The Final 2025 Notice of Benefit and Payment Parameters: Implications for States
Sabrina Corlette, Georgetown University’s Center on Health Insurance Reforms, and Jason Levitis, Urban Institute
On April 2, 2024, the Centers for Medicare & Medicaid Services (CMS) released the final Notice of Benefit and Payment Parameters (NBPP) for 2025. This annual rule governs core provisions of the Affordable Care Act (ACA), including operation of the health insurance Marketplaces, standards for health plans, insurance brokers (including web-brokers), and the risk adjustment program. This expert perspective focuses on provisions of the final rule of interest to state officials. A more comprehensive summary of the final rule can be found on Health Affairs Forefront, here and here.
The final 2025 NBPP includes several provisions requiring State-Based Marketplaces (SBMs) to adhere to standards and requirements that align more with the Federally Facilitated Marketplace (FFM), improvements to the processes for states to determine and update essential health benefits, and initiatives designed to streamline the eligibility and enrollment process for consumers. The final rule also requires states to pay for federal income verification services. CMS received 220 public comments prior to finalizing this rule, including numerous comments from state officials. CMS has also released a fact sheet on the final rule and the final 2025 Actuarial Value Calculator and methodology.
Raising the Bar for State-Based Marketplaces
Eighteen states and the District of Columbia operate an SBM, and Georgia and Illinois will transition to an SBM for plan year 2025 and Oregon for plan year 2027. Other states are considering legislation to operate their own SBM. In the final 2025 NBPP, CMS sets minimum national standards for the operation of SBMs and the plans they offer. At the same time, it reduces the user fees for states relying on the federal Marketplace platform.
A Graduated Transition and Transparent Approval Process
Under the final rule, any state seeking to transition from the FFM to an SBM must spend at least one year operating as an SBM using the federal platform (SBM-FP). SBM-FPs use HealthCare.gov as their eligibility and enrollment system, but conduct plan management and support marketing and consumer assistance themselves.
Although most public comments supported CMS’ proposal to have transitioning states spend at least a year as an SBM-FP, two states currently undergoing a transition – Georgia and Oregon – argued that the requirement would be inefficient and burdensome. However, CMS believes that the transitional year is critical for states to have the necessary time to invest in staffing, brand development and marketing, IT system procurement, design and testing, plan management, and consumer assistance. While “off the shelf” Marketplace eligibility and enrollment platforms are available, CMS notes that they require state-specific programming to ensure correct eligibility determinations and the appropriate display of consumer-facing content. The additional year will also enable states to build formal partnerships with essential partners such as the Medicaid agency, the department of insurance, health insurance issuers, brokers and agents, and Navigator grantees.
CMS is also formalizing requirements that states submit documentation supporting their bid to become an SBM through their Exchange Blueprint. The final rule clarifies that CMS has the authority to request from states whatever information the agency deems necessary to assess the state’s capabilities of running an SBM. The final rule also requires a greater level of public engagement in the SBM transition process. States will need to notify the public and provide a copy of their Blueprint applications upon submission to CMS. The agency will post the application within 30 days of receipt. States will also be required to hold at least one “public engagement,” such as a townhall meeting, upon submission of the Blueprint, and then periodic similar public engagements until CMS approves the application.
Although most public comments supported a more rigorous and transparent approval process, Georgia’s department of insurance and Marketplace characterized the Blueprint application and public engagement requirements as unnecessarily onerous and vague. However, CMS countered that the final rule simply codifies existing CMS practices and does not materially change what the agency has been asking of transitioning states.
Standards for Marketplace Call Centers
CMS has established new standards for SBM call centers. However, CMS asserts that all current SBMs already meet these standards. They are codifying these standards to ensure that future SBMs do not skimp on their investments in call centers, for example by providing only an automated telephone system. Under the new standards, SBMs must provide consumers access to a live call center representative during published hours of operation. Those call center representatives must be able to help consumers complete a Marketplace application, understand their eligibility for coverage and financial assistance, and assess their plan options.
Many public comments, including those from SBMs voiced support for the new call center standards. Some opposed the new standards, arguing that they were not necessary, or infringed on state flexibility. At least one state objected to language in the proposed rule that would have required call center representatives to help consumers select a Marketplace plan, noting that their state law prohibits anyone but a licensed broker from recommending specific plans. As a result, CMS modified its standards slightly to require that call center operators facilitate the “comparison” of Marketplace plans for consumers, rather than help them “select” a plan.
Minimum Standards for Network Adequacy
The final rule requires SBM and SBM-FP states to establish quantitative time and distance network adequacy standards that are “at least as stringent” as those required by the FFM. These states will also have to review the adequacy of Marketplace plan networks before certifying them for participation. CMS has observed that one-quarter of the current SBMs and SBM-FPs do not impose any quantitative standard for network adequacy on Marketplace insurers, and rather than conducting routine audits for compliance, state regulators rely on consumer complaints to identify problems. CMS argues that, no matter the state in which they live, consumers deserve to have a quantitative assessment of provider access and the objective monitoring of network adequacy.
As part of the plan certification process, SBM and SBM-FP states will need to enable insurers to submit justifications if they cannot meet the time and distance standards, such as workforce shortages or topographical challenges. Insurers will also need to submit data to the SBMs and SBM-FPs if their provider networks offer telehealth services.
Because some SBMs and SBM-FPs have existing quantitative network adequacy standards that differ from the FFM’s standards, CMS will allow states to seek an exception to the requirement that states maintain time and distance standards at least as stringent as the federal ones. To gain an exception, a state must be able to demonstrate that their standards ensure a level of access to providers that is as adequate as that in the FFM, and that they review plans’ network adequacy before they are certified. SBMs or SBM-FPs that fail to comply with the new expectations for network adequacy oversight could be subject to remedial action by CMS under its program integrity authority.
A Centralized Eligibility and Enrollment Platform
Going forward, all SBMs will be required to operate a centralized eligibility and enrollment platform on their own website. SBMs also cannot delegate to any other entity, such as a web-broker or direct enrollment (DE) vendor the responsibility to determine eligibility for coverage or financial assistance. Although many supported these requirements, some were opposed, arguing that they undermine state flexibility. However, CMS believes that a centralized web platform will help ensure states can properly oversee Marketplace eligibility and enrollment efficacy, implement timely system updates, and maintain a record of effectuated enrollments.
National Standards for Web-Brokers and Direct Enrollment Entities
CMS is extending standards that apply to web-brokers and DE entities in the FFM to those operating in SBMs. Although no SBMs currently use these entities to facilitate enrollments, CMS notes “increased interest” in doing so in a number of states.
Standards for web-brokers include requirements for the display of plan information, disclaimer language, and information about Marketplace financial assistance. They also address operational readiness, standards of conduct, and the behavior of downstream agents and brokers. For DE entities, the standards govern the display of Marketplace versus non-Marketplace plans, language for disclaimers, and operational readiness. The federal rules also limit DE entities’ marketing of off-Marketplace products during the Marketplaces’ open enrollment period.
CMS argues that a standardized, nationwide framework and set of requirements will help reduce burdens on web-brokers and DE entities that operate in multiple states. However, the agency also observes that state flexibility is important. Therefore, although the CMS standards set a federal floor, SBMs will have the flexibility to determine the details of those standards.
Most commenters supported establishing a minimum set of national standards. Some noted that the changes could enable SBMs to leverage the FFM’s operational readiness reviews, which would relieve compliance burdens for both SBMs, web-brokers and DE entities. However, other commenters opposed the changes, arguing that SBMs should have greater flexibility to set their own standards. In response, CMS indicated that it was balancing the need for a baseline set of consumer protections while maximizing opportunities for state flexibility.
Standardizing Open Enrollment Periods
Most SBMs hold their open enrollment periods from November 1, to on or after January 15. Going forward, CMS will require all current and future SBMs to adhere to the same schedule, with the option of extending their open enrollment period past January 15, if they choose. However, in response to comments the agency agreed to “grandfather” the open enrollment period for Idaho’s SBM, which begins in October and ends in December.
Special Enrollment Periods: Aligning Coverage Effective Dates
The final NBPP requires all SBMs to align their coverage effective dates for special enrollments. Currently, in the FFM, SBM-FPs, and several SBMs, if a consumer selects a Marketplace plan during a special enrollment period (SEP), their coverage will start on the first of the month after their plan selection. For example, if a consumer selects a Marketplace plan on March 31, their coverage will start on April 1. However, in some SBMs, if a consumer selects a plan after the 15th of the month, their coverage effective date will not start until the first day of the second month after plan selection. In other words, if a consumer selects a plan on March 16, their coverage wouldn’t begin until May 1.
Because such a late start date can expose people to coverage gaps, all SBMs will now be required to provide a coverage effective date of the first of the month following the date of plan selection. There was widespread support for this proposal from many commenters, including providers, insurers, patient and consumer advocacy groups, and SBMs.
User Fees
The final rule sets the 2025 Marketplace user fees at 1.5% for FFMs and 1.2% for SBM-FPs. These are both substantially lower than the proposed values, which were 2.2% for FFMs and 1.8% for SBM-FPs. User fees are paid by Marketplace issuers to support the operations of the FFM and federal platform, including eligibility and enrollment processes; outreach and education; managing Navigators, agents, and brokers; consumer assistance tools; and certification and oversight of Marketplace plans. The fee is calculated as a percentage of Marketplace premiums collected. CMS explains that the user fees are lower because it has increased its projections of 2025 enrollment given higher than expected enrollment in 2024, so it can meet its revenue needs with a lower rate.
Essential Health Benefits: Updating Benefits and the Benchmark Plan
Under the ACA, states are primarily responsible for establishing essential health benefits (EHB) by identifying and updating the EHB-benchmark plan. The ACA also requires states to defray the cost of any benefit mandates that are “in addition” to EHB and enacted after December 31, 2011.
Changes to the Essential Health Benefits Defrayal Policy
Under the final rule, if a state enacts, through legislation or regulation, a new mandate requiring Marketplace plans to cover an item or service, it will not be required to cover the cost of that new mandate if the benefit is already included in the state’s EHB-benchmark plan. CMS enacted this rule change in response to feedback from states that the prior defrayal policy was confusing and difficult to operationalize. Most commenters supported the change to CMS’ defrayal policy, but some issuers projected that it would increase costs. CMS however believes that states will “appropriately balance” the need for coverage of an item or service with the potential impact it could have on premiums.
Streamlining the Essential Health Benefits-Benchmark Plan Update Process
CMS is streamlining the process for states to submit changes to their EHB-benchmark plans. Going forward, states will be required to show that their updated EHB-benchmark plan is as, or more generous than the scope of benefits in the state’s least generous employer plan (among the 10 base-benchmark plan options) and is as, or less generous than the scope of benefits in the state’s most generous employer plan. This means that states will need to assess only two typical employer plan options (the least and most generous) to determine the range of generosity into which their new EHB-benchmark plan must fall. Additionally, CMS will no longer require states to submit a formulary drug list as part of their documentation of EHB-benchmark plan changes, if the state is not proposing any changes to the prescription drug benefit. In response to comments, CMS has moved up the effective date for these changes from January 1, 2027 to January 1, 2026.
Many of the public comments supported these changes, noting that simplifying the process would reduce burdens on states seeking to update their EHB-benchmark plans. These commenters believe a streamlined process could help states expand coverage for critical services such as maternity care, substance-use disorder care, obesity care, and chronic disease management.
Many other commenters opposed the proposal, arguing that the updated process and removal of the generosity standard could expose federal taxpayers to increased costs, to the extent that states are more frequently adding benefits to their benchmark plan. However, CMS notes that under its new streamlined approach, there will be an “upper bound” for EHB-benchmark plans that more closely tracks how a “typical” employer plan changes over time.
Including Adult Dental Services in Essential Health Benefits
The final 2025 NBPP lifts a regulatory prohibition on Marketplace insurers including routing adult dental services as an EHB, even if the state’s EHB-benchmark plan includes those services as a covered benefit. As a result, states seeking to improve access to oral healthcare services can update their EHB-benchmark plans, according to the revised process and standards outlined above, to include an adult dental benefit. However, CMS acknowledges the operational challenges that some issuers could face building a dental provider network. States considering adding such coverage to their EHB-benchmark plan will need to work closely with their issuers to overcome these challenges. This provision will be effective beginning January 1, 2027. State applications to update their EHB-benchmark plans to include routine adult dental services will therefore be due by May 7, 2025.
Improving Consumers’ Enrollment Experience
The final 2025 NBPP includes several provisions designed to expand consumers’ enrollment opportunities, reduce paperwork requirements, and simplify the process of enrolling in and keeping Marketplace coverage.
Monthly Special Enrollment Periods for Low-Income People
The FFM and most SBMs have implemented a monthly SEP for individuals at or below 150% of the federal poverty level. However, the federal rules creating that SEP, adopted in 2022, authorized this SEP only while the Inflation Reduction Act’s (IRA’s) premium subsidy enhancements are in place (through plan year 2025). The final 2025 NBPP revises this SEP so that its availability is no longer contingent on the availability of IRA subsidies. SBMs will continue to have the option of offering this SEP.
Advance Notice of Advanced Premium Tax Credit Risk Due to Failure to Reconcile
The final rule requires Marketplaces to give enrollees advance notice that they are at risk of losing eligibility for advanced premium tax credits (APTCs) due to “failure to reconcile” (FTR) status after one year of failing to reconcile APTC—a year in advance of APTC loss. Marketplaces may either send a notice specifying FTR status directly to the tax filer (if they can do so in keeping with tax privacy rules) or send a more general notice that warns of potential APTC loss without specifying the reason—an approach that sidesteps tax privacy rules because such notices do not count as protected tax information. CMS also notes that they will provide SBMs with additional implementation guidance and model notice language.
Additional Flexibility for Basic Health Program Effectuation Dates
The final rules give states with Basic Health Programs (BHPs) two new options for setting the effective date of BHP coverage. Previous regulations required states to determine the effective date of all BHP coverage using either the Medicaid rules or the Marketplace rules. The Medicaid rules generally allow for the earliest possible effective date for enrollees, but some states find it infeasible to adopt these rules. The Marketplace rules may substantially delay enrollment for some consumers. The 2025 proposed payment notice added a third option, a middle ground where all coverage is effective on the first day of the month after the eligibility determination is made. Comments were generally supportive, but some commenters suggested giving states flexibility to establish their own effective date policies so long as they are no more restrictive than existing rules. The final rule adopts this suggestion. As a result, BHP states will now have four options for effective date rules: the Medicaid rules, the Marketplace rules, the first of the month following the eligibility determination, or a state-developed rule approved by CMS.
Flexibility to Accept Attestation as to Incarceration Status
The final rule permits Marketplaces to accept applicants’ attestation that they are not incarcerated to establish eligibility, rather than requiring a search of third-party data. In the proposed rule, CMS explained that third-party data contained numerous inaccuracies that lead to many unnecessary “data matching issues” (DMIs), requiring applicants to submit additional documentation to demonstrate lack of incarceration. Using such data led to many erroneous coverage denials but identified very few ineligible applicants and thus provided little benefit, while also aggravating racial inequities. In response, CMS makes the use of third-party data optional and notes that FFMs and SBM-FPs will stop using such data. A state Marketplace may still propose using an electronic data source for verifying incarceration status, subject to CMS approval that the alternative data source will maintain accuracy and minimize administrative costs, delays, and burdens on individuals.
Periodic Data Matching During a Benefit Year
The final rule requires Marketplaces to conduct periodic data matching (PDM) for evidence of enrollee death twice per year. Long-standing regulations require Marketplaces to conduct PDM to identify individuals enrolled in Medicare, Medicaid, Children’s Health Insurance Program (CHIP), or BHP coverage (where applicable) no less than twice per year, they did not specify the frequency of checks for evidence of enrollee death. The FFMs and SBM-FPs currently conduct PDM for death twice per year, but many SBMs do so less often. The final rule requires PDMs for death to follow the same twice-a-year cadence.
CMS also finalized a proposal to give the Secretary authority to temporarily suspend PDM requirements in situations when PDM data are less available, such as a declared national public health emergency. The final rule tweaks the proposal to clarify that it applies when data have limited availability, not just when they are unavailable.
Automatic Re-Enrollment for People With Catastrophic Coverage
The final regulations adopt a proposal to require SBMs to automatically re-enroll catastrophic coverage enrollees whose plans terminate, or who are no longer eligible. Marketplaces must already do this for enrollees in metal-level plans (bronze, silver, gold, or platinum), but not enrollees in catastrophic coverage. Consumers must be moved to a bronze plan in the same product, with a network similar to the individual’s current plan, if available, or else a plan with the lowest coverage level offered under the same product and with a similar network. In response to a comment that Connecticut law prohibits this practice, CMS qualified the regulatory language to indicate that states must comply with the requirement “to the extent permitted by applicable state law,” consistent with the approach taken in other CMS regulations.
CMS also finalized a proposal to prohibit Marketplaces from auto re-enrolling enrollees in a metal-level plan into a catastrophic level plan.
Premium Payment Deadline Extensions
The final regulations clarify that Marketplaces may permit insurers to provide reasonable extensions to deadlines for making premium payments in certain circumstances. The 2018 Payment Notice provided that Marketplaces have authority to permit insurers to extend payment deadlines when they are “experiencing billing or enrollment problems due to high volume or technical errors”—but only for a “binder payment,” which is the first monthly premium payment that effectuates enrollment. However, CMS has interpreted this flexibility to also apply to additional payments and circumstances. For example, in response to the COVID-19 pandemic, CMS released guidance in March of 2020, permitting insurers to extend premium deadlines generally. The final rule codifies this broader scope in regulations, clarifying that insurers may permit deadline extensions for all premium payments and in additional circumstances—namely, where insurers are directed to provide extensions by federal or state authorities.
Permitting Retroactive Termination for Medicare Enrollment
The final rule permits Marketplaces to allow consumers to retroactively terminate coverage to avoid duplicate coverage in situations where Medicare Part A or Part B coverage takes effect retroactively, though subject to more limitations than in the proposed rule. CMS had proposed to permit retroactive Marketplace termination where a consumer has been retroactively enrolled in Medicare Part A or B. Retroactive Medicare enrollment may occur where an individual turning 65 years old is not automatically enrolled and does not immediately enroll themselves, or where an individual is retroactively approved for Social Security Disability Insurance (SSDI) benefits extending back more than 25 months (in which case the Medicare coverage may be effective retroactive to the 25th month). In such cases, a consumer may have had no way to know at the time that they would be Medicare-eligible and thus may reasonably want their Marketplace premiums refunded. CMS proposed that the FFMs would permit this retroactive termination, and SBMs could decide whether to do so as well.
Several commenters expressed concerns the proposal could create operational challenges and adverse selection. In response, the final rule limits the span of retroactive termination to six months, clarifies that retroactive termination does not apply to stand-alone dental plans, and defer on deciding whether Marketplaces using the federal platform will adopt this approach, while giving themselves authority to do so. The policy is optional for SBMs, as under the proposed rule.
State Flexibility to Use Income and Resource Disregards for Non-MAGI Medicaid Eligibility
CMS did not finalize a proposal to give states more flexibility around income and resource disregards in Medicaid programs. Long-standing rules permit states to use asset tests for populations exempt from eligibility based on modified adjusted gross income (MAGI). States may “disregard” specified amounts of income and resources but generally may not target these disregards to specific populations. If a state provides a certain disregard for a certain eligibility group, it must generally do so for all individuals in that group, rather than, for example, limiting the disregard to individuals with a cognitive impairment. The proposed rule would have permitted states to target disregards to discrete subpopulations so long as the classification was reasonable and non-discriminatory. But many commenters raised concerns certain states would use the new flexibility to narrow eligibility. These commenters suggested that CMS impose additional guardrails—potentially including some sort of hold-harmless requirement—if the proposal were finalized. In the final rule, CMS indicates it is not finalizing this proposal at this time while it considers how to address commenters’ concerns.
Other Proposals
The final 2025 NBPP includes additional provisions updating public notice requirements for section 1332 waivers and requiring states to start paying for a federal data service.
1332 Waivers
The final rule adopts a proposal to permit states to hold required public meetings related to section 1332 waivers either virtually or hybrid (in-person and virtual) without any special permission. Section 1332 rules require states to hold public hearings before submitting a waiver application and then annual forums after approval. In response to the COVID-19 pandemic, CMS and the Treasury Department (the Departments) permitted states to ask permission to make these meetings virtual. The new rule goes a step further, allowing these meetings to be virtual or hybrid at state option. Commenters were generally supportive, though some expressed concerns that virtual or hybrid meetings could pose accessibility challenges to people with disabilities, people with limited English proficiency, and people with limited broadband access. In finalizing the proposal, the Departments note that states must comply with applicable civil rights laws and encouraged them to take accessibility into account to ensure meaningful opportunity to comment. The new rule does not change requirements for public notice, comment periods, or consultation with Indian tribes.
Requiring States to Pay to Use a Data Hub Income Service
The final rule adopts a requirement that state Marketplaces and Medicaid agencies pay to use an optional private data service for eligibility determinations, though with a different operational approach than CMS had proposed. Through the federal Data Services Hub, CMS makes available an optional private service providing recent income information, referred to as “Verify Current Income” (VCI). As of June 2023, 32 states and the District of Columbia and Puerto Rico used VCI Hub for their Medicaid and CHIP programs, and 10 of those States also used the service for their SBMs. CMS has historically paid for VCI for SBMs and Medicaid agencies, but they now have determined that federal law appropriately requires state agencies opting to use the service to pay for their access. The final rule makes this change effective July 1, 2024 for both SBMs and Medicaid agencies, though the latter can receive a 75% federal match for the expense. VCI will still be available through the Hub, and CMS will bill states monthly for their usage. The proposed rule would have required states to pay in advance, an approach which many commented would be challenging to implement.
Several commenters raised concerns that the proposal would create operational and budgetary problems for state agencies and imposes an unfair cost burden on SBMs, especially newly established ones. CMS’ response leaned heavily on its legal interpretation that state agencies must bear the cost, while also noting that state agencies have other data sources available (for example, quarterly wage data) and could potentially increase Marketplace user fees to bear the cost. Commenters also complained that the effective date provided insufficient time for agencies to adjust budgets and seek alternative data sources. CMS declined to change the effective date, noting that use of VCI is optional and that CMS has been working with states to prepare for this transition since before the proposed rule was published.