Over 20 States Sue Trump Administration Over a New ACA Enrollment Eligibility Rule

More than 20 states, led by attorneys general, have filed a federal lawsuit challenging a Trump administration rule finalized in June 2025.

The rule changes key aspects of the Affordable Care Act (ACA) marketplace, altering enrollment periods, eligibility verification and coverage requirements.

The Department of Health and Human Services (HHS) defends the regulation, stating it is necessary to reduce fraud and ensure that financial subsidies reach only eligible enrollees. CMS Acting Administrator Liz Richter said the rule aims to protect marketplace integrity and maintain public trust.

However, the states argue that the new rule threatens this progress by imposing unnecessary hurdles that will disrupt enrollment and retention.

What Is the Affordable Care Act?

The Patient Protection and Affordable Care Act — commonly known as the Affordable Care Act, the ACA or Obamacare — is one of the most significant health care laws passed in the US in decades.

Passed in 2010, its main goal was to make health insurance more accessible and affordable for millions of Americans who previously struggled to get coverage.

Before the ACA, many faced denial of insurance due to pre-existing conditions or unaffordable premiums.

The ACA created marketplaces where individuals can compare plans and receive financial help based on income. It also requires insurers to cover essential health benefits and protects people from being denied coverage.

On the other hand, however, the ACA has also faced criticism and challenges over the years. Some have argued that it increased costs for certain groups or created complexities in the insurance market, fueling ongoing debates about the best way to ensure affordable, quality healthcare for all those enrolled.

The new rule, according to the HHS, balances coverage expansion with program integrity and financial sustainability.

What Is the New Enrollment Eligibility Rule?

The rule, officially named the Marketplace Integrity and Affordability Final Rule, was finalized by the Centers for Medicare & Medicaid Services (CMS) on June 20, 2025, and changes (Figure 1) take effect for the 2026 plan year.

It shortens the open enrollment period from 90 to 60 days, tightens income and eligibility verification and adds a $5 monthly fee for automatic re-enrollees of zero-premium subsidized plans unless they confirm eligibility.

Other changes remove a special enrollment period for very low-income individuals and exclude some groups, like Deferred Action for Childhood Arrivals (DACA) recipients, from certain programs.

The rule also removes gender-affirming care from essential health benefits. Analysis by the Kaiser Family Foundation suggests this change may increase costs for transgender patients and reduce their access to necessary treatments.

CMS says these steps reduce improper enrollments, stabilize costs and ensure subsidies reach eligible people. Critics warn that the fee and shorter enrollment may hurt low-income consumers and limit transgender care access.

How Are US States Responding?

Data from the Centers for Medicare & Medicaid Services (CMS) shows that more than 24 million Americans selected ACA marketplace plans for 2025, underscoring the program’s importance in expanding coverage.

Plaintiffs argue the Trump administration violated the Administrative Procedure Act by rushing the rule through without sufficient public comment or transparency. They warn that as many as 1.8 million people could lose ACA coverage due to the shortened enrollment period and stricter verification processes. This loss of coverage is expected to increase uncompensated care costs for hospitals and push more people into Medicaid, straining state budgets and healthcare systems.

Attorneys general from California, Massachusetts, Maine, Minnesota, Oregon, Washington, New Jersey and several other states have joined the suit, including .

Connecticut Attorney General William Tong criticized the rule, saying it undermines access and affordability of health care. Massachusetts Attorney General Andrea Campbell called the rule a barrier to health care access that imposes burdensome fees.

In Washington, the final rule would lower the number of people enrolling in health insurance by as much as tens of thousands through the Washington Health Benefit Exchange, resulting in a loss of up to $10 million in annual revenue and $100 million in uncompensated hospital care costs.

What’s at Stake Moving Forward?

If upheld, the rule may change how millions of Americans access affordable health insurance, particularly vulnerable populations like low-income families and transgender individuals.

The lawsuit remains pending in federal court, with hearings and further legal arguments anticipated in the coming months. States involved have pledged to vigorously defend the ACA and advocate for policies that support broad access to health coverage.

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