A federal judge has temporarily blocked eight provisions of a recently finalized rule from the Centers for Medicare and Medicaid Services (CMS). The decision comes as insurers begin filing proposed plan designs and premium rates for 2027.
Each year, CMS issues a Notice of Benefit and Payment Parameters, implementing changes to provisions that govern health insurance sold on Affordable Care Act marketplaces. The 2027 notice — which we discussed in a previous post — contains provisions that, according to CMS, are intended to target fraudulent enrollments and allow greater flexibility in marketplace plan offerings and administration. Shortly after the notice was finalized in May, a diverse group of plaintiffs filed a lawsuit challenging some of these provisions. On July 16, a federal judge in the U.S. District Court of Maryland stayed a handful of those provisions, temporarily preventing them from taking effect.
Among the eight stayed provisions are several that were highlighted in our previous post, including provisions that would:
- Allow insurers to sell bronze plans with out-of-pocket limits up to 130% of the standard cap. This stay prevents that change from taking effect and keeps the maximum allowable out-of-pocket limit at the standard cap, which is set at $12,000 for plan year 2027.
- Expand catastrophic plan eligibility to include adults 30 years of age or older with household incomes below 100% or above 250% of the federal poverty level. This stay leaves eligibility for catastrophic plans much narrower than was anticipated for 2027.
- Eliminate requirements that insurers offer standardized plan designs and limit the number of non-standardized plan designs they sell. This stay reinstates those requirements, potentially prompting insurers to quickly rework their 2027 plan offerings to ensure compliance.
Other stayed provisions include changes to state reviews of network adequacy, expanded income and special enrollment period eligibility verification requirements, and a provision allowing CMS to deny premium tax credits to individuals who fail to file a tax return and reconcile the premium tax credits from the previous year.
The ruling may complicate actuarial analysis of plan designs just as insurers are expected to file their plan information for the 2027 plan year. While the federal government may appeal the decision, the eight stayed provisions cannot go into effect for plan year 2027 unless the district court or a higher court changes the order. The lawsuit challenged 12 provisions of the rule, but the plaintiffs only requested that eight of them be stayed, meaning that the remaining provisions remain unaffected. These include provisions allowing the sale of multi-year catastrophic plans, eliminating the ability of insurers to accept partial premium payments without triggering coverage termination, and implementing additional reporting requirements.
A provision allowing the sale of non-network plans remains in effect, but the judge stayed the standards for certifying those plans, leaving it unclear whether marketplaces can approve them while the stay remains in effect. A provision increasing the out-of-pocket limit for catastrophic plans also remains in effect, but it does not apply until plan year 2028.
