ACA Enrollment Rule Changes: CMS Crackdown Sparks Lawsuits

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ACA at a Crossroads: CMS Cracks Down on Enrollment, Brokers Brace for Impact

If you’ve been feeling like the world of ACA coverage is shifting rapidly—and with high stakes—you’re not alone. CMS is zeroing in on improper and duplicate enrollments, and the ripple effects are poised to land squarely in your lap, whether you’re a consumer, advocate, or insurance broker.

CMS Sounds the Alarm: 2.8 Million People Might Be Enrolled Twice

Late last month, CMS dropped a bombshell: 2.8 million Americans may be enrolled in Medicaid or CHIP across multiple states—or, in some cases, enrolled in both Medicaid and a subsidized ACA Marketplace plan at the same time. That’s potentially $14 billion wasted per year in redundant coverage

To clean house, CMS announced a multi-step plan:

  1. States will get lists of people enrolled in Medicaid/CHIP in more than one state and will re-verify their eligibility.

  2. Individuals found to be enrolled in both Medicaid/CHIP and an ACA plan will be contacted. They’ll need to choose a single program, end their subsidy, or prove they’re not actually dually enrolled—or risk losing their subsidy after 30 days.

This effort marks a return to tougher data-matching (“Periodic Data Matching”) that had been paused during the pandemic.

CMS Also Cracks Down on “Improper” ACA Sign-Ups

At the same time, CMS has finalized a rule targeting “improper” ACA enrollments—something critics argue goes beyond housekeeping. The rule:

  • Shrinks the annual open enrollment window (now ending December 31, vs mid-January)

  • Ends monthly special enrollment periods for people earning ≤150% of the federal poverty level.

  • Adds tougher income verification and imposes a $5/month surcharge for those auto-renewed into subsidy-eligible plans without reconfirming eligibility.

  • Excludes DACA recipients from qualifying and removes gender-affirming care from required benefits.

CMS expects these changes to save taxpayers up to $12 billion in 2026 and lower premiums by about 5% on average. Claiming these rules restore program integrity, CMS frames the crackdown as both necessary and beneficial.

The Legal Backlash Is Real—and Already Gaining Ground

Almost immediately, a coalition of 20 Democratic state attorneys general (led by California AG Rob Bonta) filed suit in federal court. They argue the rule violates the ACA and could strip nearly 2 million people of their coverage, especially low-income individuals.

Meanwhile, cities like Chicago, Baltimore, and Columbus—backed by advocacy groups—also filed lawsuits, calling the changes an assault on access to affordable coverage.

In fact, just this week, a federal judge paused key provisions of the “Marketplace Integrity and Affordability Rule” (like extra fees and documentation requirements) after finding reasonable evidence they could violate the ACA. It’s a major legal hurdle CMS will now have to overcome

So, What Does This Mean for Insurance Agencies & Brokers?

1. Shrinking Timelines, Growing Pressure

The shorter enrollment period—and elimination of rolling sign-ups—means agencies will have a tighter window to educate, enroll, and verify clients. Every operational misstep could mean lost coverage and lost commissions.

2. Heightened Scrutiny

With stricter verification and broker accountability rules, the documentation for each client will matter more than ever. You’ll need airtight record-keeping, impeccable training, and proactive communication to ensure compliance and maintain your standing.

3. Smaller Pools, Tighter Competition

If enrollment drops—especially among low-income, high-volume segments—agencies may find fewer opportunities. This could lead to fiercer competition and narrower margins.

4. Opportunity in Service

On the flip side, agencies that go above and beyond—helping clients quickly verify eligibility, navigate renewals, and avoid coverage traps—can stand out. Being seen as a trusted guide during confusion-filled seasons could translate into credibility and client loyalty.

Bottom Line

The ACA marketplace is shifting. CMS is pushing hard on integrity, but states and cities are pushing back just as hard—both legally and politically. For insurance brokers, what feels like a compliance crackdown is also a moment to double down on client trust. Firms that deliver clarity, speed, and support stand to emerge stronger—even as the playing field gets more complex.

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