CMS Proposes Expanded ACA Health Insurance Options in 2027 

On February 9, 2026, the Centers for Medicare & Medicaid Services (CMS) issued its proposed Notice of Benefit and Payment Parameters for 2027 (Proposed Rule), which, among other things, sets standards for federal and state Affordable Care Act (ACA) health insurance exchanges. 

The Proposed Rule provides that certain nontraditional health plans would qualify as qualified health plans (QHPs) offering minimum essential coverage under the ACA. Specifically, non-network plans can receive QHP certification beginning in plan year 2027 by demonstrating that they "provide[] access to a sufficient choice of providers that accept the non-network plan's benefit amount as payment in full, including [Essential Community Providers] and providers that specialize in mental health and substance use disorder services, to ensure that all services will be accessible without unreasonable delay." Per CMS' summary of the Proposed Rule, "[t]his proposed policy aims to reduce overall health care costs by (1) empowering enrollees to utilize price transparency information to shop for lower prices and negotiate directly with providers, thus fostering increased competition, and (2) eliminating substantial administrative overhead associated with traditional network management, potentially resulting in lower premiums."

Additionally, according to CMS, the Proposed Rule would: 

• Allow issuers to offer catastrophic plans with terms of either one year or multiple consecutive years, up to 10 years, aligning incentives for plans to invest in the long-term health of Americans 
• Repeal standardized plan options and related limit requirements, giving issuers greater flexibility to design plans that meet consumer demand 
• Permit low-deductible plans with higher maximum out-of-pocket limits to broaden affordable options 
• Better align affordability and coverage incentives across catastrophic and metal-level plans 
• Expand hardship exemptions for certain individuals 30 and older in all states, allowing more consumers access to more affordable catastrophic coverage 

The Proposed Rule also adds additional standards of conduct for insurance agents, brokers, and web-brokers "by clarifying prohibited marketing practices and reinforcing oversight to deter fraud and misleading conduct." Some of the prohibited conduct highlighted in the Proposed Rule includes "providing cash, monetary rebates, gifts cards, travel vouchers, or cash equivalents as an inducement for enrollment or otherwise," "falsely asserting or suggesting that customers will always qualify for zero-dollar insurance/zero-dollar premiums," and "miscommunicating enrollment timelines and deadlines."

Comments to the Proposed Rule are due by March 11, 2026. 

Second Circuit Rejects Mandatory Arbitration of Plan-Wide ERISA Claim

On February 5, 2026, the U.S. Court of Appeals for the Second Circuit issued its opinion in Duke v. Luxottica U.S. Holdings Corp., et al., No. 24-3207 (2nd Cir.), affirming the district court's denial of the defendants' motion to compel arbitration of ERISA § 502(a)(2) claims and its holding that the plaintiff had Article III standing to seek reformation of the plan in a proposed class action alleging violations of ERISA based on the use of "outdated actuarial assumptions in calculating benefits." The plaintiff asserted fiduciary breach claims on behalf of the plan under ERISA § 502(a)(2), as well as individual and class claims under § 502(a)(3).

The plaintiff filed suit on November 1, 2021, alleging that her pension plan calculated her benefits using unreasonable and outdated actuarial assumptions, resulting in reduced monthly payments compared to the benefits she would have received had she elected a single life annuity. The plaintiff's theory is that the conversion of her single life annuity into a joint and survivor annuity relied on outdated mortality assumptions that decreased her monthly benefit. On behalf of her plan, she sought reformation of the plan to update the actuarial assumptions used for such conversions and requested monetary relief in the form of loss restoration and disgorgement of profits. The plaintiff also sought individual and class-wide relief under § 502(a)(3).
 
The defendants moved to compel individual arbitration pursuant to an employment-related dispute resolution agreement in which the plaintiff agreed to arbitrate "on an individual basis only, and not on a class [or] collective" basis. The defendants also moved to dismiss the §502(a)(2) claims on the basis that the plaintiff lacked standing. The district court compelled arbitration of the plaintiff's individual § 502(a)(3) claims. After a motion for reconsideration, it also held that the plaintiff had standing to bring her § 502(a)(2) claims and that the "effective vindication" doctrine precluded mandatory individual arbitration of those claims. 

The Second Circuit agreed that the plaintiff had Article III standing to pursue her § 502(a)(2) claims for plan formation. The court emphasized that her alleged injury was not the plan's monetary loss, but instead that "the Plan is harmed because its use of allegedly outdated actuarial assumptions renders the Plan in constant noncompliance with ERISA and jeopardizes its favorable tax status as a result." While the panel did not address whether this theory ultimately falls within the scope of § 502(a)(2)'s remedial framework, it held that the plaintiff had sufficiently alleged injury in fact for purposes of Article III. The court separately reversed the district court's ruling that the plaintiff had standing to pursue monetary relief on behalf of the plan under her § 502(a)(2) claims. 

With respect to arbitrability, the Second Circuit affirmed that the arbitration agreement was unenforceable as applied to the plaintiff's § 502(a)(2) claims because it required those claims to be brought solely in an individual capacity. The court emphasized that § 502(a)(2) authorizes fiduciary breach claims brought in a representative capacity on behalf of the plan, and prior precedent — including Cedeno v. Sasson, 100 F.4th 386, 399 (2d Cir. 2024) — makes clear that arbitration clauses cannot "prospectively waive a plaintiff's right... to bring a representative action to secure remedies on behalf of an ERISA plan." Because a § 502(a)(2) claim cannot be litigated on an individual-only basis, enforcing the arbitration clause as written would "prohibit [such claims] altogether," thereby violating the effective vindication doctrine. The arbitration clause was therefore unenforceable as applied to the plaintiff's plan-wide fiduciary breach allegations.

DOL and Kaiser Ink $30 Million Settlement to Resolve Mental Health and Substance Use Disorder Claims

According to a Department of Labor (DOL) press release issued on February 10, 2026, the DOL and Kaiser Foundation Health Plan (Kaiser) reached a $30 million settlement to resolve multiple investigations into the company's alleged failure to provide timely and appropriate access to mental health and substance use disorder services. DOL reports that the agreement resolves allegations that Kaiser did not maintain adequate provider networks for mental health and substance use disorder care and used patient responses to questionnaires to improperly prevent patients from receiving care. 

DOL states that under the settlement agreement, Kaiser will pay at least $28,323,219 for costs its members incurred when seeking out-of-network mental health and substance use disorder services and a $2,832,321 penalty to the federal government. The agency further states that Kaiser also agreed to reform company policies and practices to improve access to mental health and substance use disorder care, including reducing appointment wait times, improving care review processes, and monitoring network adequacy. Under the agreement, Kaiser members in California who participated in the plan after January 1, 2021, and paid for out-of-network mental health and substance use disorder services after trying to obtain in-network services may be eligible for reimbursement.

New ERISA Section 408(b)(2) Amendments Impose Obligations on PBMs and Beyond

The Consolidated Appropriations Act, 2026 (CAA) (H.R. 7148), passed into law and signed by the president on February 3, 2026, added sweeping mandates to ERISA related to the provision of pharmacy benefit management services to ERISA-covered group health plans. In addition to the reporting obligations contained in section 6701 of the CAA, section 6702, amending ERISA section 408(b)(2), imposes new requirements for ERISA health plan contracts and arrangements for pharmacy benefit management services to be deemed "reasonable" for purposes of qualifying for a prohibited transaction exemption and expands the types of service providers and services covered by the prohibited transaction exemption fee disclosure requirements for health plans added to ERISA in 2020. Read our full alert on the new section 6702 requirements here.

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