On May 20, 2026, the Department of Health and Human Services (HHS), through the Centers for Medicare & Medicaid Services (CMS), published a final rule establishing the Notice of Benefit and Payment Parameters for 2027 under the Patient Protection and Affordable Care Act (ACA). This comprehensive rule also incorporates elements of the recently enacted Working Families Tax Cut (WFTC) legislation, Public Law 119-21, enacted July 4, 2025. Effective July 20, 2026, these regulations aim to refine the implementation of the ACA, introduce new flexibilities, minimize administrative burdens, and bolster program integrity within the federal and state health insurance marketplaces. The finalized provisions represent a significant step in shaping the landscape of health coverage for the upcoming plan year, impacting qualified health plans (QHPs), risk adjustment programs, and consumer protections.
Enhancing Market Stability and Affordability
A primary objective of this final rule is to foster quality and more affordable health coverage for consumers, while simultaneously reducing unnecessary regulatory burdens on interested parties, such as health insurance issuers and states. The rule endeavors to enhance the role of states in program oversight and management, providing additional flexibilities that are intended to improve overall affordability and the efficiency of the health insurance ecosystem. These changes reflect a continuous effort to adapt the ACA framework to evolving market needs and legislative developments.
Key Regulatory Adjustments for 2027
The final rule introduces a range of specific adjustments impacting various facets of ACA implementation:
Risk Adjustment and Program Integrity
The rule finalizes payment parameters and provisions related to the HHS-operated risk adjustment and risk adjustment data validation (HHS-RADV) programs. These programs are critical for mitigating adverse selection and ensuring financial stability among health insurance issuers. Furthermore, the rule addresses the implementation of the State Exchange Improper Payment Measurement (SEIPM), a mechanism designed to enhance accountability and reduce improper payments within state-operated exchanges.
Financial and Administrative Oversight
For 2027, the rule establishes user fee rates for issuers offering QHPs through Federally-facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs). It also includes provisions for civil money penalties (CMPs) that may be levied against noncompliant issuers and other responsible entities, reinforcing regulatory adherence. Standards governing agents, brokers, and web-brokers are also updated, clarifying their roles and responsibilities in assisting consumers with QHP enrollment and applications for advance payments of the premium tax credit (APTC) and cost-sharing reductions (CSRs).
QHP Certification and Benefit Design
Significant changes are made to QHP certification standards. These include requirements for provider access and essential community provider standards, ensuring that QHPs offer sufficient choice and serve vulnerable populations as mandated by ACA section 1311(c)(1)(B) and (C). The rule also addresses QHP certification of non-network plans.
A notable change in benefit design is the prohibition on issuers including routine non-pediatric dental services as an Essential Health Benefit (EHB). This adjustment clarifies the scope of federally defined EHBs. Consistent with ACA section 1311(d)(3)(B), the rule also specifies requirements related to the defrayal of costs for any state-required benefits that are in addition to the federally defined EHB package.
Catastrophic Plans and Hardship Exemptions
The rule introduces new cost-sharing flexibilities for catastrophic and individual market bronze plans. Perhaps most significantly, it establishes catastrophic plans with plan terms of up to 10 consecutive plan years, a substantial departure from previous structures. Eligibility for these plans remains consistent with ACA section 1302(e), primarily for individuals under 30 or those certified with hardship or unaffordable coverage exemptions. Additionally, the rule expands and codifies hardship exemption eligibility for individuals otherwise ineligible for APTC or CSRs due to projected household income.
Quality Improvement and Program Calculations
The rule addresses QHP issuer quality improvement strategies (QISs), promoting continuous enhancement in the quality of care provided. It also revises the methodology affecting which enrollees are included in Federal Basic Health Program (BHP) payment calculations to states, an update that could influence state-level budgeting and program administration.
Legislative Foundations and Intent
The finalized provisions are rooted in the authority granted to the Secretary of HHS by various legislative acts. The Patient Protection and Affordable Care Act (Public Law 111-148), along with its amendments in the Healthcare and Education Reconciliation Act of 2010 (Public Law 111-152), collectively establish the comprehensive framework for health insurance reform. Key sections of the ACA, such as 1301 and 1302, define qualified health plans, essential health benefits, cost-sharing limits, and actuarial value requirements. Specifically, the ACA mandates coverage for 10 general categories of essential health benefits, ranging from ambulatory patient services to pediatric care. The Public Health Service Act (PHS Act), particularly section 2707, extends EHB requirements to non-grandfathered individual and small group coverage. The recent Working Families Tax Cut legislation further amends and informs aspects of this final rule, reflecting ongoing congressional activity related to healthcare policy. These legislative mandates underscore the balance sought between broad coverage requirements and the need for operational flexibility within the health insurance market.
Looking Ahead
This final rule for 2027 signifies a dynamic phase in the evolution of federal health policy. The introduction of catastrophic plans with multi-year terms represents a notable shift, potentially offering long-term, lower-premium options for eligible populations, while also presenting new considerations for market stability and consumer choice. The clarified EHB definition regarding non-pediatric dental services and the refined state responsibilities for additional benefits underscore a continuous effort to delineate federal and state roles. As these provisions become effective, their practical implications for health insurance issuers, states, and especially consumers will be closely observed. The rule's emphasis on flexibility and reduced burden suggests a responsiveness to market feedback and a strategy to enhance the long-term viability and adaptability of the ACA framework amidst ongoing legislative and economic pressures. The ongoing interaction between federal mandates and state-level implementation will be a critical area of focus in evaluating the success of these updated parameters.
