DACA Recipients Lose ACA Marketplace Coverage Following Regulatory Changes

Starting August 25, over 11,000 beneficiaries of the Deferred Action for Childhood Arrivals (DACA) program will lose access to affordable healthcare due to regulatory changes that exclude them from eligibility in the Affordable Care Act (ACA) marketplace and Basic Health Programs (BHP).

This rule, introduced by the Department of Health and Human Services (HHS), reverses a 2023 Biden administration policy that categorized DACA recipients as "lawfully present," which temporarily allowed them to access subsidized health insurance. The change impacts thousands of so-called dreamers across multiple states, with California, New Jersey, Oregon, and Minnesota among those most affected. The Centers for Medicare and Medicaid Services (CMS) justifies this action by citing risk pool stabilization and financial sustainability of the healthcare system. However, health policy experts warn that excluding younger and healthier individuals from the insurance pool could increase premiums for all enrollees. While some DACA recipients may still qualify for employer-sponsored insurance or state Medicaid programs like California's Medi-Cal, many fall into a coverage gap where they make too much to qualify for Medicaid but not enough to afford private insurance without subsidies. Legal challenges against this rule are underway, with New Jersey leading a coalition of 15 states arguing that the policy harms individuals and state healthcare systems.

More broadly, the Trump administration is enacting policies that reduce access to Medicaid and eliminate subsidies for certain immigrant groups beginning in 2027, raising concerns about increased rates of uninsured individuals in vulnerable populations. Although DACA provides work authorization and deportation protection, it does not confer legal immigration status, limiting access to federal benefits. Recent statements from the Department of Homeland Security clarify that DACA beneficiaries can still face deportation and have been encouraged to "self-deport," underscoring the complicated regulatory environment affecting healthcare access for this group.