CMS Proposes Annual Income and Citizenship Checks Before ACA Subsidies Starting With 2028 Plans

CMS proposed on October 23 that ACA marketplaces verify income, citizenship or lawful presence, other coverage and residence before paying any premium subsidy, starting with 2028 plans. The proposed rule, CMS-9873-P, carries out section 71303 of the July 2025 reconciliation law, Public Law 119-21. Its sharpest change hits people who renew. Enrollees who don’t come back each year to confirm their details would be re-enrolled automatically, but without financial help.

That ends the default many marketplace customers rely on today. A returning enrollee who does nothing is carried into the next year with a subsidy still attached. Under the proposal, the first verification window opens August 1, 2027, three months before open enrollment for 2028 coverage.

Photo: Centers for Medicare and Medicaid Services, public domain via Wikimedia Commons

What the law changed

Section 71303 rewrites the premium tax credit in the Internal Revenue Code. For tax years beginning after December 31, 2027, a month counts toward the credit only if the marketplace has verified the enrollee’s eligibility. A plan also stops counting as a qualified health plan if its marketplace doesn’t offer a pre-enrollment verification process. Treasury and the IRS published their half of the job on October 15, a proposed rule that sets out what must be verified for subsidized months: household income, family size, other coverage and eligible immigration status. Comments on the Treasury rule close in late November, with a telephone hearing on December 8.

The CMS rule is the operating manual. It tells marketplaces, federal and state-run alike, how to do the checks.

Four items have to be verified before advance premium tax credits or cost-sharing reductions flow: household income and family size; citizenship, US national status or eligible noncitizen status; eligibility for or enrollment in other qualifying coverage; and place of residence. People could still enroll while a check is pending, but they’d pay full price during that “inconsistency period” if the data can’t be matched electronically. Enrollees who clear the check later would get the subsidy back for those months. A new contingent plan selection lets someone choose a plan that takes effect only once eligibility is confirmed.

There are exceptions. The rule waives checks for family-size changes after a birth, adoption or marriage, or the loss of a dependent through divorce, separation or death. Treasury’s companion rule estimates about 50,000 families with newborns would benefit from the matching waiver.

Who it reaches

The administration frames the rule as fraud control. “Federal subsidies should only go to eligible Americans, not to fraudsters gaming the system,” CMS Administrator Mehmet Oz said. Treasury Secretary Scott Bessent said taxpayers “should not be forced to subsidize health care for people who are ineligible under federal law.”

CMS published no estimate of how many people would lose subsidies, how much the government would save, or what the checks would cost marketplaces. The fact sheet says comments are open for 30 days after Federal Register publication.

The scale is in CMS’s own enrollment data. For 2026, about 23.1 million people picked a marketplace plan, down 5 percent from 2025. About 15.8 million used HealthCare.gov, the federal platform. Nationally, 87 percent had advance premium tax credits. Treasury’s proposed rule counts about 15.6 million people in marketplace coverage, 13.5 million of them potentially eligible for the credit.

Most of those people are subsidized. Under the proposal, every one of them would need to verify each year to stay that way.

Stacked on top of 2026 and 2027 increases

The rule lands on a market already under strain. The enhanced tax credits expired at the end of 2025, and CMS reported that average monthly out-of-pocket premiums rose from $113 in 2025 to $178 in 2026. For 2027, insurers’ preliminary filings showed a median increase of 14 percent across 77 insurers in 16 states and DC, according to a KFF analysis published in July. Final 2027 rates go live when open enrollment begins on November 1. It runs to January 15, with December 15 the deadline for coverage starting January 1.

The same 2025 law removed the cap on how much of an overpaid subsidy households must repay at tax time, starting with tax year 2026. Treasury expects about 3.7 million returns in 2028 to include such a repayment. Its proposed rule also ties the credit to the new Medicaid work rules. People who would qualify for Medicaid but fail its work requirement are treated as having Medicaid coverage, which makes them ineligible for the credit. Those rules start nationwide on January 1, 2027, as covered in our Medicaid work requirements post.

The calendar

The CMS rule needs a final version well before August 1, 2027, when the first verification window opens. State-run marketplaces would have to build the same process, and a state that wants to start running its own marketplace would now apply 15 months before the verification period opens. Today the 15-month clock runs from open enrollment.

Two dates will show how the rule lands. The first is the comment deadline, 30 days after publication. The second is fall 2027, when the auto-renewal notices go out. That’s when enrollees learn whether their subsidy carries over or disappears for want of a form.