Six ways federal rule changes might affect Marketplace enrollees

The federal government has finalized a wide range of health insurance rule changes for 2025.¹ They affect Marketplace enrollment deadlines and enrollees’ transition from Marketplace coverage to Medicare, as well as potential plan benefits that could be available in future years.

Two agencies – the Centers for Medicare & Medicaid Services (CMS), and Department of the Treasury – proposed the rule changes in November 2023, accepted public comments on the proposals, and issued the final rule in April 2024.

The final rule addresses a wide range of issues. Let’s take a look at six that are most likely to have a direct effect on Marketplace consumers in 2025 and future years:

1. Open enrollment start dates will be standardized in state exchanges

The final rule requires state-run exchanges to more closely align their open enrollment periods with the federal exchange, HealthCare.gov, beginning open enrollment on Nov. 1, and ending it no earlier than Jan. 15. (As described below, there’s a modified exception for Idaho.) This rule could help reduce confusion for consumers in some states.

Under current rules, the open enrollment period for the federally run Marketplace, HealthCare.gov, (used in 32 states) runs from Nov. 1 to Jan. 15, and most state-run exchanges follow the same schedule.

Prior to the new rule, state-run exchanges can have different start dates (Idaho’s starts in mid-October and New York’s starts in mid-November) and different end dates, as long as the end date isn’t before Dec. 15. Idaho currently ends open enrollment on Dec. 15, and is the only state where open enrollment ends before Jan. 15.

In response to comments received, HHS opted to finalize the rule but with a slight exception: A state-run exchange that began its most recent open enrollment before Nov. 1, 2023, and ended it before Jan. 15, 2024 is allowed to continue to begin open enrollment before Nov. 1 and end it before Jan. 15, but only as long as the open enrollment period lasts for at least 11 weeks.

So Your Health Idaho will have the option to continue to utilize different start and end dates, but will have to extend the length of open enrollment, since the current window is less than nine weeks.

State-run exchanges created after these rules go into effect will also have to follow the standardized schedule of Nov. 1 through at least Jan. 15.

This proposed rule change was supported by various entities, including the National Association of Community Health Centers, but opposed by other entities, including the National Association of Insurance Commissioners, the state of Idaho, and the state of Georgia (Georgia plans to have a fully state-run Marketplace by the fall of 2024.² Under the final rule, Georgia will have to begin open enrollment on Nov. 1 and end it no sooner than Jan. 15.)

2. Special enrollment period effective dates will be standardized

The rule requires state-run exchanges to have first-of-the-following-month effective dates for applications submitted at any time during a calendar month during special enrollment periods.

Starting in 2022, HealthCare.gov switched to this approach. Before that, HealthCare.gov and most of the state-run exchanges required an application to be submitted by the 15th of the month for the coverage to be effective the first of the following month.³ (Some qualifying life events, including marriage, loss of other coverage, and birth/adoption, had more flexible enrollment deadlines.) This meant that an application submitted on June 20 would have an Aug. 1 effective date. But under the protocol that HealthCare.gov and some state-run exchanges adopted in 2022, that application now gets a July 1 effective date.

When HealthCare.gov switched to the new rules under which coverage is effective on the first of the month after the application is submitted – regardless of the day of the month the application was submitted during a special enrollment period – it was optional for state-run-exchanges to also make the change. Some have since adopted the same approach, but others have not.⁴.

Due to the rule change that takes effect in 2025, consumers in every state will be able to get coverage effective as of the first of the month following their application during a special enrollment period (SEP), regardless of the date they apply. The goal? Minimizing gaps in coverage by reducing the amount of time that people in some states currently have to wait for their SEP enrollments to take effect.

This proposed rule did not generate much feedback in the public comments, but there were some comments on either side of the issue. For example, it was opposed by the state of Georgia, which plans to be running its own exchange by the fall of 2024. It was supported, however, by the Massachusetts Health Connector (Massachusetts Marketplace), which currently requires SEP applications to be submitted by the 23rd of the month to have coverage effective the first of the following month.

3. It will be easier for states to add to their essential health benefit requirements

The new rule makes it easier for states to update their essential health benefits (EHB) benchmark plan requirements, and will allow states to add mandated benefits via the regulatory or legislative process without having to cover the cost of the new benefit. Before this new rule, the rules required the state to pay the cost of adding the new benefits via the regulatory or legislative process by sending money directly to the health plan or its enrollees. Under the new rule, the cost of the added benefits are incorporated into the plan’s premiums just like any other EHB.

To clarify, a state’s EHB benchmark plan sets the coverage standards for all ACA-compliant individual and small group health plans sold in that state.

Under existing rules, states could use the benchmarking process (directly updating the EHB benchmark plan, as opposed to a legislative or regulatory benefit mandate) to add benefits without defraying the cost. But states have reported that updating the benchmark plan is burdensome, and only nine states have updated their benchmark plans since new flexibilities for updating an EHB benchmark plan became available in 2020.⁵ If a state added required benefits via regulatory or legislative state mandates (as opposed to the benchmarking process) after 2011, the state was required to defray the cost, even if they subsequently added it via the benchmarking process.

The final rule ensures that if a particular benefit is covered by a state’s EHB benchmark plan, the cost doesn’t have to be borne by the state, even if the state mandated the benefit via regulation or legislation. (As noted above, the cost is treated like the cost of any other EHB and incorporated into the plan’s premiums.)

And separately, the new rule creates a more simplified process for states to update their EHB Benchmark plan, making it easier to add new benefits over time. (States have reported that the current process can be burdensome and onerous.) These changes are effective for EHB Benchmark plan updates that take effect in 2026 or later (as noted in the new rule, the process of updating a state’s EHB Benchmark is lengthy, and a state would have to begin the process by the spring of 2024 to have an updated plan in effect starting in 2026).

To clarify, states are not required to make any change to their EHB Benchmark plans or add any new benefits. But for states that wish to do so, the new rules are designed to make the process easier⁶ and – if new benefits are added – less costly for the state.

There are a variety of services that a state could choose to add to its EHB benchmark plan, including some services that have only become available in recent years, after the original EHB benchmark plans were established (weight loss medication, for example). Other examples are gender-affirming care, vasectomies, infertility treatment, and substance use disorder treatments that have been developed since EHB Benchmark plans were first created.

Among the public comments received, the National Association of Insurance Commissioners strongly supported this rule change, while Elevance Health (formerly Anthem) opposed it.

4. States will be allowed to add adult dental to essential health benefits, starting in 2027

The new rule allows – but does not require – states to add adult dental coverage to their essential health benefits package, for 2027 or future years. Previously, states were prohibited from adding adult dental to their EHBs.

The new rule notes that if a state wants to add non-pediatric dental to its EHB Benchmark plan for the 2027 plan year, the state would need to submit the application to CMS no later than May 7, 2025. Applications could be submitted after that date for states that wish to make this change effective in 2028 or a subsequent year.

If a state chooses to add adult dental to EHB, individual and small-group health plans would have to start providing adult dental benefits without dollar limits on how much the plan would pay. Carriers could accomplish this by providing the benefits directly or by contracting with a dental plan to administer the coverage, as long as it’s “seamless to the enrollee.”

Under existing rules (which explicitly require pediatric dental to be covered as EHB), a plan sold in the Marketplace can opt to not provide integrated pediatric dental coverage as long as there is an on-exchange stand-alone pediatric dental plan available. But the new rule notes that a similar provision is not available for adult dental.

So if a state adds routine adult dental to its EHB Benchmark plan, a plan sold in the state’s Marketplace would not be allowed to omit adult dental coverage simply because a stand-alone adult dental plan is available through the Marketplace. Instead, the plan would have to either include integrated adult dental coverage or contract with a dental carrier to administer dental coverage.

Self-insured and large-group plans are not required to cover EHBs (and most covered workers are in self-insured or large-group plans). But to the extent that they do, they cannot impose annual or lifetime limits on how much the plan will pay for those services.

The new rule clarifies that if a state chooses to add adult dental coverage to its EHB benchmark plan and an employer purchases that plan for its workers in the large group market (51 or more employees in most states)⁷ the carrier would have to provide dental benefits without annual or lifetime benefit caps. But if a large employer adds or continues to offer a stand-alone dental plan in addition to a medical plan, the dental plan could continue to have benefit caps.

Small-group health plans are sold to employers with up to 50 employees in most states, and to employers with up to 100 employees in four states.⁷ (This will drop to three states as of 2026, when Colorado will switch to capping small group at 50 employees.⁸) If the employer has more employees than the small-group threshold and is purchasing commercial insurance – as opposed to self-insuring – they are buying coverage in the large-group market, which is regulated under different rules than the small-group market.

States are responsible for determining the specific services that must be covered as essential health benefits, but Affordable Care Act implementation regulations (§ 156.115(d)) have prohibited states from including adult dental in their EHB package (this regulation is being updated under the terms of the new rule, for coverage effective in 2027 or future years). This was because the EHB package was meant to be representative of a typical employer-sponsored health plan, and employer-sponsored health plans generally do not include dental coverage.

In the new rule, the government notes that they’re now looking at this from the perspective of an overall employer benefit package, which often includes separate dental coverage in addition to the medical plan. So while it continues to be the case that employer-sponsored medical plans typically do not include dental coverage, the new rule will allow states to bring their EHB-Benchmark plan more in line with a typical employer benefits package, which often includes both medical and dental coverage.

Quite a few public comments were submitted in response to the proposal to allow states to add adult dental to EHB.

The proposal was supported by the American Association of Endodontists, the National Rural Health Association, the National Association of Insurance Commissioners, the National Association of Community Health Centers, and the Tribal Technical Advisory Group.

But it was opposed by Sanford and Priority Health (both insurers), and the Academy of General Dentistry.

The agencies clarified in the proposed rule (published in late 2023)⁹ that they were not proposing a change to allow states to add adult vision or custodial long-term care coverage to EHB (both of which are also not allowed to be added to EHB at this point), but they did seek feedback from stakeholders and the public regarding whether they should consider that in future rulemaking.

5. The low-income special enrollment period is permanent

The new rule makes the low-income special enrollment period (SEP) permanent, instead of ending it if and when the American Rescue Plan’s (ARP) subsidy enhancements expire.¹⁰

The rationale behind the low-income SEP is that subsidy-eligible enrollees with income up to 150% of the federal poverty level (FPL) are currently eligible for $0 premium coverage, so the adverse selection risk is low. (That means it’s unlikely that a person would let their coverage lapse when they’re healthy if they’re not having to pay for it. Adverse selection refers to situations in which healthy people do not maintain coverage, and the overall risk pool becomes less healthy and more expensive to treat.)

Under previous rules, subsidy-eligible applicants with household income up to 150% of FPL would have continued to be able to enroll year-round as long as the ARP subsidy enhancements remained in effect. They’re currently in place through 2025, and an extension would require Congressional action. But under the new rule, the low-income SEP will remain in place even if the subsidy enhancements end.

The National Association of Community Health Centers supported this proposal, while Elevance Health (formerly Anthem) opposed it. Another insurer, Priority Health, expressed general opposition to the expansion of special enrollment opportunities and wants CMS to “reduce the total number of SEPs,” noting that “ongoing enrollment contributes to adverse selection and encourages healthy persons to delay enrollment until they need care.”

Conversely, CMS and the IRS note in the final rule that because most consumers with income up to 150% FPL would continue to be eligible for some zero-cost plans in the Marketplace even without the ARP subsidy enhancements, they “would be unlikely to use the proposed 150 FPL SEP in a way that caused adverse selection.”¹¹

6. It might be possible to terminate Marketplace plans retroactively if an enrollee is eligible for backdated Medicare

Under existing rules, the option to retroactively terminate Marketplace coverage is extremely limited. The new rule allows for the possibility of a retroactive coverage termination date if a Marketplace enrollee becomes eligible for backdated Medicare coverage.

However, the new rule notes that “we are allowing HHS to elect whether to implement this provision for Exchanges using the Federal platform.”¹² In other words, the rule gives HHS the authority to implement this change but does not require it. The rule makes this provision optional for state-run Marketplaces.

Once a Marketplace enrollee becomes eligible for premium-free Medicare Part A, they are no longer eligible for premium subsidies.¹³ And even if they aren’t receiving subsidies, Medicare doesn’t coordinate with individual/family coverage.¹⁴ The advice from CMS is that “In most cases, you’ll want to end your Marketplace coverage” when your Medicare coverage begins. And consumers are responsible for canceling their Marketplace coverage when they transition to Medicare.

In most cases, under existing rules, Marketplace plans can only be canceled prospectively (or at the earliest, on the day the cancellation request is made). This works well in situations where a person knows that their Medicare will take effect on a particular day in the future and can schedule the termination of their Marketplace plan for the same time. But it becomes much more complicated when a person learns that they’ve been enrolled in Medicare with a backdated effective date.

This can happen when a person is approved for Social Security Disability Insurance (SSDI) benefits with a retroactive effective date more than 25 months in the past. (Medicare becomes available in the 25th month of SSDI benefits.) It can also happen when a person enrolls in Medicare after they’re initially eligible and their Medicare Part A coverage is backdated up to six months.

In those scenarios, the person doesn’t have an opportunity to cancel their Marketplace plan prospectively, since they’re finding out after the fact that their Medicare coverage has already begun. The new rule – if HHS chooses to implement it for HealthCare.gov –  allows them to request that their Marketplace coverage be canceled back to the day before their Medicare took effect. But the new rule notes that the retroactive cancellation rule can’t be used to backdate a coverage termination by more than six months. And it also can’t be used to retroactively terminate a stand-alone dental plan.

But if HHS chooses to implement this retroactive coverage termination option for HealthCare.gov enrollees who become eligible for backdated Medicare, it could result in premium savings for the individual, and also relive the government of having to pay premium subsidies for the months that the person is eligible for backdated Medicare and requests a retroactive coverage termination.¹⁵

The rule does not allow retroactive terminations in a situation where an individual enrolled prospectively didn’t understand that they needed to cancel their Marketplace plan once they’ve got Medicare coverage and later tries to retroactively terminate enrollment in a QHP. But it could address some of the challenges Marketplace enrollees currently face when they are retroactively enrolled in Medicare.

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Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

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2. “Georgia Access to Launch as State-based Exchange in November” Georgia Office of the Commissioner of Insurance. Aug. 14, 2024 ⤶
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5. “Information on Essential Health Benefits (EHB) Benchmark Plans” Centers for Medicare & Medicaid Services. Accessed Aug. 28, 2024 ⤶
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12. “Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program” A Rule by the Treasury Department and the Centers for Medicare & Medicaid Services. April 15, 2024 ⤶
13. “Medicare and the Marketplace” Medicare.gov. Accessed Aug. 28, 2024 ⤶
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