CMS Proposed Rule (CMS-2452-P) Could Reshape State Health Insurer Assessments—and Put Marketplace and Reinsurance Funding at Risk
August 4, 2026
What CMS-2452-P Means for State-Based Marketplaces, Section 1332 Reinsurance Programs, the individual market, and Medicaid Financing
On July 14, 2026, the Centers for Medicare & Medicaid Services (CMS) released the Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes Proposed Rule (CMS-2452-P) to implement Section 71115 of the 2025 budget reconciliation legislation, P.L. 119-21, now known as the Working Families Tax Cut.
Although the proposal is primarily intended to reform Medicaid financing and provider taxes, it raises broader questions about whether state assessments on commercial health insurers—including those used to fund State-Based Marketplaces (SBMs), Section 1332 reinsurance programs, and other state affordability initiatives—could become subject to new federal limitations.
HMA’s latest analysis examines the proposed rule, explains the policy changes, and explores the potential implications for states, insurers, Marketplace authorities, and policymakers.
Download the full white paper to understand what CMS is proposing, what remains unclear, and what organizations should be monitoring as the rulemaking process continues.
DOWNLOADExecutive Summary
CMS Proposed Rule CMS-2452-P would establish a new permissible provider tax class for the “services of health insurers.” Although the proposal is framed as implementing Medicaid financing reforms under Section 71115 of the 2025 budget reconciliation legislation, now known as the Working Families Tax Cut, it introduces uncertainty about whether insurer assessments used to finance commercial market programs—including State-Based Marketplaces and Section 1332 reinsurance programs—could also become subject to Medicaid provider tax requirements.
The proposed rule is unclear as to whether these new limitations apply only to taxes associated with Medicaid financing or extend more broadly to commercial insurance assessments. That distinction could have significant implications for states that rely on insurer assessments to support Marketplace operations, affordability programs, and other insurance initiatives.
Key Takeaways
- CMS proposes creating a new permissible provider tax class for services of health insurers.
- The proposal implements Section 71115 of the Working Families Tax Cut Act, which changes the indirect hold harmless thresholds for healthcare-related taxes.
- The rule is primarily focused on Medicaid financing, but its language raises questions about commercial insurer assessments.
- State-Based Marketplaces (SBMs) and Section 1332 reinsurance programs may face uncertainty if existing insurer assessments become subject to the new framework.
- CMS has not clearly explained whether the proposal applies only to Medicaid financing or to all state insurer assessments.
- States, insurers, and Marketplace leaders are expected to seek additional clarification during the public comment process.
What You’ll Learn from This White Paper
This paper explains:
- What CMS Proposed Rule CMS-2452-P would change
- How Section 71115 of the Working Families Tax Cut Act modifies provider tax rules
- Why states are closely evaluating the proposal
- Potential implications for State-Based Marketplaces
- Possible effects on Section 1332 waiver reinsurance programs
- How the proposal compares with CMS’s 2019 Medicaid Fiscal Accountability Regulation (MFAR)
- Key policy questions CMS has yet to answer
- What states, insurers, and Marketplace organizations should monitor moving forward
Frequently Asked Questions
What is CMS-2452-P?
CMS Proposed Rule (CMS-2452-P) would implement Section 71115 of the Working Families Tax Cut Act (WFTCA) by modifying the federal indirect hold harmless framework for healthcare-related taxes and creating a new permissible tax class for services of health insurers.
What does Section 71115 of the WFTCA do?
Section 71115 replaces the historical nationwide indirect hold harmless threshold with new state-specific and provider class-specific limits for healthcare-related taxes used in Medicaid financing.
Could this proposal affect State-Based Marketplaces?
Potentially. Many State-Based Marketplaces are funded through assessments on commercial health insurers. The proposed rule does not clearly explain whether these assessments would become subject to the new provider tax framework.
Could Section 1332 reinsurance programs be affected?
Possibly. Many Section 1332 reinsurance programs rely on insurer assessments to support state funding. If CMS interprets the proposal broadly, future changes to these assessments could face new federal limitations.
Does the proposed rule apply only to Medicaid financing?
This remains one of the most important unanswered questions. The proposal is issued under Medicaid financing authority but introduces a new insurer tax class without clearly defining whether it applies exclusively to Medicaid-related taxes or more broadly to commercial insurance assessments.
Why should insurers and states pay attention?
If finalized as broadly interpreted, the proposal could affect future funding flexibility for State-Based Marketplaces, Section 1332 waiver programs, and other state affordability initiatives financed through insurer assessments.
Why It Matters
State governments increasingly rely on commercial insurer assessments to finance programs that improve health coverage affordability and stabilize insurance markets.
These funding mechanisms support:
- State-Based Marketplace operations
- Section 1332 reinsurance programs
- Individual market affordability initiatives
- Other state programs
If CMS ultimately determines that these assessments fall within the new health insurer tax class established in Section 71115, states may face new constraints on increasing existing assessments or creating new funding mechanisms after July 4, 2025.
Because the proposed rule does not clearly answer this question, states and insurers face considerable policy uncertainty while CMS completes the rulemaking process.
How This Proposal Differs from the 2019 MFAR Rule
CMS previously proposed creating a health insurer tax class in the 2019 Medicaid Fiscal Accountability Regulation (MFAR).
However, today’s proposal differs in one important way. Since Congress enacted Section 71115 of the Working Families Tax Cut Act, the proposed insurer tax class would now operate within a new statutory framework that includes state-specific indirect hold harmless thresholds. As a result, the potential policy implications extend beyond those in the 2019 proposal.
Why HMA’s Analysis Matters
HMA’s policy experts, actuaries, Medicaid financing specialists, and Marketplace consultants work with states, health plans, and public agencies across the country to evaluate federal policy changes and their operational and financial impacts.
The proposed rule leaves several important policy questions unresolved. Understanding its potential implications now can help states, insurers, Marketplace leaders, and policymakers prepare for future regulatory changes.
Download HMA’s full analysis to explore the proposal in greater detail, understand its potential impacts, and identify key questions that may shape the final rule.
Need Assistance?
HMA’s experts advise states, health plans, Marketplace authorities, and other healthcare stakeholders on Medicaid financing, Section 1332 waivers, Marketplace operations, actuarial strategy, and federal regulatory implementation. If you have questions about how CMS Proposed Rule CMS-2452-P could affect your organization, contact one of the report authors to discuss your specific circumstances.
