Federal Court Halts Key Changes to CMS Health Insurance Rule Affecting 2027 Plans

A federal judge has issued a temporary injunction against eight specific elements of the recent rule from the Centers for Medicare and Medicaid Services (CMS). This ruling arrives as insurers begin submitting plan designs and proposing premium rates for the 2027 coverage year.

The annually issued Notice of Benefit and Payment Parameters by CMS outlines modifications affecting health insurance available through Affordable Care Act exchanges. The 2027 notice, recently finalized, aimed to mitigate fraudulent activities and provide increased flexibility in marketplace offerings. Following its release in May, a lawsuit was initiated by a diverse group challenging several provisions of the notice. Consequently, on July 16, a U.S. District Court in Maryland suspended certain sections, halting their implementation temporarily.

The suspended provisions involve changes to state assessments of network adequacy and expanded criteria for income and eligibility verification during special enrollment periods. Measures allowing CMS to withhold premium tax credits from individuals not filing and reconciling tax credits from the previous year are also paused.

This suspension may pose challenges for insurers conducting actuarial analyses on their plan designs, as the deadline for submitting 2027 plan year information approaches. While an appeal from the federal government remains possible, the eight provisions will remain inactive for the 2027 plan year unless a higher court or the same court revises the order. Out of the 12 provisions contested in the lawsuit, only eight were subject to the stay request, leaving the rest unaffected.

Among the provisions still in effect are those permitting the sale of multi-year catastrophic plans and changes to insurer premium payment acceptance policies. Another continued provision is the removal of partial premium payments as a trigger for coverage termination, along with new reporting obligations for insurers.

A rule allowing non-network plan sales is still valid; however, the criteria for certifying these plans are on hold, creating uncertainty about their approval in the marketplaces during the stay. Additionally, an increase in the out-of-pocket maximum for catastrophic plans stays active, though it will only come into play starting in the plan year 2028.