Six ways proposed federal rule changes might affect Marketplace enrollees

The federal government has proposed a wide range of health insurance rule changes for 2025 and – if approved – they’re likely to affect Marketplace enrollment deadlines and plan benefits as well as enrollees’ transition from Marketplace coverage to Medicare.

Two agencies – the Centers for Medicare & Medicaid Services (CMS), and Department of the Treasury – proposed the rule changes in November 2023 and have already accepted public comments on the proposals. The final rule, including potential modifications to the initial proposals, will be published in early 2024.

The proposed 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 would be standardized in state exchanges

The proposed rule would require state-run exchanges to more closely align their open enrollment periods with the federal exchange, HealthCare.gov, beginning open enrollment on November 1, and ending it no earlier than January 15. 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 November 1 to January 15, and most state-run exchanges follow the same schedule.

But 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 December 15. Idaho currently ends open enrollment on December 15, and is the only state where open enrollment ends before January 15.

If finalized, this rule change would require Idaho to change both the start and end dates of its open enrollment period, and New York would have to change its start date. And state-run exchanges created after these rules go into effect would also have to follow the standardized schedule of November 1 through at least January 15.

This proposal is 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. Special enrollment period effective dates would be standardized

The proposed rule would require 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. (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 August 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 at the start of the next month – 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.

If the proposed rule is adopted, 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, 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’s opposed by the state of Georgia, which plans to be running its own exchange by the fall of 2024. It’s 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 would be easier for states to add to their essential health benefit requirements

The proposed rule would make it easier for states to update their essential health benefits (EHB) benchmark plan requirements, and would allow states to add mandated benefits via the regulatory or legislative process without having to cover the cost of the new benefit. (Current rules require the state to pay the cost of adding the new benefits by sending money directly to the health plan or its enrollees.)

Under current rules, states can 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 this became available in 2020. If a state adds required benefits via regulatory or legislative state mandates (as opposed to the benchmarking process) after 2011, they have to defray the cost, even if they subsequently add it via the benchmarking process.

The proposed rule would ensure 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. And separately, the proposed rule calls for 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.)

To clarify, a state would not be required to make any change to its EHB Benchmark plan or add any new benefits. But for states that wish to do so, the proposed rules are designed to make the process easier and less costly.

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 supports this proposed rule change, while Elevance Health (formerly Anthem) opposes it.

4. States would be allowed to add adult dental to essential health benefits

The proposed rule would allow – but not require – states to add adult dental coverage to their essential health benefits package. States are prohibited from adding adult dental to their EHBs under current rules.

If a state chose 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.”

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 proposed 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) the carrier would have to provide dental benefits without annual or lifetime benefit caps. But if a large employer uses a stand-alone dental plan in addition to a medical plan, the dental plan could continue to have benefit caps.

(For clarification, small-group health plans are sold to employers with up to 50 employees in most states, and up to 100 employees in four states. 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 the Affordable Care Act prohibits states from including adult dental in their EHB package. This is 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 proposed 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 proposed rule change would 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 is 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’s opposed by Sanford and Priority Health (both insurers), and the Academy of General Dentistry.

The agencies clarified in the proposed rule that they are 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 are seeking feedback from stakeholders and the public regarding whether they should consider that in future rulemaking.

5. The low-income special enrollment period would become permanent

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

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 current rules, subsidy-eligible applicants with household income up to 150% of FPL will continue to be able to enroll year-round as long as the ARP subsidy enhancements remain in effect. They’re currently in place through 2025, and an extension would require Congressional action. If the proposed rule is finalized, the low-income SEP will remain in place even if the subsidy enhancements end.

The National Association of Community Health Centers supports this proposal, while Elevance Health (formerly Anthem) opposes 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 proposed rules 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.”

6. Marketplace plans could be terminated retroactively if an enrollee is eligible for backdated Medicare

Under current rules, the option to retroactively terminate Marketplace coverage is extremely limited. The proposed rule would allow a retroactive coverage termination date if a person becomes eligible for backdated Medicare coverage. .

Once a Marketplace enrollee becomes eligible for premium-free Medicare Part A, they are no longer eligible for premium subsidies. And even if they aren’t receiving subsidies, Medicare doesn’t coordinate with individual/family coverage. 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, 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 proposed rule would allow them to request that their Marketplace coverage be canceled back to the day before their Medicare took effect. This could result in premium savings for the individual, and also reduce the likelihood that they’ll have to repay excess premium tax credits to the IRS when they file their taxes.

The proposed 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.

If the proposed rule is finalized, retroactive termination would become available via HealthCare.gov, but would be optional for the state-run Marketplaces.

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.