The Centers for Medicare & Medicaid Services (CMS) on October 23 proposed a rule that would require Affordable Care Act (ACA) exchanges to verify an applicant’s income and family size, citizenship or immigration status, place of residence and eligibility for other coverage before paying premium tax credits or cost-sharing reductions, starting with 2028 health plans. CMS projects the change would mean about 332,500 fewer exchange enrollees a year.
The Exchange Pre-Eligibility Verification proposed rule, numbered CMS-9873-P, implements section 71303 of the law the administration calls the Working Families Tax Cuts, Public Law 119-21, according to the CMS fact sheet. The agency said it closes a loophole used for fraudulent or ineligible enrollments. “Federal subsidies should only go to eligible Americans, not to fraudsters gaming the system,” CMS Administrator Mehmet Oz said in the press release.
What would change
Today, people who appear eligible can receive advance premium tax credits while the exchange resolves data mismatches, known as inconsistency periods. Under the proposal, exchanges would no longer provide financial assistance during those periods when the criteria cannot be verified electronically. Consumers could still enroll in a plan without assistance while verification is pending, and would receive retroactive assistance for the months in their inconsistency period once eligibility is confirmed, the fact sheet says.
People already enrolled would keep their financial help on automatic re-enrollment only if they return to the exchange each year and have their eligibility re-verified; those who do not would be re-enrolled without assistance. Under current rules, subsidies continue for three months if the enrollee remains otherwise eligible, the Healthcare Financial Management Association (HFMA) reported. Consumers who do not seek financial help would not be affected.
To give people time, every exchange would have to open a pre-open-enrollment verification period starting August 1 each year, beginning August 1, 2027, for 2028 coverage. Verification would be waived for family-size changes tied to a birth, adoption, marriage or loss of a dependent through divorce, separation or death; in those cases assistance would be based on the applicant’s attested information while documents are checked. Consumers could also pick a contingent plan during open enrollment or a special enrollment period that takes effect only once eligibility for assistance is confirmed, even if the enrollment window has closed. The rule covers the federal exchange and state-based exchanges alike, and states moving to run their own exchange would have to apply 15 months before starting operations rather than 15 months before open enrollment.
The numbers
CMS projects 332,500 fewer enrollees a year against a 2028 baseline of 16.9 million, HFMA reported from the proposed rule. Healthcare Dive reported the split as more than 237,000 fewer on the federal exchanges and about 95,000 fewer in state-based marketplaces each year. Federal subsidy spending would fall by about $7.6 billion a year, $2.6 billion from fewer enrollees and $5 billion from months of assistance withheld during verification, and premiums would rise by an estimated $2.89 per member per month, or 0.4%, according to HFMA’s account of the rule. The rule itself acknowledges the possibility of delayed care, a weaker risk pool and more people uninsured, HFMA reported.
Enrollment was already falling before the proposal. HFMA reported that the 16.9 million baseline is down from 19.2 million in February 2026, the first decline since 2021, after enhanced subsidies lapsed at the end of 2025, and that CMS attributes part of the decline to removing 760,000 enrollments it assessed as fraudulent, with 420,000 more under evaluation. Healthcare Dive reported that exchange enrollment in June 2026 was about 18%, or more than 4.6 million people, below June 2025.
Why it matters
For consumers who get subsidies, the practical change is timing: documents that today can be sorted out after coverage starts would have to be verified first, or the subsidy is withheld until they are. The August 1 window is designed to let people clear that step before open enrollment. For insurers, CMS’s own analysis points to a slightly smaller and, in its words, weaker risk pool, with a small upward effect on premiums.
Treasury Secretary Scott Bessent said in the CMS release that taxpayers should not be required to subsidize health care for people who are ineligible under federal law. Formal responses from insurers, states and consumer groups will come through the comment process.
What to watch
The rule was scheduled for publication in the Federal Register on October 27, with a 30-day comment period, HFMA reported. CMS is also asking for comment on how to strengthen verification of family size and residency, including data sources, while limiting the burden on consumers and exchanges. If finalized, the first verification window would open August 1, 2027.
The caveats
This is a proposed rule and may change before it is finalized. The enrollment and savings figures are CMS’s own projections, reported here from trade press summaries of the rule text; the fact sheet itself gives no impact estimates. The fact sheet says the Treasury Department issued related regulations on October 15, 2026, which this story does not cover.
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