Judge blocks key ACA marketplace rule provisions for 2027

For the second consecutive year, a federal judge has provided relief to plaintiffs challenging Trump administration regulations that are intended to tighten limits on Affordable Care Act (ACA) marketplace coverage.

A July 16 ruling by Judge Brendan Hurson with the U.S. District Court for Maryland halted implementation of key provisions in recently finalized regulations that would have taken effect July 20, generally applying to marketplace operations for plan year 2027.

Saying the policies in the rule would reduce fraud and other forms of improper enrollment, the administration had projected that ACA marketplace enrollment would drop by between 1.2 million and 2 million. That’s on top of an ongoing decline in 2026 amid the expiration of enhanced subsidies for buying marketplace coverage, along with application of tighter enrollment controls. In February, the year-over-year decrease from 2025 was 2.9 million.

It’s far from certain that the ruling will mitigate the underlying issues affecting the marketplaces. Next year looks like it will be the second consecutive in which ACA premium increases reach double digits, according to research by KFF, which found a median increase of 14% in preliminary rate filings among 77 insurers in 16 states and Washington, D.C.

In addition, falling enrollment, rising medical costs and changes in market outlook have prompted some insurers to reassess their participation. After Aetna exited the marketplaces heading into 2026, Cigna announced its intent to do the same in 2027, as have a handful of smaller insurers.

Court pauses key ACA marketplace rule provisions

Plaintiffs in the case include Doctors for America, the Main Street Alliance, three cities and Pima County, Ariz. Policies that were stayed by the ruling include:

• Implementing a failure-to-reconcile policy that would render enrollees ineligible for advance subsidies in any year in which they failed to file a tax return and reconcile the previous year’s subsidy with their reported income
• Requiring additional steps or documentation to verify an enrollee’s income when self-reported to be below 100% of the federal poverty level or when tax data is unavailable
• Requiring eligibility verification with respect to a wider array of special enrollment periods (SEPs)
• Allowing certain bronze plans to set their annual limit on cost sharing as high as 130% of the statutory maximum
• Eliminating the requirement for insurers in federally operated marketplaces to offer at least one plan with standardized cost-sharing for each metal tier in which they participate
• Allowing states to conduct certain network adequacy reviews that otherwise would be performed by CMS
• Expanding the circumstances under which consumers can receive a hardship exemption to enroll in catastrophic coverage

The administration specifically raised concerns about pausing the increased eligibility for catastrophic coverage, saying roughly 630 people had already enrolled in the coverage under the expanded eligibility policy. The court was not persuaded that the potential disruption justified allowing the provision to remain in effect.

Earlier marketplace restrictions remain tied up in court

The 2027 rule was the administration’s second attempt to implement several of the disputed provisions. Key portions of a final rule for 2026 were stayed by Hurson in 2025 and then vacated in June 2026.

The administration did not reissue the following vacated provisions in the 2027 rule:

• Adding a $5 monthly premium for fully subsidized auto re-enrollees until they actively confirm their eligibility
• Allowing marketplace insurers to require payment of past-due premiums before new coverage takes effect
• Shortening the annual open enrollment period starting in 2027
• Eliminating a 60-day extension to resolve inconsistencies in household income data on top of the previously existing 90-day window
• Widening the permissible actuarial-value ranges for marketplace plans, which would allow insurers to lower premiums while increasing cost-sharing within each metal tier

The court allowed CMS to proceed with methodological changes to a key metric known as the premium adjustment percentage, which is used to update annual limits on cost sharing and other ACA payment parameters.

The Trump administration has appealed the vacatur. In an April 2026 court filing, the administration wrote that last year’s rule “implements a number of policies meant to reduce improper enrollments over the short term as Exchanges [i.e., ACA marketplaces] readjust to a new subsidy environment.”

Federal law bringing additional restrictions despite court rulings

One of the administration’s arguments in defending the 2027 regulations was that Congress enacted several similar requirements via the One Big Beautiful Bill Act (OBBBA, also referred to as the Working Families Tax Cut Act), and implementing them before their statutory effective dates would not cause harm. The court disagreed.

“To be sure, that some of the challenged provisions may soon have the express authorization of Congress means that in plan year 2028, for example, many of Plaintiffs’ arguments in this and the related case will be neutralized,” the ruling states. “But that apparent inevitability is not dispositive of Plaintiffs’ challenge today.”

The annual file-and-reconcile mandate and several other eligibility verification requirements are set to begin in 2028, per the OBBBA. The requirements could substantially reduce automatic reenrollment by requiring consumers to take additional steps to retain subsidized coverage.

Among other ACA-related restrictions in the OBBBA, some categories of lawfully present immigrants no longer will be eligible for subsidies starting in 2027. Subsidies will become unavailable to refugees, people seeking asylum in the U.S., and people with Temporary Protected Status.

For 2026, the legislation has removed income-based limits on the amount of excess subsidy that an enrollee may have to repay when filing a federal tax return. The law also has barred eligibility for advance subsidies and for cost-sharing reductions when an enrollee obtains coverage through an income-based SEP.