City of Columbus v. Kennedy, 2025 WL 2426382 (D. Md. 2025)
Available at https://www.govinfo.gov/content/pkg/USCOURTS-mdd-1_25-cv-02114/pdf/USCOURTS-mdd-1_25-cv-02114-0.pdf
A federal trial court has temporarily blocked portions of final regulations issued by HHS in June 2025 that were intended to ensure the integrity of the Affordable Care Act (ACA) Exchanges (also known as Marketplaces) and the affordability of health coverage. The regulations, which included changes to annual cost-sharing limits, eligibility and enrollment procedures, and the definition of essential health benefits, were scheduled to take effect on August 25, 2025, with many provisions impacting insurance plans available in 2026. A group of cities and nonprofit organizations sued, claiming that certain provisions were contrary to law or arbitrary and capricious. Finding that the challengers were likely to succeed on the merits with respect to the following provisions, the court delayed their effective date pending the outcome of the litigation:
- Imposition of a $5 monthly premium penalty on automatic re-enrollees in an Exchange;
- Revocation of guaranteed issue coverage for individuals with past-due premiums;
- Reinstatement of the “failure-to-reconcile policy,” which affects eligibility for advance premium tax credits;
- Eligibility verification requirements for Exchange special enrollment periods;
- Heightened requirements for verification of household income; and
- Changes to the de minimis ranges for actuarial value calculations.
However, the court declined to delay (1) the elimination of a 60-day extension for income verification and (2) the 2026 applicability date of the updated methodology for calculating the “premium adjustment percentage” used to set several ACA parameters, including the maximum annual limitation on cost-sharing. Thus, the cost-sharing limitations for 2026 remain $10,600 for self-only coverage and $21,200 for other than self-only coverage. Additional provisions of the regulations were not challenged, including the revocation of Exchange eligibility for Deferred Action for Childhood Arrivals (DACA) recipients and the modification of the essential health benefits definition to exclude “specified sex-trait modification procedures.”
EBIA Comment: HHS has acknowledged the court’s ruling on its website, confirming the regulatory provisions that will be delayed while the litigation remains pending. For more information, see EBIA’s Health Care Reform manual at Sections XXI.A (“Establishment and Functions of Exchanges”), XXI.B (“Exchange Eligibility”), XXI.C (“Qualified Health Plans (QHPs) and Essential Health Benefits”), and XXI.G (“Premium Tax Credits”). See also EBIA’s Self-Insured Health Plans manual at Section XV.D (“Designing Cost-Sharing Features”).
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