiently current,
accurate, and minimizing administrative burden; (2) any electronic data
sources that provide data on coverage based on Federal employment, and
(3) any data available for the Small Business Health Options Program
(SHOP) in the applicable State. HHS has not approved any data sources
as being sufficiently current, accurate, and minimizing administrative
burden. Therefore, Exchanges are only required to verify eligibility
and enrollment in employer-sponsored coverage electronically with the
Office of Personnel Management (OPM) and the applicable SHOP. If those
data sources indicate that the consumer is enrolled in eligible
employer-sponsored plan or eligible for qualifying coverage in an
eligible employer-sponsored plan, then the consumer receives a DMI and
is required to submit documentation to verify their attested
information. Finally, if an Exchange does not expect to obtain data
from at least one electronic data source that has been approved by HHS
to be sufficiently current, accurate, and minimize administrative
burden, it may follow an alternative process described in paragraph
(d)(4)(i). Specifically, an Exchange may use a risk-based approach to
verify whether an applicant is enrolled in an eligible employer-
sponsored plan or eligible for qualifying coverage in an eligible
employer-sponsored plan. If an Exchange's assessment of risk shows a
low risk for inappropriate payment of APTC or CSRs, an Exchange is
permitted to accept an applicant's attestation without further
verification.
In the HHS Notice of Benefit and Payment Parameters for 2023 final
rule (2023 Payment Notice) (87 FR 27208, 27270 and 27271), we provided
guidance that if Exchanges do not have access to an approved data
source that provides accurate and up-to-date information regarding
eligibility for or enrollment in coverage offered through an employer
and determined through research that the risk of improper eligibility
determinations for APTC and CSRs is low, that Exchanges are permitted
to accept a consumer's attestation without any further verification.
This is the verification procedure that the FFE and SBE-FPs adopted as
a risk-based approach since the risk for inappropriate APTC and CSRs
was deemed to be low, as discussed in the 2023 Payment Notice. Because
we are still of the view that the risk is still low of improper
eligibility determinations for APTC and CSRs resulting from
attestations regarding eligibility for an employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan, we do not propose any changes to the process for verifying such
information. Accordingly, Exchanges are permitted to continue following
whatever approved risk-based approach they currently are approved to
use by HHS.
Finally, under Sec. 155.320(b), for verification related to
eligibility for MEC other than through an eligible employer-
[[Page 67665]]
sponsored plan, such as Medicaid and Medicare, Exchanges use electronic
data sources to verify applicants' attestations.
Regardless of the type of eligibility information, section
1411(e)(3) and (e)(4)(B)(i) of the Affordable Care Act require that,
when application information is required to be verified through a
trusted data source but cannot be, Exchanges must set a DMI and provide
applicants 90 or 95 days (depending on the type of DMI) to provide
documentation to resolve the DMI. Exchanges must determine eligibility
for QHP coverage and APTC and CSRs based on attested information on the
application and provide such coverage and APTC or CSRs, as applicable,
during the inconsistency period. Accordingly, in the March 27, 2012,
Exchange Establishment Rule (77 FR 18310), we finalized that Exchanges
must determine eligibility for APTC and CSRs for applicants based on
attested information on the application during an inconsistency period,
which was done through adding Sec. 155.315(f)(4). Specifically, Sec.
155.315(f)(4)(i) and (ii) currently require Exchanges to proceed with
all other elements of eligibility determination using the applicant's
attestation during an inconsistency period and grant QHP eligibility if
otherwise qualified, provided that the applicant attests that they
understand their APTC is subject to reconciliation when they file their
Federal income taxes. This means that, currently, consumers who receive
DMI(s) are deemed eligible for QHP coverage through Exchanges and, if
applicable, APTC and CSRs, based on the information on their
application while those DMI(s) remain open (as long as the attestation
is provided if required).
As set forth in Sec. 155.315(f)(2)(ii), Exchanges can resolve a
DMI either when the consumer submits sufficient documentation to verify
their attested information or when Exchanges receive updated
information from data sources that verifies the attested information.
Once a DMI is resolved, the applicant's eligibility is verified, and
they can continue receiving QHP coverage through the Exchange and APTC
and CSRs as applicable. However, as noted in Sec. 155.315(f)(5), if an
Exchange is unable to resolve a DMI within the 90/95-day inconsistency
period, an Exchange redetermines eligibility based on information from
data sources, typically resulting in a loss of enrollment in QHP
coverage or a loss or decrease in APTC and CSRs. In cases of an
application with multiple applicants, eligibility is determined for
each applicant who has a DMI, with the exception of DMI types that
apply at the household level, such as annual household income DMIs, in
which case the DMI applies to the entire household. Applicants who
update their application during the coverage year and receive an
eligibility redetermination follow the same process as outlined above.
While this is the current process, as discussed above, we read
section 71303(a) of the WFTC legislation to generally prohibit
Exchanges from providing APTC and CSRs for any month before it has
verified, using certain specified information, a consumer's eligibility
for enrollment in a QHP and for APTC and CSRs, as applicable, for those
months. Also as previously mentioned, we read that the requirement to
``verif[y]'' such information to mean to verify in accordance with
section 1411 of the Affordable Care Act and implementing regulations.
For citizenship, lawfully present immigration status, eligible
noncitizen status, and annual household income, Exchanges must verify
an applicant's attestation through a trusted data source, and if the
trusted data source cannot verify the attestation, set a DMI and
provide an applicant with a 90/95-day inconsistency period to provide
documents to resolve their DMI. Therefore, we read section 71303(a) of
the WFTC legislation to prohibit payment of APTC and CSRs for any month
before an Exchange verifies an applicant's attestation regarding
citizenship, lawfully present immigration status, eligible noncitizen
status,\11\ and annual household income through a trusted data source
or, if the applicant's attestation cannot be verified through a trusted
data source, until the applicant provides documents to resolve their
DMI and they have been determined eligible for APTC and CSRs.
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\11\ PTC proposed rule (91 FR 65498).
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Regarding verification of family size, Exchanges must submit family
size information to the Secretary of Treasury for verification.
However, per Sec. 155.320(c)(3)(i)(A), if the Secretary of Treasury
cannot verify family size, Exchanges may accept an applicant's
attestation of family size if the consumer attests that a change in
circumstance has occurred or is likely to occur, as long as the data
provided by the applicant is reasonably compatible with other
information provided about their family. More information regarding
family size verification can be found in section III.A.4.c. of this
proposed rule.
In contrast, for verification of residency, enrollment in an
eligible employer-sponsored plan and eligibility for qualifying
coverage in an eligible employer-sponsored plan, and eligibility for
MEC other than through an eligible employer-sponsored plan, section
1411(d) of the Affordable Care Act does not specify specific data
sources to use. As such, and as explained above, HHS regulations
sometimes require attestations about such information to be verified
through a trusted data source, or, if the trusted data source cannot
verify the information, through documentation, and other times permit
Exchanges to verify such information through attestation.
Therefore, we read section 71303(a) of the WFTC legislation to
prohibit payment of APTC and CSRs for any month before an Exchange
verifies residency, enrollment in an eligible employer-sponsored plan
and eligibility for qualifying coverage in an eligible employer-
sponsored plan, eligibility for MEC other than through an eligible
employer-sponsored plan, and family size--however verification is
required under section 1411 of the Affordable Care Act, its
implementing regulations, and any successor or other applicable
regulations as may be issued, and we are exploring further updates to
residency and family size verification as outlined further in sections
III.A.4.a. and III.A.4.c. of this proposed rule. Additionally, we
emphasize that some State Exchanges may have data available to them
that are sufficiently current, accurate, minimizes administrative
burden, and approved by the Secretary of HHS for usage and therefore
may already be setting DMIs for criteria that the Federal Exchange
currently does not, and this proposed rule does not limit State
Exchanges from setting DMIs in those instances. In summary, when
attestations about such information must be verified through a trusted
data source or documentation, we read section 71303(a) of the WFTC
legislation to prohibit payment of APTC and CSRs until such
verification is complete.
As such, we are proposing to amend Sec. 155.315(f) to reflect the
new requirement of section 71303(a) of the WFTC legislation.
Specifically, we propose in Sec. 155.315(f)(4)(ii) that if an
applicant receives a DMI related to the applicable enrollment
information, Exchanges would be prohibited from providing APTC and CSRs
until those DMIs are adjudicated and the Exchange determines that the
applicant is eligible for enrollment in a QHP and for APTC and CSRs, as
applicable. In contrast, for a DMI not related to applicable enrollment
information, or if a family size SEP waiver applies, as discussed in
section III.A.4.c. of this proposed rule, and during eligibility
redeterminations
[[Page 67666]]
during the plan year, as discussed in section III.A.4.d. of this
proposed rule, Exchanges would be required to continue payment APTC and
CSRs, if otherwise eligible, during an inconsistency period.
Specifically, this includes DMIs for AI/AN status.
We acknowledge that section 71303(a) of the WFTC legislation could
be read to allow Exchanges to always treat an applicant's information
as ``verified'' such that a month can be considered a ``coverage
month'' if the applicant affirms (that is, attests to) the required
information. As previously mentioned, section 71303(a) of the WFTC
legislation added section 36B(c)(5)(A) of the Code, effective beginning
in 2028, and section 36B(c)(5)(A) states that a coverage month cannot
include any month before an Exchange ``verifies, using applicable
enrollment information that shall be provided or verified by the
applicant, such individual's eligibility'' to enroll in a QHP or
receive APTC. (Emphasis added). Section 71303(a) of the WFTC
legislation that added section 36B(c)(5)(B) of the Code, effective
beginning in 2028, and section 36B(c)(5)(B) provides that ``applicable
enrollment information shall include affirmation'' of the specified
criteria. One could read these provisions together as permitting
Exchanges to verify an applicant's eligibility using only the
applicant's provided affirmation (or attestation) of the enumerated
eligibility criteria, rather than using an external data source or
submitted documentation. However, as explored further below, we are of
the view that this reading of section 71303(a) of the WFTC legislation
is implausible.
As discussed previously in this proposed rule, given that the term
``verifies'' is ambiguous in section 71303 of the WFTC legislation, the
statutory language is best read to mean that an Exchange verifies the
specified criteria in accordance with the verification procedures
articulated in section 1411 of the Affordable Care Act, its
implementing regulations, and any successor or other applicable
regulations as may be issued.\12\ These successor applicable
regulations include potential future updates to perform further
verification of residency beyond accepting attestation, as described in
section III.A.4.a. of this proposed rule. This is supported by the
language in section 71303(a) of the WFTC legislation stating that an
Exchange must verify eligibility for enrollment in a QHP and for APTC
and CSRs, as applicable, using the specified information ``provided''
or ``verified'' by the applicant. We read that the terms ``provided''
and ``verified'' to refer to the verification procedures under section
1411 of the Affordable Care Act and implementing regulations which, as
explained previously in this proposed rule, allow Exchanges to verify
some eligibility criteria using an attestation provided by the
applicant and which require further verification from a trusted data
source or documentation in the case of other eligibility criteria.
Given that the WFTC legislation does not prescribe any new specific
methods of verification, we read it as permitting existing verification
processes to continue, except that generally a month may not be a
coverage month, and therefore no APTC or CSRs can be provided, until
verification under section 1411 of the Affordable Care Act, its
implementing regulations, and any successor or other applicable
regulations as may be issued, is complete. As previously stated, we are
requesting comments on whether updates should be made to the
verification of residency as defined under Sec. 155.315(d), which is
discussed further in section III.A.4.a. of this proposed rule, and the
verification of family size as defined under Sec. 155.320(c)(3), which
is discussed further in section III.A.5. of this proposed rule.
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\12\ We note that neither the current verification processes
conducted by Exchanges, nor the proposed verification processes that
would be conducted by Exchanges if the proposals in this rule were
finalized, would in any way change the obligations of agents,
brokers, and web-brokers to comply with the FFE Standards of Conduct
at 45 CFR 155.220(j), including the obligation to provide the FFEs
with correct information, and document that eligibility application
information has been reviewed by and confirmed to be accurate by the
consumer or their authorized representative prior to submission to
the Exchange. See 45 CFR 155.220(j)(2)(ii). These obligations extend
to agents, brokers, and web-brokers assisting consumers on the SBE-
FPs. See 45 CFR 155.220(l).
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Additionally, we are of the view that reading section 71303(a) of
the WFTC legislation to permit Exchanges to treat all attested
information as verified would, effectively, render the changes under
section 71303(a) meaningless as, under current rules, that reading
would result in a month likely being considered a coverage month based
on just an applicant's attestation of eligibility criteria. Therefore,
we are of the view that the intention of the WFTC legislation is to
rely on existing verification procedures in section 1411 of the
Affordable Care Act, its implementing regulations, and any successor or
other applicable regulations as may be issued for purposes of
verification under section 71303 of the WFTC legislation.
In summary, due to the new requirements in section 71303 of the
WFTC legislation, we are of the view that APTC and CSRs cannot be
provided to consumers when eligibility for enrollment in a QHP and for
APTC and CSRs, as applicable, have not been verified using the
specified criteria in accordance with section 1411 of the Affordable
Care Act and implementing regulations--which allows certain information
to be verified through attestation and which requires certain other
information to be verified by either a trusted data source or
documentation provided by the applicant during an inconsistency period.
Therefore, we have determined that significant changes to the
verification procedures in Sec. 155.315(f)(4) related to providing
APTC and CSRs during an inconsistency period are required. These
changes are described below.
(ii) APTC and CSRs During Certain Inconsistency Periods (Sec.
155.315(f)(4)(ii))
As described in section II.A. of this proposed rule, section
71303(a) of the WFTC legislation describes the specific criteria that
must be verified before a month is considered a coverage month. These
criteria are household income and family size; whether an individual is
an eligible alien; any health coverage status or eligibility for
coverage; place of residence; and other information as may be
determined by the Secretary of Treasury, in consultation with the
Secretary of HHS, as necessary to the verification described in section
36B(c)(5)(A) of the Code, as added by section 71303(a) of the WFTC
legislation. Per the PTC proposed rule (91 FR 65498), the Secretary of
the Treasury proposes to include citizenship and lawful presence status
as criteria under section 36B(c)(5)(B)(v) of the Code that must be
verified before a month can be a coverage month. Therefore, in light of
the Secretary of Treasury's PTC proposed rule, and our interpretation
of section 1411(a)(2)(A) of the Affordable Care Act that Exchanges must
make APTC eligibility determinations consistent with the PTC
eligibility requirements of section 36B of the Code, we are proposing
to require citizenship and lawful presence be verified before Exchanges
can provide APTC or CSRs.
Accordingly, when an applicant receives a DMI for annual household
income and family size, citizenship, lawful presence status, eligible
noncitizen status, residency, eligibility for MEC other than through an
employer-sponsored plan, or eligibility
[[Page 67667]]
for or enrollment in employer-sponsored coverage,\13\ we propose that
any DMI generated for these applicable enrollment information would
need to be adjudicated by an Exchange (that is, the applicant's
eligibility for APTC and CSRs must be verified) before APTC or CSRs can
be paid for the applicant for any months, including prior months as
described later in section III.A.4.b.iv. of this proposed rule. We note
that although lawful presence status is included in these criteria and
would be required to be verified before APTC and CSRs are provided, we
do not expect this would have a functional impact on Exchanges.
Beginning in PY 2027, only consumers who have eligible noncitizen
status as defined in Sec. 155.20 are eligible for APTC and CSRs.
Eligible noncitizens are a subset of lawfully present noncitizens,
specifically individuals who have been lawfully admitted for permanent
residence (sometimes referred to as a ``lawful permanent resident'' or
``green card holder''), those who have been granted the status of Cuban
and Haitian entrant as defined in section 501(e) of the Refugee
Education Assistance Act of 1980, and those who are lawfully residing
in the United States in accordance with the Compacts of Free
Association (COFA) as defined at 8 U.S.C. 1612(b)(2)(G) (sometimes
referred to as a ``COFA migrant''). We anticipate that, given Exchange
operations, the functional impact of the proposed requirement to verify
lawful presence status would be handled through the verification of
eligible noncitizen status per Sec. 155.320(c)(3)(ix).
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\13\ Consistent with the Secretary of Treasury in the PTC
proposed rule (91 FR 65499), we interpret ``any health coverage
status or eligibility for coverage'' to refer to ``minimum essential
coverage'' as described in Sec. 155.20.
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Notwithstanding the above, as mentioned earlier in this section,
section 71303(a) of the WFTC legislation provides for an exception to
the verification requirements described in section 36B(c)(5)(A) of the
Code. Specifically, section 71303(a) of the WFTC legislation adds
section 36B(c)(5)(E) of the Code, which allows the Secretary of
Treasury to waive the verification requirements (for coverage month
purposes) for applicants who enroll during an SEP based on a change in
the applicant's family size, including current enrollees who are
eligible to enroll due to a family size SEP. As a result, and
consistent with the PTC proposed rule (91 FR 65494), we are proposing
in Sec. 155.315(f)(4)(ii) to require Exchanges to provide this
exception for SEPs where an applicant, or a member of their household,
has a qualifying life event related to a change in family size, such as
birth or adoption of a child. Further information about this proposal
is provided in section III.A.4.c. of this proposed rule and in the PTC
proposed rule (91 FR 65499). In addition, as discussed in section
III.A.4.d. of this proposed rule, we are also proposing modified
procedures when an eligibility redetermination results in DMIs related
to applicable enrollment information that was previously verified for
the plan year.
Additionally, for the reasons described in section III.A.4.b.i. of
this proposed rule, we are not proposing to amend the Exchanges
verification requirements except to prohibit (in most situations)
payment of APTC and CSRs before eligibility for enrollment in a QHP and
for APTC and CSRs, as applicable, have been verified in accordance with
section 1411 of the Affordable Care Act, its implementing regulations,
and any successor or other applicable regulations as may be issued is
complete. We discuss below in more detail the current process for
verifying enrollment in an eligible employer-sponsored plan and
eligibility for qualifying coverage in an eligible employer-sponsored
plan. Additionally, we are requesting comments on whether updates
should be made to the verification of residency as defined under Sec.
155.315(d) and discussed further in section III.A.4.a. of this proposed
rule and the verification of family size as defined under Sec.
155.320(c)(3) and discussed further in section III.A.5. of this
proposed rule.
In addition, while section 71303 of the WFTC legislation does not
specifically mention CSRs, we are also of the view that Exchanges are
required to withhold CSRs during the specified inconsistency periods.
As mentioned earlier in this section, section 1402(g)(2) of the
Affordable Care Act, which is codified in Sec. 155.305(g), outlines
that applicants are only eligible for CSRs for months in which they are
also eligible for APTC and meet all other CSR eligibility criteria.
Therefore, we propose to require Exchanges to withhold CSRs prior to an
Exchange having verified eligibility for enrollment in a QHP and for
APTC and CSRs using the applicable information required under section
36B(c)(5) of the Code.
One important clarification is that the special cost-sharing rule
specific to AI/AN applicants specifically for items and services
provided through the Indian Health Service, an Indian Tribe, Tribal
Organization, an Urban Indian Organization, or through referrals under
contracted health services (hereinafter ``Indian health providers'')
under section 1402(d)(2) of the Affordable Care Act, and implemented in
Sec. 155.350(b), is not impacted by new requirements in section 71303
of the WFTC legislation because it is not conditioned on being eligible
for APTC. Under Sec. 155.350(b), Exchanges must determine an AI/AN
applicant eligible for special cost-sharing described in section
1402(d)(2) of the Affordable Care Act without requiring them to request
an eligibility determination for insurance affordability programs in
accordance with Sec. 155.310(b). To clarify, an individual who is a
member of a Federally recognized tribe or is an ANCSA Corporation
shareholder may be subject to cost sharing under the special cost-
sharing rule even if they do not apply for any financial assistance (as
in, APTC and CSRs) when they apply for QHP coverage through an Exchange
or if they apply but are determined ineligible.
In contrast, income-based CSRs that AI/AN applicants may receive
are tied to APTC eligibility, as described in Sec. 155.350(a), and
therefore would be subject to the requirements proposed in this
section. As an example, if a consumer who is a member of a Federally
recognized tribe applies for QHP coverage through an Exchange with
financial assistance, the Exchange would be required to follow the
verification processes outlined in section 1411 of the Affordable Care
Act and implementing regulations. In cases where they receive a DMI
related to the applicable enrollment information, they would be able to
receive cost sharing under the special cost sharing rule for AI/AN
individuals for items and services provided through Indian healthcare
providers, as previously described, but would not receive income-based
CSRs until all DMIs related to the applicable enrollment information
are adjudicated and they have been determined eligible for APTC and
CSRs.
As an additional point of clarification, while we propose that
Exchanges would be prohibited from determining an applicant eligible
for APTC and CSRs during an inconsistency period for DMIs related to
the applicable enrollment information, we are not proposing to prohibit
Exchanges from determining eligibility for enrollment in a QHP during
the same period, even if the DMI related to the applicable enrollment
information is related to eligibility for enrollment in a QHP (such as
citizenship or lawful presence status). Section 71303(a) of the WFTC
legislation states that an individual's eligibility to enroll in a QHP
and for APTC must be verified using applicable
[[Page 67668]]
enrollment information for a month to be considered a ``coverage
month'' under section 36B of the Code. A coverage month is required for
APTC and CSRs to be paid but has no bearing on an applicant's
eligibility for enrollment in a QHP. Additionally, section 36B(c)(5)(D)
of the Code, as added by section 71303(a) of the WFTC legislation,
explicitly states that applicants cannot be treated as ineligible to
enroll in a QHP through an Exchange solely for failing to meet the
requirements to verify applicable enrollment information as required by
section 36B(c)(5)(A) and (B) of the Code.
Therefore, we propose that an applicant would be required to be
determined eligible for enrollment in, and may enroll in, a QHP during
any period in which the applicant has any DMI, including when the DMI
relates to information necessary to determine eligibility for a QHP,
such as citizenship or lawful presence status, if otherwise eligible.
Accordingly, we only propose a minor conforming edit to Sec.
155.315(f)(4)(i), which would still state that Exchanges must provide
eligibility for a QHP if an applicant is otherwise eligible during an
inconsistency period. We note that an applicant who enrolls in a QHP
during an inconsistency period related to QHP eligibility information
must verify such eligibility by the end of their 90-day inconsistency
period. If they fail to do so, their QHP enrollment through the
Exchange would be terminated.\14\
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\14\ However, failure to meet eligibility requirements for
enrollment through the Exchange generally is not a basis for a
health insurance issuer to terminate health insurance coverage under
the guaranteed renewability requirements of section 2703 of the
Public Health Service Act and 45 CFR 147.106. Accordingly, an
individual whose Exchange enrollment is terminated for failure to
meet Exchange eligibility criteria generally would have a right to
renew or continue in force such coverage outside the Exchange.
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In summary, we propose to amend Sec. 155.315(f)(4)(ii) to state
that Exchanges cannot provide APTC and CSRs based on attested
information on the application when an applicant has a DMI related to
the applicable enrollment information.
(iii) Eligibility Redeterminations During the Plan Year (Sec.
155.315(f)(4)(iii))
As previously stated, we propose to amend Sec. 155.315(f)(4)(ii),
which would prohibit Exchanges from providing APTC and CSRs based on
application information during inconsistency periods for DMIs related
to the applicable enrollment information. Exchanges would, therefore,
be prohibited from providing APTC and CSRs during inconsistency periods
as they currently do, including for the entire application household in
cases of household-level DMIs such as those related to annual income
and family size. However, for applicants who submit an application and
receive new DMIs after they had previously verified all of the
eligibility criteria specified in proposed Sec. 155.315(f)(4)(ii) for
the current plan year, we propose to add Sec. 155.315(f)(4)(iii) to
permit Exchanges to provide APTC and CSRs during an inconsistency
period. This is discussed in detail in section III.A.4.d. of this
proposed rule.
(iv) Resolution of DMIs (Sec. 155.315(f)(4)(iv))
We also propose to add new Sec. 155.315(f)(4)(iv) to establish
that Exchanges would be required to determine eligibility for APTC and
CSRs on behalf of an applicant following a successful verification of
the information described in Sec. 155.315(f)(4)(ii) and to provide
effective dates for the eligibility determination. Specifically, these
proposed effective dates rules would apply to determinations and
redeterminations in two circumstances. First, they would apply to
determinations resulting from resolution of DMIs related to applicable
enrollment information. Second, they would apply to redeterminations
resulting from an applicant resolving all DMIs when the applicant would
qualify for a greater amount of APTC than they were receiving during
their inconsistency period upon DMI resolution--that is, DMIs described
in proposed Sec. 155.315(f)(4)(iii)(A). These rules would apply to the
DMIs described in Sec. 155.315(f)(4)(ii) and (iii)(A) because
resolution of these DMIs would generally result in changes to a
consumer's APTC and CSR eligibility. In contrast, when a DMI described
in Sec. 155.315(f)(4)(iii)(B) is resolved, such resolution would
instead confirm the consumer's eligibility for the APTC and CSRs, as
applicable, that they were already authorized to receive during their
inconsistency period based on their attestation, and the amount of APTC
and CSRs would remain the same.
We propose in Sec. 155.315(f)(4)(iv)(A) that, if a consumer is
already enrolled in a QHP when such DMIs are resolved by an Exchange,
an Exchange would generally be required to implement the resulting APTC
and CSR eligibility determination effective the first day of the first
month in which all the following criteria are met: (1) an Exchange
determined all eligibility criteria described in proposed Sec.
155.315(f)(4)(ii) to be verified for that month, (2) the consumer was
enrolled in a QHP on the first day of that month, and (3) the
consumer's DMI was generated prior to the first of that month. This
would allow APTC and CSRs to be paid prospectively, as well as
retroactively, subject to the conditions described. We propose one
exception to these rules, for cases where these rules would otherwise
result in Exchanges being required to provide APTC for months in the
prior coverage year. In these cases, we propose that Exchanges would
not provide APTC for months in the prior coverage year, and consumers
would instead claim any PTC for which they were eligible on their
Federal income tax return.
This proposal would implement section 36B(c)(5)(C) of the Code,
which was added by section 71303(a) of the WFTC legislation. Section
36B(c)(5)(C) of the Code provides that a month that begins before
completion of the verification prescribed by section 36B(c)(5)(A) of
the Code must be treated as a coverage month for an individual if the
Exchange verifies (using applicable enrollment information) that the
individual is eligible to enroll in a QHP and for APTC. This provision
effectively requires an Exchange to provide APTC and CSRs, as
applicable, retroactively after verification of applicable enrollment
information.\15\
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\15\ As discussed throughout this proposed rule, we interpret
section 1411(a)(2) of the Affordable Care Act to require Exchanges
to make APTC eligibility determinations consistent with the PTC
eligibility requirements of section 36B of the Code, including
whether an applicant has met the requirements for a month to be
considered a coverage month. Also as previously discussed, we have
also interpreted section 1402(g)(2) of the Affordable Care Act to
require that an Exchange only provide CSRs for months that qualify
as coverage months under section 36B of the Code.
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Section 36B(c)(2)(A)(i) of the Code requires an individual to be
enrolled in a QHP as of the first of a month before the month can be a
coverage month. Section 36B(c)(5)(A) of the Code provides, in relevant
part, that a coverage month does not include any month that begins
before the Exchange verifies an individual's eligibility to enroll in a
QHP and for APTC. Accordingly, we propose that the retroactive period
would go no further than the first of the month in which all the
following conditions are met: an Exchange verified all eligibility
criteria described in proposed Sec. 155.315(f)(4)(ii), the consumer
was enrolled in a QHP on the first day of that month, and the
consumer's DMI was generated prior to the first of that month.
First, at Sec. 155.315(f)(4)(iv)(A)(1), we propose that the
retroactive period
[[Page 67669]]
would not extend beyond the first day of the first month for which the
Exchange verified all eligibility criteria described in proposed Sec.
155.315(f)(4)(ii). This implements the requirement in section
36B(c)(5)(C) of the Code that a month beginning prior to verification
only be considered a coverage month if the Exchange verifies the
consumer's eligibility ``for such month.''
Under this proposal, Exchanges would be required to consider annual
household income to be verified for months prior to the resolution of
an annual household income DMI. This is because when verifying annual
household income, Exchanges are verifying an individual's projected
household income for the entire coverage year, and a successful
verification therefore indicates that the individual's projection is
considered verified for all months of the year unless and until a
change is reported.
Exchanges would also be required to consider U.S. citizenship to be
verified for months prior to the resolution of a U.S. citizenship DMI,
if the consumer submits documents indicating that they are a U.S.
citizen by birth, or that they are a naturalized citizen whose
naturalization occurred prior to when they provided their attestation
of U.S. citizenship to the Exchange. However, if an individual attests
on their application that they are a U.S. citizen, receives a DMI, and
subsequently submits documents that indicate that they became
naturalized in a month following such attestation, then the Exchange
would only be required to consider the individual's citizenship
verified for the months that the submitted documents indicated that the
individual was a U.S. citizen.
Similarly, if an individual attests to lawful presence or eligible
noncitizen status, receives a DMI, and subsequently submits documents
that indicate that they gained their lawfully present or eligible
noncitizen status in a month following such attestation, then the
Exchange would only be required to consider the individual's lawful
presence or eligible noncitizen status verified for the months that the
submitted documents indicated that the individual was lawfully present
or an eligible noncitizen. If the individual submitted documents
demonstrating that they gained their lawfully present or eligible
noncitizen status in a month prior to their attestation, then the
Exchange would be required to consider lawful presence and eligible
noncitizen status, as applicable, to be verified for months prior to
the resolution of the DMI.
Finally, if an individual attests that they are not eligible for
MEC other than through an eligible employer-sponsored plan, receives a
DMI, and subsequently submits documents that indicate that they ceased
to be eligible for or enrolled in their other MEC in a month following
such attestation, then the Exchange would only consider the
individual's lack of eligibility for or enrollment in other MEC
verified for the months the submitted documents indicated that the
individual was not eligible for or enrolled in other MEC. If the
individual submitted documents demonstrating that they were ineligible
for or not enrolled in other MEC in a month prior to their attestation,
then the Exchange would be required to consider this criterion verified
for any applicable prior months.
Exchanges would be required to communicate to consumers regarding
whether past months were successfully verified, and the impact of this
verification outcome on the Exchange's determination of the consumer's
APTC and CSR eligibility, via the notification required by Sec.
155.310(g). We note that this notification would be required by Sec.
155.515(a)(2) to include information about appeal rights. Existing
regulations at Sec. 155.505(b)(1) specify that applicants and
enrollees have the right to appeal an Exchange's eligibility
determinations, and we interpret this existing requirement to extend to
eligibility determinations made on the basis of an Exchange's
assessment regarding whether eligibility criteria were successfully
verified for months prior to verification.
We acknowledge that Exchanges would need to make case-by-case
determinations to determine whether each eligibility criterion can be
considered verified for months occurring prior to verification. We
request comment from State Exchanges regarding the feasibility of
parsing whether applicable criteria can be considered verified for
specific months as described.
Second, at Sec. 155.315(f)(4)(iv)(A)(2), we propose that the
retroactive period for which an Exchange may provide APTC and CSRs
would not extend beyond the first day of the first month in which the
enrollee is enrolled in a QHP. This is consistent with Section
36B(c)(2)(A)(i) of the Code, which requires an individual to be
enrolled in a QHP as of the first of a month before the month can be a
coverage month. Rules regarding Exchange enrollment periods and their
effective dates are addressed at Sec. Sec. 155.410 and 155.420, with
some modifications proposed in sections III.A.9. and III.A.10. of this
proposed rule.
Third, we propose at Sec. 155.315(f)(4)(iv)(A)(3) that the
Exchange's determination of an individual's APTC and CSR eligibility
following the resolution of their DMIs related to applicable enrollment
information may not be effective earlier than when the individual's
DMIs were generated. We are proposing this rule to align with
Exchanges' existing effective date framework, described at Sec.
155.330(f), under which changes to eligibility are generally \16\
implemented prospectively, in relation to when the consumer provides
the attestations that produce such changes in eligibility. This
proposal that an Exchange's determination of an individual's APTC and
CSR eligibility following the resolution of their DMIs may not be
effective earlier than when the individual's DMIs were generated
ensures consistent effective dates for consumers who verify the
applicable enrollment information electronically as compared to those
who verify the applicable enrollment information via document
submission during their inconsistency period. To illustrate, consider a
consumer who does not provide or confirm their eligibility information
for the upcoming coverage year, and is re-enrolled in a QHP without
APTC or CSRs effective January 1.\17\ If that consumer subsequently
updates their application on January 10 and their applicable enrollment
information are verified in real-time through trusted data sources on
that same date, then, under the proposed effective date rules at Sec.
155.330(f)(1), their redetermination of eligibility for APTC and CSRs
would take effect prospectively, on February 1. If, instead, the same
consumer updates their application on January 5, the Exchange opens a
DMI related to the applicable enrollment information on the same date,
and the DMI is resolved through document submission on January 10,
[[Page 67670]]
then the effective date rules proposed in this section apply. Without
the proposed policy at Sec. 155.315(f)(4)(iv)(A)(3)--which would
require that APTC and CSR eligibility determinations not take effect
before the date the DMI was generated--the consumer could qualify for a
January 1 effective date for their APTC and CSRs. Specifically, under
the rules proposed at Sec. 155.315(f)(4)(iv)(A)(1) and Sec.
155.315(f)(4)(iv)(A)(2), if the information related to the applicant's
DMIs was verified for January, the consumer's effective date for their
APTC and CSRs would be January 1 because they were enrolled in a QHP as
of January 1. This would produce different effective dates for APTC and
CSRs for consumers who verify electronically versus through
documentation on the same date. Proposed Sec. 155.315(f)(4)(iv)(A)(3)
would prevent this illogical outcome. Under this proposal, the
effective date for the consumer's APTC and CSR eligibility would be
February 1--consistent with the effective date for the consumer whose
eligibility was verified electronically.
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\16\ Changes to eligibility may be implemented retroactively, in
relation to when the consumer provides the attestations that produce
such changes in eligibility, in the case that a consumer qualifies
for an SEP due to gaining a dependent, described at Sec.
155.420(b)(2)(i). However, because consumers who qualify for an SEP
due to gaining a dependent would qualify for the waiver described at
proposed Sec. 155.315(f)(4)(ii), the effective dates described in
this section would not be applicable to them, since the resolution
of their DMIs would not produce a change in their APTC or CSR
eligibility. These proposed effective date rules therefore would not
permit changes in eligibility to take effect prior to when the
consumer provided their attestation of a change in circumstance.
\17\ See section III.A.7 of this proposed rule for further
discussion of annual eligibility redeterminations.
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Finally, at Sec. 155.315(f)(4)(iv)(A)(4), we propose an exception
to the effective date rules proposed at Sec. 155.315(f)(4)(iv)(A)(1)
through (3). Specifically, if these rules would result in an APTC and
CSR effective date in the prior coverage year, we propose that the
Exchange would not be permitted to provide or increase APTC for those
months in the prior year. This exception is intended to mitigate tax
administration issues and consumer burden that would result if
Exchanges provided APTC for a month after the Exchange had already
generated a consumer's Form 1095-A for the coverage year.
Consider the following example. A consumer submits an application
to the Exchange on November 15, 2028, and qualifies for an SEP due to a
November 30, 2028, loss of MEC. The consumer selects a plan on November
15, 2028, and in accordance with Sec. 155.420(b)(2)(iv), qualifies for
a coverage effective date of December 1, 2028. The consumer has a DMI
related to their annual household income for 2028. The consumer chooses
to enroll in a QHP effective December 1, 2028, without APTC or CSRs.
Subsequently, the consumer submits documents to the Exchange, and the
Exchange verifies the consumer's annual household income for 2028 and
resolves their DMI on February 1, 2029. Were an exception not applied,
under the rules proposed at Sec. 155.315(f)(4)(iv)(A)(1)-(3), the
Exchange would be required to provide retroactive APTC, effective
December 1, 2028.
This proposed exception is necessary to avoid significant tax
administration issues. Exchanges generate Form 1095-A for enrollees in
January following the applicable coverage year, which includes
information about any APTC paid for each month in the coverage year.
If, in the scenario described above, the consumer's Form 1095-A is
generated prior to the Exchange's determination on February 1 that the
consumer qualifies for APTC for December, the consumer's Form 1095-A
would reflect that they were enrolled in a QHP but no APTC was paid for
the month of December. Assume the consumer used this Form 1095-A to
file their Federal income tax return and claim PTC for the month of
December. If, in February, the Exchange then provided APTC for the
month of December, the Exchange would need to issue a corrected Form
1095-A, a process that generally takes multiple months. Then, upon
receipt of the corrected Form 1095-A, the consumer would have to file
an amended 2028 tax return, reduce the December PTC the consumer
claimed by the amount of APTC paid for the consumer's December
coverage, and include a tax payment equal to the December APTC, plus
interest and perhaps penalties, with the 2028 amended return. Instead,
if there is no retroactive payment of APTC for December, the consumer
would, on the consumer's 2028 tax return, lower his or her tax
liability or receive a tax refund for the amount of the December PTC
for which the consumer is eligible.
Thus, to alleviate these burdens on Exchanges, consumers, and the
IRS, we propose that Exchanges would not provide or increase APTC for
months in prior coverage years. We clarify that this exception applies
only to APTC; Exchanges would still be required to increase CSRs for
months in prior coverage years if the enrollee is eligible under the
rules proposed at Sec. 155.315(f)(4)(iv)(A)(1) through (3). We further
clarify that, as proposed, this exception would only prevent Exchanges
from providing APTC for months in a prior coverage year in the specific
situation where a consumer is enrolled in a QHP and subsequently their
DMI described at Sec. 155.315(f)(4)(ii) or (iii)(A) is resolved.
We acknowledge that there are limited additional situations in
which Exchanges may already be providing or increasing APTC for months
in a prior coverage year, including if a consumer qualifies for an SEP
with a retroactive effective date, or in the case of certain appeals.
At the FFE, consumers are only able to receive prior year APTC through
manual processes, by calling the Marketplace Call Center and having
their case reviewed on an individual basis. As a result, we have
determined that the current volume of cases where prior-year APTC is
permitted is quite low. In contrast, the consumers to whom the
effective date rules proposed in this section would apply would be able
to use an online, automated process to enroll and to resolve their
DMIs, and we therefore expect that the volume of consumers who may
qualify for prior year APTC as a result could be quite significant by
comparison. Therefore, we are only proposing to prevent Exchanges from
providing prior-year APTC in this specific situation, but we seek
comment regarding whether this principle should apply in other cases as
well.
Regarding the rules proposed at Sec. 155.315(f)(4)(iv)(A), we seek
comment from issuers and other interested parties on operational
considerations regarding retroactive provision of APTC and CSRs for
eligible consumers. Specifically, we understand that providing CSRs for
weeks or months prior to DMI resolution may be operationally
challenging for issuers and consumers. We understand that, today,
correctly re-processing claims that a consumer incurred during a period
prior to an Exchange's determination of CSR eligibility often requires
a consumer to manually submit, and an issuer to manually process and
reimburse, costs incurred by consumers in the past. We seek comment on
these and any other operational considerations.
Finally, at Sec. 155.315(f)(4)(iv)(B), we propose that for
consumers who select a plan and elect that it would only become
effective once verification requirements are met, as described in
section III.A.8.b. of this proposed rule, an Exchange's APTC
eligibility determination would be required to be implemented on the
same date that the consumer's plan becomes effective. Proposed
effective date rules for such plan selections are described in section
III.A.9. of this proposed rule for individuals who make a plan
selection during the annual OEP, and in section III.A.10. of this
proposed rule for individuals who select a plan during an SEP. This
proposal would ensure that, for consumers who elect that their plan
only become effective once verification requirements are met,
enrollment and APTC would start on the same date, resulting in a clear
process for consumers and streamlined communications for Exchanges, as
well as ensuring that the consumer does not have a period of
unsubsidized coverage.
[[Page 67671]]
We seek comment on this proposal. We understand State Exchanges may
find it challenging to implement these requirements for PY 2028.
Therefore, we specifically seek comment from State Exchanges regarding
any risks that State Exchanges would not be able to implement these
proposed effective date rules by PY 2028, and whether there are
alternative proposals that could achieve similar outcomes while
alleviating operational burden.
(v) APTC and CSRs during Other Inconsistency Periods (Sec.
155.315(f)(4)(v))
We also propose new Sec. 155.315(f)(4)(v) to specify that
applicants with DMIs not related to applicable enrollment information
would be provided APTC and CSRs based on attested application
information, if otherwise eligible, during an inconsistency period.
Section 71303(a) of the WFTC legislation provides that no month shall
be considered a coverage month until an Exchange verifies, using
applicable enrollment information, an individual's eligibility to
enroll in a QHP and for APTC. We read this to mean that if an Exchange
has failed to verify information that is not applicable enrollment
information, then section 71303(a) of the WFTC legislation does not
apply. Therefore, we propose that if an individual has a DMI not
related to the applicable enrollment information, an Exchange would be
required to follow the existing process established in section 1411 of
the Affordable Care Act and implementing regulations and provide APTC
and CSRs, as applicable, during the inconsistency period. An example of
a DMI not related to the applicable enrollment information is
verification of AI/AN status, as discussed in Sec. 155.350(c).
(vi) Conclusion
Overall, subject to certain exceptions described in sections
III.A.4.c. and III.A.4.d. of this proposed rule, these proposed changes
would prevent applicants from receiving APTC and CSRs during
inconsistency periods when an applicant has a DMI related to the
applicable enrollment information.
We seek comment on these proposals.
c. Family Size Special Enrollment Period Waiver (Sec.
155.315(f)(4)(ii))
In accordance with section 1.36B-3(c)(6)(ii) of the PTC proposed
rule (91 FR 65499), we propose to amend Sec. 155.315(f)(4)(ii) to
require Exchanges to ensure that APTC and CSRs, as applicable, are
provided on behalf of an applicant based on the information attested on
the application for coverage during an inconsistency period described
in Sec. 155.315(f)(4)(ii), when the applicant, or a member of the
applicant's tax household, is eligible to enroll during an SEP in
accordance with Sec. 155.420(d)(2)(i), also known as the birth,
adoption, and marriage SEP, or Sec. 155.420(d)(2)(ii), also known as
the loss of a dependent (or consideration as a dependent) through
divorce, legal separation or death SEP. We refer to these SEPs
collectively as the ``change in family size SEPs'' throughout this
section. These SEPs would be subject to the requirement to verify 75
percent of enrollments via SEPs that were finalized in the HHS Notice
of Benefit and Payment Parameters for 2027 (2027 Payment Notice) (97 FR
29526).\18\ In addition, we propose adding Sec. 155.315(f)(4)(iii)(A)
that also explains that current enrollees who are eligible to re-enroll
during an SEP in accordance with Sec. 155.420(d)(2)(i) or (ii) are
also eligible for this exception to ensure that APTC and CSRs are
provided based on the information attested to on their updated
application.
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\18\ As of the date of this publication, this policy has been
stayed by an order issued on July 16, 2026, in the City of Columbus
et al. v. Kennedy et al. (1:26-cv-02215).
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Section 71303(a) of the WFTC legislation adds section 36B(c)(5)(E)
of the Code, which explicitly allows for a waiver of the verification
requirement in section 36B(c)(5)(A) of the Code, at the option of the
Secretary of the Treasury, in the case of an individual who enrolls in
a QHP during an SEP due to a change in family size. We propose to
require Exchanges to adopt this exception set forth in proposed
Treasury Reg. Sec. 1.36B-3(c)(6)(ii) (91 FR 65499). Adopting this
exception would allow Exchanges to consider a month to be a coverage
month prior to verification of the requirements set forth in the
proposed Sec. 1.36B-3(c)(6) (91 FR 65494). Under Sec. 1.36B-3(a) (91
FR 65494), for a consumer to be eligible for PTC for that month, a
month is required to be a coverage month. Furthermore, as mentioned
earlier, we interpret section 1411(a)(2) of the Affordable Care Act as
requiring Exchanges to make APTC and CSR eligibility determinations
consistent with the PTC eligibility requirements of section 36B of the
Code. Taking those two requirements together, we propose to require
Exchanges to adopt this exception such that a month may be a coverage
month, and APTC and CSRs may be paid, prior to verifying the
information in proposed Treasury Reg. Sec. 1.36B-3(c)(6)(i) (91 FR
65494), which is the same as the information proposed in Sec.
155.315(f)(4)(ii) of this proposed rule, if an individual, either is
eligible to newly enroll or re-enroll in a QHP during an SEP that is
triggered by a change in family size as allowed at Sec.
155.420(d)(2)(i) or (ii). If finalized, this exception would allow a
consumer who qualifies for a change in family size SEP to be determined
eligible for APTC and CSRs (if otherwise eligible) based on attested
application information during an inconsistency period, as they are
under current rules. We note that if this exception is finalized as
proposed, consumers would still be subject to existing Exchange
processes to verify eligibility to enroll in a QHP and eligibility for
APTC and CSRs, as applicable, consistent with section 1411(c) and (d)
of the Affordable Care Act and implementing regulations.
As explained previously, we interpret section 1411(a)(2)(A) of the
Affordable Care Act as requiring Exchanges to make APTC and CSR
eligibility determinations consistent with the PTC eligibility
requirements of section 36B of the Code. Therefore, it is necessary for
HHS to also adopt the Secretary of Treasury's waiver of the
verification requirements of section 36B(c)(5)(A) of the Code to ensure
that Exchanges make APTC and CSR eligibility determinations consistent
with PTC eligibility determinations. Additionally, by aligning our
requirements with those proposed by the Secretary of Treasury in the
rule described above, HHS can ensure timely and continuous coverage for
enrollees who qualify for SEPs due to a change in family size,
particularly consumers who are adding newborns or dependents to their
families. There are several situations where, without this exception,
consumers could potentially lose APTC and CSRs at critical junctures of
needing medical care, including the newborn and postpartum periods.
The requirements specified in section 1411(c) and (d) of the
Affordable Care Act and the implementing regulations at Sec. Sec.
155.315 and 155.320, which are the basis for Exchange verification
processes, require verification of information provided by applicants,
including citizenship or immigration status, household income and
family size, and eligibility for or enrollment in employer-sponsored
coverage. If a consumer, either new or current, is eligible to enroll
or re-enroll during a family size SEP, generates DMIs related to the
applicable enrollment information, and then is unsuccessful at
resolving those DMIs and loses their APTC, the consumer may still be
allowed PTC for the months during the inconsistency period when filing
their
[[Page 67672]]
tax return and reconciling their APTC with their actual allowed PTC.
Section 71303(a) of the WFTC legislation allows a waiver of the
verification requirement in section 36B(c)(5)(A) of the Code for an
individual who enrolls in a QHP during a SEP based on ``a change in the
family size of the individual.'' We read this as referring to the
following current SEPs: gaining a dependent through marriage, birth,
adoption, placement for adoption, placement in foster care, or through
child support or another court order in Sec. 155.420(d)(2)(i); and
loss of a dependent or consideration as a dependent through divorce,
legal separation, or death in Sec. 155.420(d)(2)(ii) (if offered by an
Exchange). To qualify for the SEP at Sec. 155.420(d)(2)(i) through
marriage, one or both spouses need to demonstrate having one or more
days of MEC in the prior 60 days preceding the date of marriage under
Sec. 155.420(d)(2)(i)(A). Exchanges on the Federal platform do not
currently offer the SEP at Sec. 155.420(d)(2)(ii), as generally the
consumer who is losing or is no longer considered a dependent qualifies
for a loss of MEC SEP, thereby preventing a loss of coverage.
We are requesting comment specifically on whether Exchanges should
be required to offer the loss of dependent or consideration as a
dependent SEP offered at Sec. 155.420(d)(2)(ii) so that consumers who
are eligible to enroll during this SEP may continue to qualify for APTC
and CSRs based on their attestation during an inconsistency period that
occurs due to updating their eligibility information to the Exchange.
While consumers are already required to promptly report any changes
that may affect their APTC or CSR eligibility, we are of the view that
doing so is more important than it has been previously, in light of the
change that removes APTC repayment caps in section 71305 of the WFTC
legislation. For consumers that have been determined eligible to enroll
during a family size SEP as described at Sec. 155.420(d)(2) and
otherwise have a DMI due to the new information on their application,
this statutorily allowed exception ensures that consumers receive the
APTC and CSRs that most closely reflect their attested-to situation,
thereby minimizing the potential for larger tax liabilities. Requiring
Exchanges to offer the loss of dependent or dependent status SEP would
also prevent individuals who lose dependent status--for example, due to
divorce or death of the primary policyholder--from losing potential
APTC and CSRs until they newly meet pre-verification requirements.
For these reasons, we are proposing to amend Sec.
155.315(f)(4)(ii) and add new Sec. 155.315(f)(4)(iii)(C) to require
all Exchanges to determine eligibility for APTC and CSRs based on the
attested application information during an applicant's inconsistency
period for DMIs related to the applicable enrollment information if the
applicant's household is eligible to enroll during a family size SEP in
accordance with Sec. 155.420(d)(2)(i) and (ii). The proposed change
would ensure that both new applicants and enrollees who have previously
verified their information under Sec. 155.315(f)(4)(ii) and (iii) are
eligible for APTC and CSRs based on the attested application
information if they are eligible to enroll during a change in family
size SEP.
We seek comment on this proposal. We understand State Exchanges may
find it challenging to implement these requirements for PY 2028.
Therefore, we are considering providing flexibility for State Exchanges
to delay implementation of the change in family size SEP exception
until PY 2029. We seek comment, in particular from State Exchanges,
about whether the availability of this flexibility would be useful to
ease the burden of implementing the requirements in this proposed rule.
d. Eligibility Redeterminations During the Plan Year
Consistent with the PTC proposed rule (91 FR 65499), we propose the
addition of new Sec. 155.315(f)(4)(iii) to describe the requirements
for providing APTC and CSRs for enrollees who have reported a change to
eligibility criteria during the plan year after an Exchange has
completed verification of those same criteria using the enrollee's
information from their immediately preceding eligibility determination.
As outlined in section II.A. of this proposed rule, section 71303(a) of
the WFTC legislation provides additional criteria for a month to be
considered a coverage month. Specifically, a month generally may not be
a coverage month for an enrollee in a QHP for any month that an
Exchange fails to verify specific criteria related to the enrollee's
eligibility to enroll in a QHP through an Exchange and, to the extent
relevant, for APTC for the coverage for that month using certain
criteria. More specifically, beginning with PY 2028, an Exchange must
verify eligibility for enrollment in a QHP and APTC using the following
information before a month is considered a coverage month and PTC may
be paid: (1) household income and family size; (2) eligible noncitizen
status; (3) any health coverage status or eligibility for coverage; (4)
residency; and (5) other information as determined by the Secretary of
the Treasury, in consultation with the Secretary of HHS.
In proposed Sec. 155.315(f)(4)(iii)(A) and (B), we propose
Exchange procedures regarding the provision of APTC and CSRs when an
enrollee reports a change that generates one or more DMIs related to
the applicable enrollment information. If the reported change results
in an amount of APTC or CSRs that is in excess of or equal to the
amount of APTC or CSRs previously determined for the individual, we
propose that Exchanges would be required to continue providing APTC and
CSRs (as applicable) during inconsistency periods at the same amount as
previously determined. If the reported change results in an amount of
APTC or CSRs that is lower than the amount previously determined for
the individual, then we propose that Exchanges would lower APTC and
CSRs based on the information provided by the applicant during an
inconsistency period.
Section 71303(a) of the WFTC legislation amends the definition of
``coverage month'' and conditions PTC eligibility on successful
verification of applicable enrollment information (that is, the
criteria described in proposed Sec. 155.315(f)(4)(ii)) listed above.
We construe this change as a requirement that Exchanges must comply
with in addition to (not in place of) existing verification
requirements prescribed by sections 1411 and 1412 of the Affordable
Care Act. Importantly, while section 71303(a) of the WFTC legislation
requires that information be verified prior to treating a month as a
coverage month (that is, before PTC can be allowed for an applicant's
coverage), we propose this process would not immediately supersede all
prior verifications or require automatic termination of APTC and CSRs
at the point that an enrollee reports a change within the plan year.
Instead, we read section 71303(a) of the WFTC legislation to mean that
any verification of applicable enrollment information must remain
effective for the duration of the plan year, but, if an enrollee
reports a change resulting in a DMI related to the applicable
enrollment information, additional verification is required only before
any additional APTC may be paid. For example, consider an enrollee
receiving $250 per month in APTC. The enrollee reports a decrease in
projected annual household income during the plan year that would make
the enrollee eligible for $300 per month in APTC.
[[Page 67673]]
The enrollee's income cannot be verified with IRS, resulting in a DMI.
Section 71303(a) of the WFTC would prohibit an Exchange from providing
the enrollee with the additional $50 per month in APTC until the
enrollee's income was verified, but it would not permit the Exchange to
end APTC during the DMI period entirely (unless otherwise permitted).
Additionally, even if 71303(a) of the WFTC legislation did not
compel this outcome, the Exchange may continue to draw authority from
section 1412(b) of the Affordable Care Act for changes reported during
the benefit year. Specifically, section 1412(b)(2) of the Affordable
Care Act allows the Secretary of HHS to establish procedures to
determine APTC on the basis of information other than an enrollee's
prior tax return data when an enrollee's application form demonstrates
substantial changes in circumstances, such as changes in income, family
size, or other significant changes affecting eligibility.\19\
---------------------------------------------------------------------------
\19\ As outlined in Sec. 155.330(b), current enrollees who
previously sought and received an eligibility determination from the
Exchange are required to report changes that impact their
eligibility within 30 days of such change. If an Exchange receives
updated information, the enrollee's eligibility is redetermined in
accordance with Sec. 155.305 and the enrollee is notified about the
determination. If an Exchange is unable to verify the updated
information, the enrollee receives a DMI and is provided with a 90/
95-day inconsistency period to submit documentation that verifies
the attested application in accordance with Sec. Sec. 155.315 and
155.320.
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Accordingly, we propose a framework that would require an Exchange
to maintain or decrease an enrollee's previously determined APTC or CSR
amount (where applicable) if a reported change generates a DMI related
to the applicable enrollment information after the enrollee was
determined eligible for APTC or CSR for a given plan year. The
maintained or decreased APTC amount would be applicable until an
Exchange either resolves the DMI, the consumer reports another change
in circumstance, or until the end of the inconsistency period during
which the updated information remains unverified.
Throughout this paragraph, we use ``previously verified'' or
``previously determined'' to reference the enrollee's most recent
verification or determination conducted by the Exchange. We propose in
Sec. 155.315(f)(4)(iii)(A) that when an individual reports a change
that results in an amount of APTC or CSRs greater than or equal to the
amount of APTC or CSRs previously determined for the individual, an
Exchange would be required to maintain APTC or CSRs at the previously
verified amount during an inconsistency period. If the DMI is not
resolved, under section 1411(e)(4)(B)(ii) of the Affordable Care Act
and regulations at Sec. Sec. 155.315(f)(5) and 155.320(c)(3)(vi)(F)
through (G), an Exchange would be required to redetermine eligibility
for enrollment in a QHP and for APTC and CSRs, as applicable, on the
basis of records maintained by specific Federal officials as outlined
in section 1411(c) of the Affordable Care Act, which may include
termination of enrollment in a QHP and/or of APTC and CSRs. We propose
the approach in Sec. 155.315(f)(4)(iii)(A) because until new
information is verified, maintaining an enrollee's prior verified
eligibility preserves program integrity and eases burden on enrollees
related to reporting changes to the Exchanges, as stated later in this
section. This is particularly relevant as it is reasonable for an
individual to experience changes that significantly impact their
eligibility, resulting in DMIs.
For example, consider a scenario where an enrollee reports a
decrease in income from 350 percent of the FPL to 150 percent of the
FPL, corresponding with an increase in APTC and new eligibility for
CSRs, and resulting in a household income DMI. Under proposed Sec.
155.315(f)(4)(iii)(A), Exchanges would be required to maintain the
previously determined lower amount of APTC and CSRs based on previously
verified information during the inconsistency period. Once the
household income DMI is successfully resolved, an Exchange would be
required to redetermine eligibility and adjust the amount of APTC or
CSRs upwards based on the consumer's verified income attestation, with
an effective date consistent with proposed Sec. 155.315(f)(4)(iv) and
other proposed changes regarding effective dates following resolution
of DMIs outlined in section III.A.6.b. of this proposed rule. As noted
previously, if the DMI is not resolved, the Exchange would be required
to redetermine QHP and APTC and CSR eligibility, as applicable, on the
basis of records maintained by a trusted data source, which may include
removal of QHP and/or APTC and CSR eligibility.
By maintaining the lower amount of APTC and CSRs based on the
previously verified information during the inconsistency period,
Exchanges would ensure that APTC and CSRs are only ever provided to
enrollees during an inconsistency period at a level that does not
exceed the amount provided based on previously verified information.
Additionally, this proposed policy supports program integrity by
ensuring that accurate amounts of APTC and CSRs are being provided on
behalf of enrollees.
We acknowledge that this proposal would result in many consumers
receiving less APTC and CSRs during an inconsistency period than they
are ultimately determined eligible for when their DMIs are resolved.
For APTC, consumers could be made whole during the tax filing and
reconciliation process. We acknowledge that this may present a gap for
some enrollees regarding CSRs when compared to APTC, because enrollees
with APTC less than their PTC may claim the difference as a tax credit
on their tax return for the year of coverage whereas there is no
similar process for CSRs. However, we are of the view that this
proposed policy strikes a balance between ensuring responsible Exchange
operations regarding the provision of APTC and CSRs and encouraging
enrollees to report changes.
In contrast, consider the opposite scenario, where an enrollee
reports an increase in income from 150 percent of the FPL to 350
percent of the FPL, corresponding with a decrease in APTC and
ineligibility for CSRs, and resulting in a household income DMI. We
propose in Sec. 155.315(f)(4)(iii)(B) that Exchanges would be required
to adjust APTC or CSRs downward immediately after application
submission based on the information provided by the enrollee on the
application. Under this proposal, since the enrollee was previously
verified for a higher amount of APTC or CSRs, the enrollee would be
determined eligible for a lower amount of APTC or CSRs during the
inconsistency period based on their newly attested applicable
enrollment information. By requiring the Exchange to decrease APTC or
CSRs in this manner, this proposal would help ensure that the Exchange
does not pay out more APTC than that for which the consumer may be
eligible based on the consumer's reported increase in income.
We are of the view that the policies described in proposed Sec.
155.315(f)(4)(iii)(A) and (B) are permitted under section 1412(b)(2) of
the Affordable Care Act, which affords discretion to the Secretary to
modify procedures for making advanced determinations as circumstances
warrant. In other words, this broad authority allows the Secretary to
structure Exchange rules for determining an enrollee's APTC or CSRs
when the enrollee reports a change during the benefit year. We are of
the view that this interpretation allows an Exchange to maintain or
adjust APTC or
[[Page 67674]]
CSRs downwards for instances described in proposed Sec.
155.315(f)(4)(iii)(A) and (B). We are of the view that this proposed
framework--maintaining or reducing APTC or CSRs during the
inconsistency period for an enrollee following a mid-year change that
results in a change to the amount of, or eligibility for, APTC or
CSRs--best achieves Congressional intent of section 71303 of the WFTC
legislation. Under both proposed Sec. 155.315(f)(4)(iii)(A) and (B),
enrollees would continue to receive APTC and CSRs during the 90/95-day
DMI period as long as they are otherwise eligible for APTC.
Under this proposed framework, Exchange determinations would always
utilize verified information. In the first instance where an enrollee's
reported change would result in an increase of APTC and CSRs, the
Exchange would maintain APTC and CSRs at the previously verified level
during the inconsistency period while verification of reported changes
is pending at the Exchange. In the second instance, when the enrollee's
reported change would result in a decrease in APTC and CSRs, the
Exchange would base their determination on the enrollee's newly
reported information. This determination would not occur in the absence
of verified information. Rather, this determination (and the resulting
provision of APTC and CSRs during the inconsistency period) would
reflect both the enrollee's newly reported information and the fact
that the Exchange previously verified the enrollee eligible for a
higher amount of APTC and CSRs. We are of the view that this approach
is critical, as the only alternative would be to disregard an
enrollee's attestation that supports eligibility for less APTC and CSRs
than previously verified. Importantly, the downward adjustment of APTC
and CSRs based on the enrollee's attestation simply adjusts the
verified baseline amount of APTC and CSRs downward to limit the
enrollee's exposure to tax liability. We considered that an enrollee
would have less incentive to report a change that results in a decrease
in APTC or CSRs if they were not aware of the tax implications and did
not wish to limit their tax liability.
In contrast, some enrollees may be inclined to report a change that
results in an increase of APTC and CSRs because they are unaware of the
tax implications or are focused on the short-term benefit of doing so
(that is, lower monthly premiums). For these reasons, we believe the
proposed approach best balances the interests of protecting consumers
from increased tax liability and program integrity. Ultimately, the
provision of APTC and CSRs during the inconsistency period while
verification of reported changes is pending at the Exchange would use
previously verified information as a foundational element for
determinations. This two-pronged approach would ensure that enrollees
and households do not receive more APTC and CSRs than they are verified
for.
We considered alternatives to this proposal. We considered an
approach in which Exchanges would be required to maintain an enrollee's
current APTC or CSRs (that is, maintain a higher amount of APTC despite
the enrollee's attested increased income) during an inconsistency
period described in Sec. 155.315(f)(4)(ii) when the enrollee reports a
change that would result in a decrease in APTC or CSRs. However, since
section 71305 of the WFTC legislation eliminates the limitation on
repayment of excess APTC for tax years after December 31, 2025 (as set
forth in section 36B(f)(2) of the Code), this approach could result in
a consumer incurring a large tax liability despite correctly reporting
a change. Therefore, our proposed policy serves as a key consumer
protective measure by helping to safeguard consumers from large APTC
repayments. We also considered requiring Exchanges to provide the
higher amount of APTC or CSRs when an enrollee reports a change that
results in an increase of APTC or CSRs, but encouraging consumers to
take less APTC--specifically the amount they were receiving prior to
reporting a change in circumstances--to avoid the risk of incurring a
significant tax liability if their attestation was not verified.
However, we determined that this would create consumer confusion and
may not be effective as consumers would need to take additional actions
to manually adjust the amount of APTC applied to their monthly premium
if desired.
This alternative operational approach could result in consumer
confusion and friction, which may inadvertently disincentivize
consumers from reporting changes. Importantly, we are of the view that
structuring Exchange operations in the manner proposed would ensure
accurate APTC determinations to the extent possible. Such a posture
would enhance program integrity by ensuring that enrollees receive no
more APTC than they have been determined eligible for after
verification of their applicable enrollment information. Ultimately,
such an approach reduces unnecessary Federal APTC outlays in the event
attestations are inaccurate while safeguarding consumers from large tax
liabilities, preventing an unnecessary cycle of APTC payment and
repayment.
We considered another alternative approach, which would require
Exchanges to remove APTC or CSRs during inconsistency periods. This
approach would require individuals to pay the full premium to maintain
coverage, which could be unaffordable for many individuals and result
in them terminating coverage. That outcome could have a destabilizing
impact on risk pools due to increases in adverse selection, as
individuals with greater health needs would be more likely to maintain
coverage (whether by quickly resolving DMIs or paying the full cost of
premiums) than healthy individuals. Furthermore, we are of the view
that it is important to structure the Exchange rules such that
enrollees are motivated to report changes as required. Requiring
Exchanges to terminate APTC or CSRs for consumers who report a change
that results in a DMI related to the applicable enrollment information
would likely discourage consumers from reporting changes.
We acknowledge that this proposal may require Exchanges to modify
application and enrollment processes to accommodate scenarios where
APTC and CSRs are maintained and those where APTC and CSRs are
decreased. We especially acknowledge the burden that this change may
impose on State Exchanges and the operational costs that may be
incurred to implement these changes. However, given the high likelihood
that individuals may experience significant changes during the benefit
year after their applicable enrollment information has been verified,
it is critical that Exchanges implement these new requirements to
motivate individuals to report changes that accurately represent their
circumstances. Exchanges may leverage existing infrastructure to
implement these changes, such as current functionality that enables
Exchanges to maintain APTC and CSRs during an inconsistency period, or
functionality that adjusts or removes APTC as required by section
1411(e)(4)(B)(ii) of the Affordable Care Act as described above.
We also acknowledge that this proposal would require changes to
existing enrollee communication procedures and associated
infrastructure. In particular, enrollees may find it difficult to
distinguish between scenarios where their APTC or CSRs would be
maintained compared to those where APTC or CSRs would be reduced.
Importantly, while alternative approaches such as removing APTC or CSRs
altogether or requiring enrollees to
[[Page 67675]]
manually adjust APTC may appear simpler on their face, such approaches
would simply shift complexity on to the enrollee at a later moment in
the enrollment process, such as at the point of plan selection or
enrollment where an enrollee (or an agent or broker applying on their
behalf) must manually adjust their APTC or at tax reconciliation, where
the enrollee may incur tax liabilities. Such approaches would likely
deter enrollees from reporting changes during the benefit year.
We expect Exchanges to identify communication strategies that are
tailored to their enrollee populations, such as updated eligibility
determination notices that describe APTC or CSR changes following a
mid-benefit year change, text message alerts to enrollees when APTC or
CSRs are reduced, dynamic messaging for consumers after application
submission and so on. We note that State Exchanges have successfully
absorbed comparable operational changes, such as changes resulting from
Medicaid unwinding from 2023-2024, suggesting that system changes such
as these are likely within existing institutional capacity and would
not impose a burden once integrated into normal operations. We
anticipate that enrollee familiarity (as well as that of assisters,
agents, and brokers that assist enrollees) will increase across
enrollment cycles as their application better reflects the enrollee's
most recent applicable enrollment information.
To summarize, we propose the addition of Sec.
155.315(f)(4)(iii)(A) and (B) to describe the requirements for
providing APTC and CSRs for enrollees who have reported a change during
the plan year that results in a DMI related to applicable enrollment
information (such as household income), after an Exchange has completed
verification of those same criteria for the same plan year using the
enrollee's information from their immediately preceding eligibility
determination. We propose that Exchanges would be required to maintain
the amount of APTC or CSRs if a reported change results in an amount of
APTC or CSRs that is in excess of or equal to the amount of APTC or
CSRs previously determined for the individual. We propose that
Exchanges would be required to reduce APTC or CSRs based on the
individual's attested income if a reported change results in an amount
of APTC or CSRs that is lower than the amount previously determined for
the individual.
We seek comment on this proposal. We understand State Exchanges may
find it challenging to implement these requirements for PY 2028.
Therefore, we are considering providing flexibility for State Exchanges
to delay implementation of this proposal for enrollees who have
reported a change during the plan year until PY 2029. We seek comment,
in particular from State Exchanges, about whether the availability of
this flexibility would be useful to ease the burden of implementing the
requirements in this proposed rule.
5. Verification Process Related to Eligibility for Insurance
Affordability Programs (Sec. 155.320(c))
We do not propose any changes to the existing regulatory
requirements at Sec. 155.320(c) related to verification of family size
as described further in this section. However, we seek comment on how
we might strengthen requirements for Exchanges to verify family size in
the future. We also seek comment on how Exchanges could verify family
size using data sources, and which data sources we should consider
making available for Exchanges, with the ultimate goal of increasing
program integrity, while minimizing burden for Exchanges and consumers,
and limiting the cost for Exchanges to procure new data sources.
As background, to be eligible to receive APTC or CSRs, applicants
or enrollees must provide certain information regarding the individuals
that make up their tax household, including their relationship to the
tax filer (the tax anchor on the application) and tax filing status,
according to section 1411(b)(3)(A) of the Affordable Care Act. Under
section 1411(c)(3) of the Affordable Care Act, the Secretary of HHS
must submit the family size information collected by Exchange
applications to the Secretary of the Treasury for verification of both
household income and family size.
Per current Sec. 155.320(c)(3)(i)(A), an Exchange must require an
applicant or enrollee applying for coverage with financial assistance,
such as APTC and CSRs, to attest to information about the individuals
that comprise the tax filer's family. If an applicant or enrollee
attests that a change in circumstance has occurred or is likely to
occur that would result in an inaccurate projection of their family
size for the year for which they are applying for coverage, and so it
is not representative of the family size for the plan year, an Exchange
may accept the applicant or enrollee's attestation without further
verification, per Sec. 155.320(c)(3)(i)(C), as long as the data
provided by the applicant is reasonably compatible with other
information provided about their family. If the data provided by the
applicant or enrollee is not reasonably compatible with other
information provided by the application filer for the family, an
Exchange generally must utilize data obtained through other electronic
data sources to verify the attestation. If such data sources are
unavailable or information in such data sources is not reasonably
compatible with the applicant or enrollee's attestation, an Exchange
must request additional documentation to support the attestation,
consistent with current Sec. 155.315(f).
Currently, the FFE application prompts the applicant or enrollee to
provide information about their tax filing status and the current
makeup of their household, including any dependents they plan to claim
on their Federal income tax return. However, the FFE application does
not allow the applicant or enrollee to provide a specific number of
family members in their household. Rather, the FFE's eligibility logic
works to calculate the applicant's family size based upon the
information the applicant or enrollee has provided in their application
regarding tax filing status and any dependents they listed.
In light of the new requirements in the WFTC legislation, we wish
to revisit family size verification and solicit comment from interested
parties on possible alternatives, new data sources, or other
enhancements that Exchanges could implement to strengthen family size
verification. We explored additional ways Exchanges could strengthen or
enhance their verification procedures for family size, but discovered
some important challenges Exchanges would likely face, which we discuss
in more detail in the remainder of this section.
First, we are not aware of any existing external data source
currently used by any Federal agency to verify an applicant or
enrollee's current or future family size, other than Federal income tax
return data that Exchanges access through the IRS Hub service.
Exchanges could potentially use this data to verify family size by
calculating the number of dependents an applicant or enrollee claimed
on their tax return and comparing with the number of dependents
attested to on the coverage application; however, any such estimate is
likely to often be incorrect, since IRS displays tax data for the most
recent tax year for which data is available, which is typically 1 to 3
years prior to the current coverage year, due to the time delay between
a tax return being filed and the time period the tax data represents,
and the consumer's family
[[Page 67676]]
size may have changed during that timeframe. Furthermore, the
operational process to determine the number of dependents a tax filer
plans to claim on their tax return is difficult for both an Exchange
and consumers because changes to family size during the plan year may
cause inconsistencies when trying to match against IRS data. For
example, an applicant or enrollee who gains a dependent via a birth in
October 2026 and applies for coverage during the OEP in November 2026,
would not be able to electronically verify his or her family size using
IRS data. This is because that new dependent was not included on the
applicant's most recent Federal income tax return and, therefore, IRS
data will not have any record of that new dependent until the applicant
or enrollee claims them on their 2026 tax return filed in 2027. A
relative dearth of data available to prove changes in a consumer's tax
household size is a major challenge with verifying family size through
IRS tax data.
A second challenge for Exchanges verifying family size is
navigating the complicated rules relating to who qualifies as a tax
filer's dependent on their tax return. In general, a consumer is able
to claim an individual as a dependent if (1) the individual is a U.S.
citizen, a U.S. national, U.S. resident, or a resident of Canada or
Mexico, (2) the individual, if married, does not file a joint return
with his or her spouse except in limited situations, and (3) the
individual is a qualifying child or a qualifying relative of the
consumer. Additional tests must be met for an individual to qualify as
a qualifying child or qualifying relative of a consumer. In addition,
it is possible for an individual to be a qualifying child of more than
one tax filer, and in those situations, there are tiebreaker rules to
determine which tax filer can claim the individual as a dependent.
Because of these complex rules, it may be difficult for tax filers to
provide documentation supporting the attested family size provided on
their application.
While considering the current challenges that Exchanges face
regarding family size verification discussed previously and the new
requirements in section 71303 of the WFTC legislation, we also
considered two potential approaches to strengthen or enhance family
size verification for applicants or enrollees applying for Exchange
coverage with APTC/CSRs. The first approach involved setting a family
size DMI for all applicants or enrollees whose reported household size
did not match their household size in IRS tax data. Based on our
analysis of FFE data that looked at IRS response codes from consumers
for PY 2024 and PY 2025, we found that household size data from IRS
could not be returned for 13,423,627 applications, out of a total of
30,328,781, which is roughly 44 percent. While many reasons may have
contributed to a lack of available IRS data for these consumers, this
approach could result in almost half of all applicants receiving a
family size DMI, which would require significant technical and
operational updates for all Exchanges. Additionally, we expect that the
percentage of applicants or enrollees who successfully resolve their
family size DMI would be low, given the lack of available documentation
types for an applicant to prove tax family size. Moreover, there is a
high likelihood of inaccurate DMI processing, due to the complexities
in tax rules for claiming dependents. A notable concern with this
approach is that if an applicant's or enrollee's family size DMI could
not be resolved, then APTC would be removed for the entire household.
Finally, this approach may have negative impacts on the risk pool as it
may lower overall participation in Exchanges due to the increased
burden to resolve DMIs, thus increasing the risk of adverse selection
as certain populations, such as younger individuals, would choose to
forego Exchange coverage.
A second option we explored was a targeted, risk-based approach to
modifying the family size verification process. We explored if an
Exchange could either randomly verify a specific percentage of
households, verify family size changes greater than two when compared
to IRS tax data, verify family sizes greater than a certain amount of
people, or verify non-applicant dependents without an SSN. This option
would require the same technical and operational updates as the first
option but would result in fewer DMIs. However, similar to the first
option, we anticipate the percentage of applicants who would
successfully resolve their family size DMI would be low due to the lack
of available documentation options to prove tax family size. This
option would likely have less of a negative impact on the risk pool as
compared to the first option as a smaller subset of applicants would
receive a DMI.
Given that Exchanges face such extensive challenges and costs
associated with enhancing family size verification operations, we
propose to retain the current regulatory requirements regarding
verification of family size as outlined in Sec. 155.320(c). We are of
the view that the current regulatory requirements and Exchange
operations to verify family size are sufficient given the challenges we
discussed earlier in this section. We note that historically, we have
seen very limited cases of fraud as it relates to family size, however,
we are still interested in ways to potentially strengthen or enhance
family size verification, in a way that is both cost-efficient for
Exchanges and minimally burdensome on consumers.
We seek comment on alternatives and invite interested parties to
share their experiences with family size verification, including
challenges, risk for family size fraud, feasibility of other
verification approaches such as risk-based verification, and cost/
budget impacts.
6. Eligibility Redetermination During a Plan Year (Sec. 155.330)
a. Effective Dates for Enrollee-Reported Changes (Sec. 155.330(f)(1))
(i) Summary of Proposed Effective Dates for Enrollee-Reported Changes
In Sec. 155.330(f)(1), we propose that if an Exchange redetermines
an enrollee's eligibility to enroll in a QHP, for APTC, or for CSRs
because the enrollee has provided updated information to the Exchange,
such redetermination of eligibility would become effective on the first
of the month following an Exchange's eligibility redetermination. We
clarify that, throughout this section, when we refer to a
redetermination of APTC or CSR eligibility, we are referring to both
redeterminations that result in a consumer becoming eligible for a
different amount or level of APTC or CSR, as applicable, and
redeterminations that result in a consumer becoming newly eligible or
ineligible for APTC or CSRs.
The proposal in Sec. 155.330(f)(1) would maintain the general rule
currently in Sec. 155.330(f)(1)(i) that eligibility updates resulting
from enrollee-reported changes must be effective on the first of the
month following an Exchange's eligibility redetermination. Currently,
Sec. 155.330(f)(1)(i) provides that eligibility changes ``resulting
from a determination under this section'' must be effective on the
first of the month following the date of the consumer's eligibility
determination notice, subject to certain exceptions enumerated in Sec.
155.330(f)(2) through (5). Determinations ``under this section''
include both enrollee-reported changes as described in Sec.
155.330(e)(1), as well as determinations made as part of the periodic
data matching process described in Sec. 155.330(e)(2). We propose
effective dates for determinations made as part of the periodic data
matching process in proposed Sec. 155.330(f)(3),
[[Page 67677]]
discussed in section III.A.6.c. of this proposed rule.
Proposed Sec. 155.330(f)(1) would apply to eligibility
redeterminations when an enrollee provides updated information to an
Exchange and the Exchange determines the enrollee has an inconsistency.
For example, Sec. 155.330(f)(1) would apply if an Exchange determines
that an enrollee's APTC or CSRs, as applicable, needs to be reduced
during their inconsistency period because they have a DMI as described
in proposed Sec. 155.315(f)(4)(iii)(B). In these cases, the
redetermination of the enrollee's APTC or CSRs eligibility would be
effective on the first of the month following the Exchange's
eligibility redetermination.
At Sec. 155.330(f)(1)(i), we propose an exception such that, if
the Exchange redetermines an enrollee's eligibility because the
enrollee has provided updated information to the Exchange, and the
Exchange also determines that the enrollee qualifies for certain SEPs
described in Sec. 155.420(b)(2)(i) or (b)(2)(iii), then the Exchange
would implement the enrollee's eligibility redetermination on the
coverage effective dates described in Sec. 155.420(b)(2)(i) or
(b)(2)(iii), respectively.
Current Sec. 155.330(f)(1)(iii) specifies that eligibility changes
``affecting enrollment or premiums only'' must be effective on the
first day of the month following the date ``the Exchange is notified of
the change.'' Under our proposed restructure of Sec. 155.330(f), we
propose that all enrollee-reported changes, including those affecting
enrollment or premiums only, would be subject to the effective dates
under proposed Sec. 155.330(f)(1) and therefore would generally be
effective on the first of the next month following the eligibility
determination. For Exchanges on the Federal platform, we clarify that
even if a reported change only affects enrollment or premiums, an
Exchange generally also redetermines an enrollee's eligibility for
enrollment in a QHP and for APTC and CSRs, as applicable, before
sending an updated transaction to the enrollee's issuer. We request
comment from State Exchanges regarding whether State Exchanges also
redetermine enrollees' eligibility in cases in which a reported change
only affects enrollment or premiums, such that proposed Sec.
155.330(f)(1) would apply. We also note that Sec. 155.400(b)(1)
requires Exchanges to send all eligibility and enrollment information,
which includes updates on eligibility and enrollment, to issuers
``promptly and without undue delay.''
(ii) Proposal to No Longer Allow Exchanges To Delay Effective Dates for
Enrollee-Reported Changes
Current Sec. 155.330(f)(2) provides an exception to current Sec.
155.330(f)(1), permitting Exchanges to delay the effective dates of
eligibility redeterminations by one month if they occur on or after the
15th of a month. For example, if an enrollee reported a change in
income to an Exchange and an Exchange redetermined the enrollee's
eligibility for APTC and CSRs on May 20, an Exchange could delay the
effective date of the resulting APTC and CSR change from June 1, as
prescribed under the general rule at current Sec. 155.330(f)(1), to
July 1, as permitted in current Sec. 155.330(f)(2). In proposed Sec.
155.330(f)(1), we propose that Exchanges would no longer be permitted
to delay the effective dates for eligibility redeterminations resulting
from enrollee-reported changes in the manner allowed by current Sec.
155.330(f)(2). As proposed at Sec. 155.330(f)(1), all eligibility
redeterminations resulting from enrollee-reported changes would be
effective the first of the month following an Exchange's
redetermination, with limited exceptions for scenarios where the
enrollee also qualifies for certain SEPs. As a result, in the example
described previously, a change in eligibility for APTC and CSRs
resulting from an enrollee reporting a change to their income on May 20
would be effective on June 1, and Exchanges would not be permitted to
delay the effective date for such changes to July 1.
We propose to no longer allow the exception currently at Sec.
155.330(f)(2) for eligibility redeterminations following enrollee-
reported changes for several reasons. First, the redeterminations
discussed in proposed Sec. 155.330(f)(1) would be limited to enrollee-
reported changes, where the enrollee is actively engaging with the
Exchange. They would not apply to determinations as part of the
periodic data matching process or following the expiration of an
inconsistency period, where the Exchange is redetermining eligibility
without the enrollee's active engagement. When an enrollee reports a
change to the Exchange, the enrollee is typically informed of the
results of their redetermination in real-time, and there is therefore
no compelling need to delay the effective date of the redetermination
to ensure that an Exchange is able to communicate with the enrollee
regarding the change before it takes effect.
Second, the elimination of the limitations on repayment of excess
APTC starting in PY 2026, required by section 71305 of the WFTC
legislation, makes it even more important that Exchanges apply the
changes that enrollees report without delay, to reduce the risk that
consumers who accurately report changes to the Exchanges are faced with
increased tax liability despite their efforts to proactively report
changes. We seek comment on the proposal to remove the exception
currently at Sec. 155.330(f)(2) regarding eligibility redeterminations
following enrollee-reported changes.
Similarly, for redeterminations resulting from enrollee-reported
changes, we are proposing to remove Sec. 155.330(f)(3), which provides
that if a change results in decreased APTC or a change in CSR
eligibility, and the redetermination occurs after the 15th of a month,
Exchanges are required to delay the effective date of such eligibility
redeterminations by one month. For example, if an enrollee reports an
increase in income to an Exchange and the Exchange determines on May 20
that the enrollee is eligible for less APTC, an Exchange is required to
delay the effective date of the resulting decrease in APTC from June 1,
as prescribed under the general rule at current Sec. 155.330(f)(1), to
July 1, as required by the exception in current Sec. 155.330(f)(3).
For enrollee-reported changes, we are proposing to remove the required
delay at Sec. 155.330(f)(3) for the same reasons we are proposing to
remove the option for Exchanges to delay under Sec. 155.330(f)(2). For
redeterminations not resulting from enrollee-reported changes--
specifically, those resulting from the expiration of an inconsistency
period or periodic data matching--we propose to maintain the required
delay for redeterminations that result in a decreased amount of APTC or
decreased level of CSR. This proposal is discussed in detail in section
III.A.6.c. of this proposed rule.
We considered proposing an alternative under which Exchanges would
be required or permitted to immediately implement eligibility
redeterminations resulting from enrollee-reported changes. However, we
determined that immediate, mid-month adjustment of APTC and CSRs would
be more difficult for Exchanges and issuers to implement. Changes to
APTC and CSR amounts in the middle of a month would require Exchanges
and issuers to prorate both APTC and premium amounts and would require
issuers to retroactively re-bill consumers for the month in which the
change was reported. For these reasons, we are proposing at Sec.
155.330(f)(1) that eligibility redeterminations resulting
[[Page 67678]]
from enrollee-reported changes become effective on the first of the
month following an Exchange's redetermination.
(iii) Enrollee-Reported Changes Resulting in an SEP
Current Sec. 155.330(f)(4) provides another exception to current
Sec. 155.330(f)(1), requiring that eligibility redeterminations
associated with an SEP due to gaining or becoming a dependent through
birth, adoption, foster care, child support, or court order, as
described at Sec. 155.420(b)(2)(i), become effective on the SEP
effective dates prescribed in Sec. 155.420(b)(2)(i). We are proposing
to maintain this exception at proposed Sec. 155.330(f)(1)(i). This
exception ensures that if, for example, an enrollee adds a newborn to
their application, the resulting redetermination of the enrollee's
eligibility due to their change in family size is effective retroactive
to the newborn's date of birth.
Current Sec. 155.330(f)(4) further provides that eligibility
redeterminations associated with an SEP due to marriage become
effective on the SEP effective dates prescribed in Sec.
155.420(b)(2)(ii). We are not proposing to maintain this exception in
proposed Sec. 155.330(f)(1)(i), because Sec. 155.420(b)(2)(ii)
requires that coverage selected in accordance with an SEP due to
marriage becomes effective on the first of the month following plan
selection. Therefore, for consumers with a marriage SEP, their coverage
effective date already generally aligns with the effective dates for
eligibility redeterminations proposed at Sec. 155.330(f)(1).
Current Sec. 155.330(f)(5) provides an exception to current Sec.
155.330(f)(1) such that eligibility changes associated with an SEP
described in Sec. 155.420(d)(4), (d)(5), and (d)(9) may be effective
``based on the specific circumstances of each situation.'' The SEP at
Sec. 155.420(d)(4) is for qualified individuals who experience an
error of the Exchange; the SEP at Sec. 155.420(d)(5) is for enrollees
whose QHP violates a material provision of its contract with the
enrollee; and the SEP at Sec. 155.420(d)(9) is for qualified
individuals who experience an exceptional circumstance. In proposed
Sec. 155.330(f)(1)(i), we are proposing that if an Exchange determines
that an enrollee qualifies for any of the SEPs enumerated in Sec.
155.420(b)(2)(iii)--which include the SEPs described at Sec.
155.420(d)(4), (d)(5), and (d)(9)--then the enrollee's eligibility
redetermination would be effective on the coverage effective date
prescribed by Sec. 155.420(b)(2)(iii). Section 155.420(b)(2)(iii)
provides that the Exchange ``must ensure that coverage is effective on
an appropriate date based on the circumstances of the special
enrollment period.'' Therefore, we are proposing to maintain the
flexibility currently permitted under Sec. 155.330(f)(5) for Exchanges
to establish appropriate eligibility redetermination effective dates
for enrollees who qualify for these SEPs.
We are newly proposing that an Exchange follow the same eligibility
redetermination effective date rules for an individual eligible for the
three other SEPs enumerated in Sec. 155.420(b)(2)(iii): the SEP at
Sec. 155.420(d)(11) for qualified individuals who are determined
ineligible for Medicaid or CHIP after their enrollment period has
ended; the SEP at Sec. 155.420(d)(12) for enrollees whose enrollment
was influenced by a material error regarding certain plan
characteristics; and the optional SEP at Sec. 155.420(d)(13) for
individuals who resolve an inconsistency after their QHP has been
terminated. We do not see a compelling reason to impose different
eligibility redetermination effective date rules for enrollees with
these SEPs as compared to the SEPs at Sec. 155.420(d)(4), (d)(5), and
(d)(9), given that Exchanges have the discretion to establish
appropriate coverage effective dates for all of these SEPs under Sec.
155.420(b)(2)(iii). Because Sec. 155.330(f)(5) was finalized prior to
these SEPs being established, we are of the view that the lack of
reference to these SEPs at Sec. 155.330(f)(5) is merely an oversight.
We seek comment on this proposal. Specifically, we seek comment
from State Exchanges and other interested parties regarding any
operational burden these proposed changes to current effective date
policies would create, and whether a 1-year delay in implementation
would mitigate any expected risk of State Exchanges having insufficient
time to make necessary updates to their IT systems.
b. Effective Dates Related to the Resolution of DMIs (Sec.
155.330(f)(2))
In section III.A.4.b.iv. of this proposed rule and at proposed
Sec. 155.315(f)(4)(iv)(A), we propose effective date rules for APTC
and CSR determinations resulting from the resolution of DMIs described
in Sec. Sec. 155.315(f)(4)(ii) and 155.315(f)(4)(iii)(A) for
individuals who are enrolled in a QHP when such DMIs are resolved. In
Sec. 155.330(f)(2), we propose to cross-reference the effective dates
proposed in Sec. 155.315(f)(4)(iv)(A), such that the same effective
date rules proposed in Sec. 155.315(f)(4)(iv)(A) would apply for
individuals described in Sec. 155.330--that is, QHP enrollees whose
eligibility is redetermined during the coverage year due to the
resolution of such DMIs.
Specifically, as proposed at Sec. 155.315(f)(4)(iv)(A), for
individuals who are enrolled in a QHP when their DMIs are resolved, any
changes to the eligibility or amount of APTC or CSRs resulting from the
DMI resolution would be effective on the first day of the first month
in which all of the following criteria are met: all information related
to the applicant's DMIs are verified for the month; the enrollee is
enrolled in a QHP on the first day of the month; and the enrollee's
DMIs were generated before the first of such month. We further propose
an exception to these rules in cases where they would result in an
Exchange determining or redetermining APTC eligibility for months in a
prior coverage year.
We propose to align the effective dates proposed in Sec.
155.330(f)(2) with those described at proposed Sec.
155.315(f)(4)(iv)(A) for the following reasons.
Section III.A.4.b.iv. of this proposed rule and proposed Sec.
155.315(f)(4)(iv)(A)(1) provide that an Exchange's determination of
APTC or CSR eligibility upon DMI resolution would not be effective
prior to the first day of the first month for which the Exchange
verified all eligibility criteria described in proposed Sec.
155.315(f)(4)(ii). In section III.A.4.b.iv. of this proposed rule, we
explain that this proposal implements the requirement in section
36B(c)(5)(C) of the Code, which specifies that a month beginning prior
to verification must only be considered a coverage month if the
Exchange verifies the consumer's eligibility ``for such month.'' We
propose to apply the same principle for enrollees who resolve a DMI
described at Sec. 155.315(f)(4)(ii) or Sec.
155.315(f)(4)(iv)(iii)(A), such that any redetermination of APTC or CSR
eligibility resulting from such DMI resolution does not take effect
prior to the first month in which the enrollee's newly attested
eligibility criteria are verified. This proposal ensures equitable
treatment of new and existing enrollees regarding when their APTC and
CSRs can begin or increase following DMI resolution.
Section III.A.4.b.iv. of this proposed rule and proposed Sec.
155.315(f)(4)(iv)(A)(2) further provide that an Exchange's
determination of APTC or CSR eligibility upon DMI resolution would not
be effective prior to the first day of the first month that the
enrollee is enrolled in a QHP. In
[[Page 67679]]
section III.A.4.b.iv. of this proposed rule, we explain that allowing
retroactive APTC or CSRs to extend further would produce illogical
outcomes given that section 36B(c)(2)(A)(i) of the Code requires that a
taxpayer or their family member must be enrolled in a QHP as of the
first of the month for the month to be considered a coverage month.
With regard to the enrollees described in this section, we have
similarly determined that allowing redeterminations of APTC or CSR
eligibility to take effect prior to QHP enrollment is illogical and
should be prevented.
Section III.A.4.b.iv. of this proposed rule and proposed Sec.
155.315(f)(4)(iv)(A)(3) provide that an Exchange's determination of
APTC or CSR eligibility upon DMI resolution would not be effective
prior to when the consumer's DMIs were generated. We explain in section
III.A.4.b.iv. of this proposed rule that this proposal aligns with
Exchanges' existing effective date framework, under which changes to
eligibility are generally implemented prospectively, in relation to
when the consumer provides the attestations that produce such changes
in eligibility. This existing principle also applies to
redeterminations described in this section.
Finally, in section III.A.4.b.iv. of this proposed rule and at
proposed Sec. 155.315(f)(4)(iv)(A)(4), we describe an exception to the
effective date rules proposed at Sec. 155.315(f)(4)(iv)(A)(1) through
(3). Specifically, if these rules would result in an APTC effective
date in the prior coverage year, we propose that the Exchange would not
provide or increase APTC for those months in the prior year. This
exception is intended to mitigate tax administration issues and
consumer burden that would result if Exchanges provided APTC for a
month after the Exchange had already generated a consumer's Form 1095-A
for the coverage year. These tax administration issues pertain to both
initial eligibility determinations and to the redeterminations
described in this section. Therefore, we are proposing to adopt the
same rules for APTC and CSR redeterminations for QHP enrollees whose
eligibility is redetermined during the coverage year due to the
resolution of their DMIs.
We seek comment on this proposal.
c. Effective Dates for Redeterminations Following Expiration of
Inconsistency Period or Periodic Data Matching (Sec. 155.330(f)(3))
In Sec. 155.330(f)(3), we propose effective date rules for
eligibility redeterminations following the expiration of an
inconsistency period or as part of the periodic data matching process
described at Sec. 155.330(e)(2). Currently, these rules are primarily
enumerated in Sec. 155.330(f)(3), which covers redeterminations that
result in a decreased amount of APTC, or a change in the level of CSRs.
We clarify that current Sec. 155.330(f)(3) also applies in cases where
an enrollee is redetermined newly ineligible for QHP, APTC, or CSRs.
While current Sec. 155.330(f)(3) does not explicitly refer to the end
of an inconsistency period or periodic data matching processes, these
situations are covered under Sec. 155.330(f)(3) because they generally
result in the removal or reduction of APTC.
Current regulations at Sec. 155.330(f)(3) provide that such
decreases in amount of APTC or in the level of CSRs must be effective
the first of the month following the redetermination, unless the
redetermination occurs after the 15th of the month, in which case the
Exchange must delay the effective date by one month. At Sec.
155.330(f)(3)(i), we are proposing to maintain these effective date
rules in cases where an eligibility redetermination is the result of an
inconsistency period expiring or a periodic data matching process
ending, and such redetermination results in a decreased amount of APTC
or decreased level of CSRs.
Consider an example in which an enrollee is found, through the
periodic data matching process described in Sec. 155.330(e)(2), to be
enrolled in other MEC, and in which an Exchange notifies the enrollee
regarding this updated information on May 20. In accordance with Sec.
155.330(e)(2)(i)(B), an Exchange provides the enrollee with 30 days, or
until June 19, to respond to their notice. If the enrollee has not
responded by the end of this 30-day period, an Exchange must
redetermine the enrollee's eligibility, in which case the enrollee
would be determined ineligible for APTC because they are enrolled in
other MEC. Under current Sec. 155.330(f)(3), because this eligibility
redetermination results in a decrease in APTC and occurs on June 19,
the eligibility redetermination must be effective on August 1. Under
proposed Sec. 155.330(f)(3)(i), this rule would be maintained, and the
eligibility determination would also be effective on August 1.
We also propose to maintain the rules currently at Sec.
155.330(f)(3) for eligibility redeterminations following the end of an
inconsistency period, where the redetermination results in decreased
APTC or a decreased level of APTC or CSRs. In a similar example where
an enrollee's 90-day inconsistency period expires on June 19, the
resulting eligibility determination would continue to be effective on
August 1.
We are proposing to keep these rules for several reasons. First,
unlike cases where a consumer is reporting updated information to the
Exchange, consumers whose APTC or CSRs are redetermined following the
end of an inconsistency period or as part of the periodic data matching
process are not actively engaged with the Exchange. Therefore, a delay
between any reduction to the consumer's APTC or level of CSRs and the
effective date of that redetermination is appropriate to give the
Exchange sufficient time to communicate the upcoming change in
eligibility to the consumer. Second, section 71303 of the WFTC
legislation does not require Exchanges to update existing effective
date rules for inconsistency period expiration or periodic data
matching processes or to implement such redeterminations as soon as
possible.
Finally, we have determined that maintaining these existing rules
is operationally simpler for Exchanges than requiring a change to
existing policy and operations. We acknowledge that the proposals in
this rule would require Exchanges to make significant changes to their
systems on a short timeline to meet statutory deadlines. To increase
the likelihood that Exchanges can successfully implement the many
changes already required by the WFTC legislation and that would be
required by this proposed rule, and for the other reasons stated above,
we propose to maintain the existing effective date policy with regard
to periodic data matching and DMI expirations that result in a
reduction in APTC or CSRs.
There are cases in which the expiration of an inconsistency period
may instead result in the Exchange determining a consumer eligible for
the same or an increased amount of APTC, or the same or a more generous
level of CSRs. In accordance with Sec. 155.315(f)(5), at the end of an
inconsistency period, if an Exchange remains unable to verify an
attestation, an Exchange must determine a consumer's eligibility based
on information available from trusted data sources. In the case that
the Exchange obtains income data from the Department of Treasury, as
described in Sec. 155.320(c)(1)(i) and (ii), but such data does not
verify the consumer's attestation of their income, the Exchange must
determine eligibility based on this data at the end of the consumer's
inconsistency period. Depending on the consumer's income attestation
and the data available to the
[[Page 67680]]
Exchange from the Department of Treasury, this could result in the
Exchange determining the consumer eligible for more APTC or a more
generous level of CSRs than provided during their inconsistency period.
Currently, such redeterminations are subject to the effective date
rules in Sec. 155.330(f)(1)(i) and (f)(2). These current rules give
Exchanges the option to either consider such redeterminations effective
the first of the month following the date of the redetermination
notice, or to delay the effective date by a month, if the
redetermination occurred after the 15th of the month.
Additionally, given the proposals enumerated in proposed Sec.
155.315(f)(4)(ii) and (iii), the end of an inconsistency period may
result in no change to a consumer's APTC or CSR eligibility. For
example, if a consumer has a DMI related to their enrollment in other
MEC, and the Exchange determines in accordance with the requirements in
Sec. 155.315(f)(4)(ii) and (iii) that the enrollee cannot be provided
with APTC or CSRs during their inconsistency period, then the
expiration of such inconsistency period simply confirms the consumer's
ineligibility for APTC or CSRs and does not result in an increase or
decrease.
At Sec. 155.330(f)(3)(ii), we propose that, for redeterminations
following the expiration of an inconsistency period or periodic data
matching that result in the same or an increased amount or level of
APTC or CSRs, the Exchange be required to implement such
redeterminations on the first of the month following the
redetermination. This maintains the general requirement currently
enumerated at Sec. 155.330(f)(1) but removes the flexibility for
Exchanges to delay such effective dates until the first of the
following month afforded under Sec. 155.330(f)(2).
We propose these rules regarding redeterminations following the
expiration of an inconsistency period or periodic data matching that
result in an increased amount or level of APTC or CSRs for several
reasons. First, eliminating the flexibility currently permitted under
Sec. 155.330(f)(2) better ensures timely access to APTC and CSRs for
eligible consumers. While enrollees in this scenario are not actively
engaged with the Exchange, we see no reason to delay implementing a
change that results in the same or more APTC or CSRs. In contrast, for
a change that results in a decrease of APTC or CSRs, we determined a
delay would be justified to ensure consumers receive timely notice. In
addition, proposing to remove the flexibility currently permitted under
Sec. 155.330(f)(2) for these eligibility redeterminations aligns with
our proposed effective date rules for enrollee-reported changes,
described in section III.A.6.a. of this proposed rule, thereby
promoting a consistent set of rules.
We seek comment on this proposal.
d. Effective Dates for Appeals (Sec. 155.330(f)(4))
We are proposing to redesignate current Sec. 155.330(f)(1)(ii),
regarding effective dates for redeterminations resulting from an appeal
decision, as proposed Sec. 155.330(f)(4), with some minor wording
changes. This would maintain the current requirement that, in cases
where an Exchange redetermines eligibility due to an appeal decision,
that the change in eligibility must be effective on the date specified
in the appeal decision.
We seek comment on this proposal.
7. Annual Eligibility Redetermination (Sec. 155.335)
We propose to modify the title of this section to ``Annual
eligibility redetermination and re-enrollment.'' We propose to amend
Sec. 155.335 by revising Sec. 155.335(a) and (b); removing Sec.
155.335(c) through (i); redesignating Sec. 155.335(j) as new Sec.
155.335(c); and removing Sec. 155.335(k) through (n). Current Sec.
155.335(a) through (i) and (k) through (n) include procedures required
for an Exchange to annually redetermine eligibility for APTC and CSRs
using the information previously provided by an enrollee in a QHP for
the current plan year, or an earlier plan year, along with updated
information from trusted data sources, when the enrollee does not
contact the Exchange during the annual OEP to update their eligibility
information. We are proposing to no longer permit these procedures.
Proposed Sec. 155.335(a) would require Exchanges to redetermine
the eligibility of an enrollee for enrollment in a QHP and for APTC and
CSRs, as applicable, on an annual basis in accordance with Sec.
155.305 and adhere to the existing notification standard for
eligibility determinations under Sec. 155.310(g). Proposed Sec.
155.335(a)(1) would newly specify that for an Exchange to redetermine
an enrollee eligible for APTC and CSRs for the subsequent plan year,
the enrollee or the enrollee's application filer would be required to
provide or confirm household income and family size; U.S. citizenship
or status as a lawfully present eligible non-citizen, as applicable;
eligibility for or enrollment in other MEC; and place of residence for
the subsequent plan year on or after August 1 and no later than
December 31 of the year preceding the applicable plan year, and the
Exchange would verify the specified eligibility information using the
processes in Sec. Sec. 155.315 and 155.320, including the relevant
provisions in those sections regarding DMIs.
We propose to modify Sec. 155.335(b) to specify that the annual
eligibility redetermination of QHP and for APTC and CSRs, as
applicable, would be effective on the first day of the applicable plan
year. We propose an exception to this effective date for the
redetermination of APTC and CSRs in instances where an enrollee has an
unresolved DMI under Sec. 155.315(f)(4)(ii) as of December 31 of the
year preceding the plan year and for whom APTC and CSRs are not
provided during the inconsistency period. In these instances, we
propose that the redetermination of APTC and CSRs under this part take
effect in accordance with Sec. Sec. 155.315(f)(4)(iv)(A) or
155.330(f)(3), as applicable.
Proposed Sec. 155.335(c) would retain the QHP re-enrollment
standards currently at Sec. 155.335(j). We also clarify that under
Sec. 155.1200(b)(2), State Exchanges would still be required to submit
information annually to HHS for HHS oversight on operations regarding
Sec. 155.335.
Section 71303(a) of the WFTC legislation specifically states that
the applicable enrollment information must be ``provided or verified''
by the individual and that, generally, the term coverage month does not
include months ``before the Exchange verifies'' that information. As
described previously, PTC is allowed only for months that are coverage
months. Eligibility for PTC is determined after the end of each tax
year, based on information, such as household income and family size,
relating to the year of coverage. As a result, section 36B(c)(5)(A) of
the Code, as added by s
[…truncated; see source link]Indexed from Federal Register on October 27, 2026.
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