What the 2027 ACA marketplace proposal means for employers

• Key Insight: Discover how upcoming ACA marketplace changes are impacting employee perceptions of group health plans.
• What's at Stake: HR leaders risk facing a flood of employee questions regarding misunderstood health plan changes.
• Forward Look: Brace for potential rule changes as legal challenges move forward in federal court.
  Source: Bullets generated by AI with editorial review.

There are changes on the horizon for the Affordable Care Act's (ACA) marketplace, but it may not be as big of a concern as employers and employees expect.

The 2027 ACA Marketplace proposed earlier this year went into effect in July, according to the Centers for Medicare and Medicaid Services. However, several of its key provisions have been blocked by a federal court and are currently still on hold, further complicating the proposal's progress and potentially stunting leaders' understanding of what it means for them. And while the proposal's overall impact is still unclear, there are many things for leaders to know.

"The goal is [supposed to be] to make sure financial assistance is going to people who actually meet the requirements for it," said Jennifer Schaefer, founder and CEO of benefit platform JS Benefits Group. "But this is still a work in progress."

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Under the new rule, there will be a number of changes made to the traditional process. Since July there has been a stricter income and eligibility verification process, additional requirements for people seeking coverage through special enrollment periods, and stronger safeguards to ensure consumers knowingly consent to enrollment. In addition, the rule also seeks to shorten the annual open enrollment period for coverage beginning in 2027, from Nov. 1 through Jan. 15 to Nov. 1 through Dec. 15, although that provision is currently among those tied up in court.

For employers, this shouldn't change too much, according to Schaefer, because the regulation mainly applies to the ACA Marketplace, not the group health coverage an employer provides. Still, she strongly suggested leaders don't take that lightly.

"The biggest thing right now is not assuming everything is settled just because the rule has been finalized," Schaefer said. "There could still be changes as the legal challenges [move] forward."

Rising opposition

Despite the proposal's attempt to improve upon the ACA, a coalition of 22 states have already publicly opposed the change and are suing the federal government to block the rule from being put forth. The states challenging the regulation — led by California, New Jersey and Pennsylvania — have concerns about accessibility, affordability, and the amount of administrative work some of these changes could create for those dependent on them. There are also concerns that some of the new requirements could make things more difficult for people who are eligible for coverage. 

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Another thing employers need to think about is when their employees will actually feel the impact of these changes, Schaefer noted, which is less predictable. If employees hear that the ACA is changing, they may assume their employer's health plan is changing too, but that may not be the case and leaders will need to be prepared to address that.

"HR is often going to be the first place employees go when they have questions," Schaefer said. "Someone needs to be able to look at a regulatory change and explain what actually affects them and their company and what doesn't."

How to react amid uncertainty

Considering the amount of unknown variables, Schaefer wouldn't recommend that employers make major benefits decisions based on the latest headline, no matter how appealing it may be. Instead, she suggested starting by identifying who in your organization could actually be affected by changes to the individual marketplace. If an organization has variable-hour employees, employees approaching retirement, or employees with family members who get their own coverage, those are the employees they should look out for, Schaefer said.

She also advised HR teams to be well-educated on the proposal and prepared with clear explanations of the difference between Marketplace coverage and a company's group health plan. Employees don't need a lesson on the regulations, Schaefer said, they need answers about whether their coverage is changing and what they need to do.

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"I'd use this [situation] as a reason to look at the bigger benefits strategy," Schaefer said. "Healthcare costs are already a major concern for employers, and regulatory changes are just one more thing HR and benefits teams have to keep up with."

The most important thing leaders should take away from this, according to Schaefer, is that benefits strategy can't be something organizations look at only once a year when the renewal arrives. Her advice is to be as flexible as possible and be open to continuous change.

"I don't think employers should panic or make major changes simply because the marketplace rules are changing," Schaefer said. "Stay informed, but make decisions based on what's actually happening with your employees and your own benefits plan."