ACA 2027 Proposed Rule: Actuaries Model a 2 Million Enrollment Drop as HHS Widens De Minimis and Eliminates Income-Based SEP

From reviewing every Notice of Benefit and Payment Parameters rule since 2014, we can confirm that the 2027 proposal represents the most consequential single-year shift in actuarial value floor methodology and enrollment verification requirements in the ACA's history. Previous NBPP cycles adjusted one or two parameters at a time. The 2027 proposal adjusts three foundational levers simultaneously, and each one pushes in the same direction: fewer enrollees, thinner benefits, and a sicker remaining risk pool.

The proposed rule (Federal Register citation 2026-02769) was released on February 9 and published on February 11, 2026, with a 30-day comment period that closed on March 13, 2026. A final rule is expected in the coming months, with QHP application windows opening April 16, 2026, for the 2027 plan year. Health actuaries filing 2027 rates are already operating under the assumption that most provisions will be finalized as proposed, and the actuarial memoranda accompanying those filings must now address enrollment sensitivity, risk pool composition shifts, and cost-sharing adequacy under a fundamentally different regulatory framework.

The Three Levers: What HHS Proposed and Why They Compound

The 577-page rule covers dozens of technical provisions, from user fee rates (2.5% for FFE, 2.0% for SBE-FP) to risk adjustment methodology updates. But three changes drive the enrollment and risk pool impact that health actuaries must model.

First, the de minimis range for standard metal-level plans widens to +2/-4 percentage points, and expanded bronze plans get +5/-4. Second, the income-based special enrollment period created in September 2021 is permanently eliminated. Third, APTC repayment caps are removed starting with tax year 2026, exposing enrollees to full clawback of excess advance premium tax credits regardless of income.

Each change independently narrows the effective value proposition of marketplace coverage for marginal enrollees. Together, they create compounding enrollment pressure that CMS itself projects will remove 1.2 to 2 million people from marketplace coverage and reduce federal premium tax credit spending by $10.4 billion in 2027.

Actuarial Value De Minimis: How +2/-4 Reshapes Plan Design

The ACA assigns each metal level a target actuarial value: 60% for bronze, 70% for silver, 80% for gold, and 90% for platinum. The de minimis range determines how far a plan's actual AV can deviate from the target while still qualifying for the metal level.

Under the original ACA framework, the de minimis range was +2/-2 for most metal levels and +5/-2 for expanded bronze plans. The 2026 final rule (issued June 2025) widened all standard plans to +2/-4 and expanded bronze to +5/-4. The 2027 proposed rule continues these ranges.

The practical consequence: a silver plan can now have an actuarial value as low as 66%, while a bronze plan can reach as high as 62% (standard) or 65% (expanded). Georgetown University's Center on Health Insurance Reforms flagged the core problem: "certain bronze plans can have an AV of as much as 65 percent and a silver plan may have an AV of as little as 66 percent," creating minimal distinction between the two most popular metal levels.

For pricing actuaries, this overlap creates several challenges:

Metal-level migration modeling: When the benefit gap between bronze and silver compresses to one percentage point, silver enrollees who are net premium payers (above the CSR income threshold) face a rational incentive to move to bronze. The risk transfer implications are significant because silver enrollees who downgrade tend to be healthier than the silver-plan average.
Cost-sharing parameter calibration: The 2027 maximum annual limitation on cost-sharing is proposed at $12,000 for self-only and $24,000 for family coverage, a 13.2% year-over-year increase. Catastrophic plan deductibles, set at 130% of the standard maximum out-of-pocket, would reach $15,600 for individuals and $31,200 for families. These numbers change the distribution of plan-paid versus member-paid claims at every metal level.
CSR loading precision: Starting with plan year 2027, issuers using CSR loading must disclose both retrospective and prospective CSR-related data in the Unified Rate Review Template and Actuarial Memorandum. This new transparency requirement means the actuarial justification for silver loading will face direct regulatory scrutiny for the first time.

A judge stayed the widened de minimis provisions in August 2025, pending litigation. As of April 2026, the stay remained in effect. Health actuaries face the unusual position of filing rates under two possible scenarios: one where the +2/-4 range holds and one where courts reinstate the narrower bands. The actuarial memorandum must address both contingencies, and the rate impact difference between scenarios can run several percentage points depending on assumed metal-level migration.

Income-Based SEP Elimination: A Permanent Enrollment Pathway Closure

In September 2021, HHS established a low-income special enrollment period that allowed individuals at or below 150% of the federal poverty level to enroll in marketplace coverage year-round, outside the standard open enrollment window. By April 2024, HHS had finalized a rule making this SEP permanently available. It became a significant enrollment channel: KFF estimated millions of consumers used income-based SEPs to gain or maintain coverage between annual enrollment periods.

Two legislative and regulatory actions closed this pathway. On June 25, 2025, HHS finalized a rule temporarily eliminating the SEP through the end of 2026. Nine days later, on July 4, 2025, the "One Big Beautiful Bill Act" (P.L. 119-21) made the restriction permanent by prohibiting premium tax credits for anyone who enrolls during an income-based special enrollment period not tied to a qualifying life event.

The distinction matters for actuaries. The SEP itself could theoretically be reinstated by a future administration. But the premium tax credit prohibition is statutory, not regulatory. Without subsidies, full-price coverage is economically inaccessible for someone earning 150% of FPL or less. The enrollment pathway is functionally closed regardless of future administrative action on the SEP rule itself.

The income-based SEP served a specific population: individuals whose income or employment circumstances fluctuated throughout the year, who missed the open enrollment window, or who became newly eligible for subsidized coverage mid-year. These enrollees tended to be younger and relatively healthier than the OEP-enrolled population, because many were transitioning from uninsured status (where they consumed minimal healthcare services) into coverage.

Removing this population from the risk pool has a predictable actuarial effect. When healthier marginal enrollees lose their enrollment pathway, the remaining pool becomes sicker on average. The morbidity adjustment factors in 2027 rate filings must reflect this composition shift, and the magnitude depends on each carrier's estimate of how many of their current enrollees entered through income-based SEPs versus qualifying life events.

APTC Repayment Caps: The Full Clawback Era Begins

From 2014 through 2025, the ACA capped the amount of excess advance premium tax credits that enrollees had to repay at tax time. Caps varied by income and filing status, ranging from approximately $350 for low-income single filers to $3,150 for households near 400% FPL. These caps functioned as a financial safety net: enrollees whose actual income exceeded their projected income would owe back some portion of their excess APTC, but the downside was bounded.

The One Big Beautiful Bill Act eliminated all repayment caps starting with tax year 2026 (returns filed in early 2027). Under the new regime, enrollees must repay the full excess amount with no cap, regardless of income level. The only exception: no repayment is required if actual income falls below 100% FPL.

Consider a concrete example. An enrollee projects $40,000 in annual income and receives $305 per month in APTC ($3,660 annually). If their actual income comes in at $60,000, the recalculated APTC is lower, and the enrollee owes the full difference. Under the previous cap structure, repayment would have been limited to roughly $1,550 to $3,150 depending on filing status. Under the new rules, they owe the entire excess amount.

The behavioral response to uncapped repayment is predictable but hard to quantify precisely. Enrollees who experienced repayment in prior years and were protected by caps now face a different risk calculus. Those with variable income (gig workers, commission-based salespeople, seasonal employees, small business owners) are most exposed because their income projections carry the widest confidence intervals. The rational response for some subset of these enrollees is to decline APTC entirely and pay full premiums to avoid repayment risk, or to forgo coverage altogether.

For pricing actuaries, the APTC repayment change introduces a new variable into enrollment forecasting. Enrollees who drop coverage to avoid repayment risk are likely to be in higher income brackets (where the financial exposure from uncapped repayment is largest) and therefore more likely to be net payers into the risk pool. Their departure worsens the morbidity mix of the remaining population.

Enrollment Projections: CMS's Own Numbers Tell the Story

CMS's regulatory impact analysis projects that the 2027 proposed rule will reduce marketplace enrollment by 1.2 to 2 million people and cut federal premium tax credit spending by $10.4 billion in 2027. These are the agency's own estimates, not external projections.

For context, 2025 represented the ACA marketplace's peak enrollment at 24.2 million consumers, with 92% receiving subsidies and average monthly premiums after subsidies of $113. By 2026, enrollment had already declined to 23.1 million (a 4.9% drop), the subsidy share fell to 87%, and the average post-subsidy premium increased to $178. The 2027 rule projects a further reduction of 1.2 to 2 million from an already declining baseline.

CBO's broader projections incorporating all recent policy changes paint a steeper trajectory. CBO's February 2026 baseline estimates the uninsured population will increase by 3.4 million in 2026, 7.5 million in 2027, and 8.7 million in 2028 compared to 2025 levels. The budget reconciliation law's gross marketplace federal spending cuts total approximately $213 billion over ten years.

CBO also projects that gross benchmark premiums could increase by 4.3% in 2026 and 7.7% in 2027. This estimate predates the full actuarial modeling of the de minimis range impact and SEP elimination, so the actual premium trajectory may run higher once carriers incorporate the risk pool composition shift into their 2027 filings.

NASHP (National Academy for State Health Policy) estimates that eligibility verification changes alone will reduce APTC spending by approximately $5.2 billion in 2027, with a resulting 2 to 3 percent increase in health insurance premiums. This is a separate and additive effect from the de minimis and SEP provisions.

Risk Pool Composition: The Adverse Selection Mechanics

The enrollment decline projected by CMS is not random. Patterns we have tracked across prior enrollment contractions show that healthier and younger enrollees are consistently the first to leave when coverage becomes more expensive or administratively burdensome. The 2027 rule creates both types of barriers simultaneously.

The Association for Community Affiliated Plans (ACAP) flagged this dynamic in its comment letter: "healthy people are more likely to be deterred by" administrative requirements such as pre-enrollment SEP verification. The proposed rule requires pre-enrollment verification for 75% of SEP applicants, up from the current post-enrollment process. This procedural change does not directly affect plan pricing, but it suppresses enrollment among the population segment most likely to be deterred by paperwork: younger, healthier individuals who are less motivated to complete administrative steps because their expected healthcare utilization is low.

The Commonwealth Fund's analysis reinforced this point, noting that the rule would worsen risk pools by driving out healthier enrollees who face higher net premiums after subsidy reductions. When subsidies decrease (through enhanced PTC expiration, APTC repayment risk, or SEP closure) and cost-sharing increases (through wider de minimis ranges), the marginal enrollee who exits is the one whose expected claims are below the plan's break-even premium. Every such departure raises the average cost of the remaining pool.

For health actuaries, the risk pool composition shift requires explicit modeling in the 2027 rate filing. The standard approach of applying a morbidity adjustment factor to projected enrollment must now incorporate three separate attrition channels (SEP closure, APTC repayment avoidance, and de minimis-driven metal migration), each with its own demographic and health status profile. This continues the trend we documented in our analysis of the 21.7% benchmark premium surge for 2026, where carrier-level morbidity adjustment factors ranged from 1.0025 to 1.044.

Additional Regulatory Changes Compounding the Impact

Several other provisions in the 2027 proposed rule add pressure to the enrollment and plan design landscape. While individually smaller than the three main levers, their cumulative effect is significant.

Catastrophic plan expansion: The proposed rule would allow multi-year enrollment in catastrophic plans for up to 10 consecutive years (previously annual re-qualification was required). Catastrophic plan deductibles are set at 130% of the standard MOOP: $15,600 for individuals and $31,200 for families, covering only three primary care visits plus preventive care before the deductible. BCBSA warned against multi-year catastrophic plans in its comment letter, drawing parallels to long-term care insurance: "premium increases of 50-300%, insolvencies." Centene noted that pricing catastrophic plans for multi-year horizons would be "incredibly difficult" given medical trend uncertainty.

Standardized plan elimination: The proposed rule removes the requirement for standardized plan options on federally facilitated exchanges and state-based exchanges using the federal platform, effective plan year 2027. Consumer advocates noted that "one-third of the market" had enrolled in standardized plans within two years of their rollout. Removing standardized options increases plan design complexity for consumers and may reduce the effectiveness of the risk adjustment transfer formula.

Essential Community Provider threshold reduction: The minimum ECP threshold drops from 35% to 20% of available essential community providers in a plan's service area. This affects network adequacy for safety-net populations and could narrow access in rural and underserved areas where Federally Qualified Health Centers provide the primary care infrastructure.

Open enrollment period constraints: All exchanges must end the OEP by December 31 and limit it to no more than nine weeks starting in 2027. States that had extended their enrollment windows (several state-based exchanges ran into mid-January) lose that flexibility.

Immigration eligibility restrictions: Effective January 1, 2027, only citizens, lawful permanent residents, Cuban/Haitian entrants, and COFA migrants are eligible for premium tax credits. Asylum seekers and individuals with other immigration statuses lose PTC eligibility, further narrowing the enrolled population.

Recalibrating 2027 Rate Filings: A Health Actuary's Checklist

Health actuaries certifying 2027 ACA rates must address several new considerations that previous filing cycles did not require. Based on the proposed rule provisions and the Academy of Actuaries' March 13, 2026 comment letter, the following recalibrations are necessary.

Enrollment sensitivity analysis: The actuarial memorandum should include scenario testing for enrollment declines of 5%, 10%, and 15% relative to the 2026 effectuated enrollment baseline, with corresponding morbidity adjustment factors for each scenario. The CMS projection range of 1.2 to 2 million across the national market translates differently for each carrier depending on their proportion of SEP enrollees, CSR-eligible members, and subsidy-dependent populations.

Metal-level migration modeling: If the de minimis stay is lifted, actuaries must model the expected migration from silver to bronze among non-CSR-eligible enrollees, and from gold to silver among enrollees who perceive the compressed AV difference as insufficient to justify the premium differential. Each migration path changes the expected claims distribution within the metal level the enrollee enters.

CSR loading documentation: The new disclosure requirement for CSR loading in the Unified Rate Review Template and Actuarial Memorandum means that the silver load calculation, which has operated with limited regulatory transparency since 2017, must now be actuarially justified with both retrospective experience data and prospective assumptions. Actuaries should review their current silver loading methodology for consistency with the new disclosure framework.

APTC repayment behavioral adjustment: Rate filings should incorporate an assumption about enrollment attrition driven by repayment aversion. This is a new variable with no direct historical analog, so actuaries may need to rely on analogy-based assumptions (such as the behavioral response to the individual mandate penalty reduction) or carrier-specific data on enrollees who previously received repayment notices.

Risk adjustment recalibration: The American Academy of Actuaries raised concerns about risk pool fragmentation from separate catastrophic and metallic plan risk pools, which the proposed rule contemplates. If catastrophic plans are separated from the metal-level risk adjustment pool, the transfer formula recalibration could affect carrier-level risk adjustment receivables and payables by several percentage points, depending on the carrier's catastrophic plan market share.

Dual-scenario filing contingency: Given the ongoing litigation over de minimis ranges, carriers in states where the stay applies should prepare rate filings that can accommodate either the +2/-4 range or the narrower historical range. The actuarial certification must specify which assumptions underlie the filed rates and how the rate level would change under the alternative scenario.

What the Academy of Actuaries Flagged

The American Academy of Actuaries submitted a detailed comment letter on March 13, 2026, through its Individual and Small Group Markets Committee and Health Solvency and Risk Management Committee. Several concerns are directly relevant to pricing and reserving actuaries.

The Academy expressed concern about the actuarial certification challenges created by separate risk pools for catastrophic and metallic plans. Under the current framework, catastrophic plan experience is pooled with metal-level plans for risk adjustment purposes. Separating these pools would require actuaries to certify rates based on thinner credibility for both segments, with potentially volatile risk adjustment transfer payments in the early years of separation.

On cost-sharing parameters, the Academy noted that multi-year catastrophic plan pricing introduces medical trend projection uncertainty that compounds over the enrollment horizon. Unlike annual plans where actuaries can recalibrate trend assumptions each year, a multi-year commitment requires pricing for trend levels three, five, or even ten years out. The Academy drew attention to the difficulty of actuarial certification under these conditions.

The Academy also addressed data collection requirements for separate risk pool calculations, noting that the infrastructure for tracking and reporting catastrophic plan experience separately does not currently exist at most carriers. Building that infrastructure adds implementation costs that must be reflected in the administrative expense load of 2027 rate filings.

Why This Matters for Health Actuaries

The 2027 NBPP proposed rule is not a marginal adjustment to marketplace parameters. It represents a structural shift in the ACA's enrollment infrastructure, benefit design flexibility, and subsidy architecture that will reshape the individual market risk pool for years beyond 2027.

For pricing actuaries, the immediate challenge is calibrating 2027 rate filings to a population that will be smaller, sicker, and more subsidy-dependent than the 2026 enrolled population. The morbidity adjustment factors must capture three distinct attrition channels, each with its own demographic signature. Carriers that underestimate the enrollment decline will over-collect premium (and potentially lose market share to competitors who priced more aggressively), while carriers that overestimate will under-price and face adverse financial results.

For reserving actuaries, the composition shift changes the claims distribution in ways that historical development patterns may not capture. If the 2027 enrolled population skews older and sicker, claim severity will increase, claim frequency patterns will shift (more chronic care, fewer acute episodes), and the standard completion factors derived from a broader population may understate ultimate losses.

For consulting actuaries advising state regulators, the proposed rule creates a patchwork of implementation challenges. States with their own exchanges have some flexibility on OEP timing and standardized plan requirements, but the federal statutory changes (APTC repayment caps, income-based SEP prohibition) apply uniformly. The regulatory review of 2027 filings will require examiners to evaluate assumptions about federal policy changes that may not be finalized when filings are submitted.

This article pairs with our analysis of GLP-1 credibility challenges in 2027 ACA rate filings. The proposed rule's enrollment contraction compounds the credibility problem: as the enrolled population shrinks, the already-thin GLP-1 utilization data becomes even less statistically reliable, making it harder for actuaries to separate signal from noise in pharmacy trend projections.

The final rule is expected in the coming months. Regardless of whether specific provisions are modified, the direction is clear: the 2027 individual market will have fewer enrollees, wider cost-sharing tolerances, and less subsidy insulation than any plan year since the ACA's enhanced premium tax credits began. Health actuaries who file rates without explicitly modeling these changes risk certifying premiums that do not reflect the population they will actually cover.