Exchange Pre-Eligibility Verification Proposed Rule (CMS 9873-P)

Introduction

Consistent with the President's goal to prevent waste, fraud, and abuse, today the U.S. Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), issued the Exchange Pre-Eligibility Verification Notice of Proposed Rulemaking. This rule would align Exchange eligibility and verification regulations with new requirements specified under the Working Families Tax Cuts (WFTC) legislation (P.L. 119-21).

The WFTC legislation amended the Internal Revenue Code to establish new eligibility requirements for the premium tax credit (PTC). The Exchange Pre-Eligibility Verification proposed rule would establish new Exchange requirements that align advance payments of the premium tax credit (APTC) and cost-sharing reductions (CSRs) eligibility with PTC eligibility changes enacted under sec. 71303 of the WFTC legislation and proposed to be codified in regulations issued by the Department of the Treasury on October 15, 2026.

Currently, when consumers apply for coverage through Exchanges, they provide certain information that Exchanges may attempt to verify electronically. If an Exchange cannot verify the information electronically, the consumer enters an inconsistency period during which they need to submit documentation to verify their information. Under existing policy established by the Affordable Care Act (ACA), Exchanges provide APTC and CSRs (collectively, financial assistance) during the inconsistency period to consumers who otherwise appear eligible. If they do not submit documentation to verify their eligibility before the end of the inconsistency period, APTC and CSRs are generally reduced or ended.

The Exchange Pre-Eligibility Verification proposed rule would require Exchanges to verify the following criteria before providing financial assistance:

• household income and family size
• status as a citizen, U.S. national, or eligible noncitizen (including lawfully present)
• eligibility for or enrollment in other qualifying coverage
• place of residence

However, under the proposed rule, consumers could enroll in Exchange coverage without financial assistance during the inconsistency period while verifications are pending.

It would also establish a verification period beginning August 1 before Open Enrollment (OE) each year to ensure that consumers have ample opportunity to provide and confirm information impacting their eligibility before the following coverage year. This proposed rule also includes provisions on annual eligibility redeterminations and re-enrollment, eligibility redeterminations during the plan year, timeline requirements for states seeking to transition to a State-based Exchange, binder payments, a waiver of the proposed verification requirements for certain Special Enrollment Periods (SEPs), effective dates for eligibility determinations, annual OE notices, and plan selection requirements.

The proposed regulations would ensure financial assistance is only provided when income can be verified, potentially reducing the risk that consumers would have to repay excess APTC at tax filing due to inaccurate income estimates. They also would reduce improper or fraudulent enrollments by requiring verification of certain eligibility criteria before providing financial assistance, improving program integrity.

The provisions in the Exchange Pre-Eligibility Verification proposed rule would be effective starting with eligibility determinations made for plan year 2028. The rule would require Exchanges to make a pre-OE verification period available starting August 1 each year ahead of OE, during which consumers could choose to provide eligibility verification information earlier for next coverage year. The first pre-OE window would start August 1, 2027, for 2028 coverage.

The Exchange Pre-Eligibility Verification proposed rule is available on the Federal Register at: https://www.federalregister.gov/public-inspection/2026-21891/patient-protection-and-affordable-care-act-exchange-pre-eligibility-verification . Stakeholders may submit public comments for a 30-day period following publication of the proposed rule.

Strengthening Program Integrity

Requiring Verification Before Receiving Financial Assistance

CMS proposes new regulations for verification requirements for consumers requesting financial assistance for Exchange coverage. Exchanges would no longer be permitted to provide financial assistance during inconsistency periods when certain eligibility criteria cannot be verified electronically. Additionally, CMS proposes that Exchanges maintain or reduce the amount of financial assistance provided during such inconsistency periods after an enrollee voluntarily reports a change in circumstances that impacts eligibility for financial help. These new requirements would help ensure that only eligible consumers receive financial assistance.

Requiring Annual Verification

CMS proposes that currently enrolled consumers would only be automatically re-enrolled with financial assistance if they return to the Exchange to confirm certain eligibility criteria annually and have it re-verified by the Exchange. Consumers who don't actively return and have their information re-verified for financial help would be automatically re-enrolled without financial assistance. The new requirement would help ensure that only eligible consumers receive financial assistance through annual re-enrollment.

Supporting Exchange Consumers

Opportunity for Verification Before Open Enrollment

Beginning August 1, 2027, CMS proposes that Exchanges provide consumers the option to submit certain eligibility information for the Exchange to verify before annual OE. CMS proposes requiring all Exchanges make this pre-OE verification period available to new and returning applicants to provide a minimum set of eligibility information and that all Exchanges start their annual pre-OE verification period on August 1 each year. By providing the early opportunity for verification, the proposed rule would help Exchange enrollees to have their eligibility fully verified before the upcoming coverage year, ensuring continuous coverage with financial assistance from year to year.

Flexible Enrollment Options for Consumers

CMS proposes requiring Exchanges to allow consumers to select a contingent plan during OE or a SEP such that the plan selection would become effective only if the consumer is determined eligible for financial assistance. This means consumers may choose a plan based on preliminary financial assistance estimates that would only start after they confirm eligibility for financial assistance. This process would enable consumers who elect not to enroll when they do not receive financial assistance during their inconsistency period to enroll once they are determined eligible for financial assistance, even if OE or their SEP, as applicable, has ended.

Ensuring Timely Access to Financial Assistance

CMS proposes new effective date rules for eligibility determinations and redeterminations made under the other proposed requirements in this rule. These proposals include new effective dates for financial assistance eligibility determinations and redeterminations after successful verification of eligibility. For consumers already enrolled in a health plan when their eligibility for financial assistance is verified, we propose providing financial assistance retroactively for the months during their inconsistency period when they were enrolled. For consumers who select a plan pending verification of eligibility for financial assistance, meaning the plan won't start until after verification, we propose that their enrollment and financial assistance become effective and will start based on when their eligibility is verified. These proposed rules would provide clarity to consumers, Exchanges, and issuers; ensure timely access to coverage and financial assistance; and limit risks of adverse selection.

Flexibility in Open Enrollment Notification

Starting with plan year 2028, CMS proposes to permit Exchanges to provide the written annual OE notification to each enrollee before the pre-OE verification period, instead of in the month before OE starts. This would permit Exchanges to design the most effective outreach strategy to educate their consumers about the earlier verification period opportunity and the annual OE.

Exception for Changes in Family Size

CMS proposes waiving new verification requirements for consumers with certain changes in family size, as outlined in Treasury's regulations, so that their financial assistance is based on their attested application information during inconsistency periods. This applies when a consumer or their household member qualifies for an SEP triggered by birth, adoption, marriage, or loss of a dependent through divorce, separation, or death (if allowed by the Exchange).

Improving Exchange Rules

Comment Solicitation on Enhancing Verification Procedures

CMS seeks comment on how to strengthen Exchange requirements to verify family size and residency, including which data sources CMS should consider using or making available. CMS seeks comment on ways to increase program integrity while limiting burden on consumers and limiting operational costs and burdens for state and federal Exchanges.

State Exchange Transitions

CMS proposes that a state submits its application for HHS' review and approval to become a State-based Exchange 15 months before a state begins operations as a State Exchange for the pre-OE verification period, instead of 15 months before OE. This would ensure the required pre-OE verification period is available to consumers when a State-based Exchange launches, removing the risk that a consumer first verifies on the Federally-facilitated Exchange (FFE) during the pre-OE verification period and then must reverify on the State-based Exchange. This requirement would ensure transitioning states align their transition timeline with the start of the pre-OE verification period, which would be the start of their operations as a State-based Exchange, instead of the start of OE.

Binder Payment Alignment

CMS proposes that the FFE and State-based Exchanges on the Federal Platform (SBE-FPs) must make prospective and retroactive enrollments under this proposed rule subject to the existing binder payment rules for prospective and retroactive enrollments, respectively. In addition, State-based Exchanges have the option to adopt the same changes. This would give issuers additional flexibility to set binder payment due dates for the proposed new enrollment scenarios.

Effective Dates

CMS proposes limited updates for current rules on effective dates for financial assistance eligibility redeterminations, when an existing enrollee reports a change to the Exchange during the coverage year. Specifically, in cases where the enrollee does not qualify for an SEP, CMS proposes no longer allowing Exchanges to delay effective dates for such eligibility redeterminations beyond the first of the month after the redetermination occurs. This change would align effective dates across existing and new scenarios and ensure timely eligibility updates.