A federal judge in Maryland struck down most of a controversial rule that overhauled Affordable Care Act enrollment and eligibility, delivering a setback to the Trump administration’s fraud-fighting efforts while handing a win to advocates of expanded health coverage.
Judge Brendan Hurson of the Maryland District Court vacated eight provisions of the rule on Friday. These included a $5 premium penalty for people who automatically reenroll in coverage and a policy that disqualified individuals who failed to reconcile tax credits with their income from receiving subsidies. The decision came after Hurson had already stayed most of the provisions last year.
The rule, finalized by the Centers for Medicare & Medicaid Services last June, shortened sign-up windows and tightened eligibility verification for ACA plans. Regulators argued the changes were needed to crack down on what they described as widespread fraud and abuse in the exchanges.
Officials pointed to research from a conservative think tank that estimated millions of ACA enrollments are improper, inflating government subsidies. Independent health policy experts say that number is probably too high, though many agree improper sign-ups are a real problem.
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Nonprofit group Democracy Forward sued on behalf of Chicago, Baltimore, Columbus, Ohio, along with Doctors For America and the Main Street Alliance.
Hurson stayed key provisions last summer, finding the plaintiffs were likely to succeed. The administration appealed that stay, which is still pending. Now Hurson has officially tossed out the bulk of the rule, agreeing that regulators overstepped their authority.
“The agency cannot utilize its general rulemaking authority to override explicit statutory provisions,” the judge wrote in his Friday opinion.
Along with the $5 auto-enrollment penalty and the “failure to reconcile” policy, Hurson vacated the elimination of guaranteed coverage for people overdue on premiums; higher income verification standards when exchanges find tax data inconsistencies; stricter eligibility checks before a special enrollment period; and changes to the formula used to sort ACA plans into coverage tiers.
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All those provisions had been stayed before. Hurson also vacated a policy he had originally allowed to continue: eliminating a 60-day window for enrollees to resolve income data inconsistencies. He struck down a shorter open enrollment period set to begin next year, something he didn’t address in August.
The only major policy Hurson allowed to stand was a change to CMS’ methodology for calculating premium adjustments. He noted the agency had properly justified that change, even though the government conceded it would increase premiums and worsen the risk pool.
“While this policy change will undoubtedly have effects on the broader insurance market, including, as HHS concedes, an increase in premiums and a worsening risk pool, the Court is constrained to conclude that HHS did not act without explanation or rationale,” Hurson wrote.
Democracy Forward called the ruling a “major victory.” Other plaintiffs cheered the result. Zach Klein, attorney for Columbus, said the decision was a win for millions of Americans who would have been denied coverage or faced skyrocketing costs.
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The ruling isn’t a final fix for ACA supporters. CMS could appeal. Regulators have issued other rules that critics say weaken patient protections. The GOP’s tax and policy megabill signed last summer codified similar restrictions, including effectively ending autorenewals and requiring more frequent income updates or risk losing coverage. Those changes take effect in 2028.
ACA exchanges have already shrunk after Congress let more generous subsidies expire at the end of 2025. Enrollment could fall by 17% to 26% this year, leaving millions more uninsured, according to Wakely Consulting Group.
The health status of the ACA population appears to be degrading. Younger, healthier people are leaving the exchanges at a higher rate, leaving sicker and more expensive enrollees behind. That could create a cycle where insurers drop out and premiums rise, pushing even more healthy people away until the marketplaces are forced to close.
Carriers have already started exiting. Major national insurers like CVS and Cigna, along with regional plans like Providence Health Plan, PacificSource and Baylor Scott & White, have cited high spending and regulatory turbulence as reasons to leave.
