By Karen Davenport

In recently-proposed regulatory changes to Affordable Care Act (ACA) marketplace coverage, the Trump Administration intends to strip Deferred Action for Childhood Arrivals (DACA) recipients of eligibility for marketplace coverage, premium subsidies, and cost-sharing assistance. This proposal represents the latest twist in the roller coaster of policy changes and litigation DACA recipients have endured and would, if finalized, terminate affordable coverage options for individuals currently living and working in the United States under DACA protection. 

Immigrants experience dips, twists, and turns on DACA and marketplace eligibility 

The ACA limits marketplace enrollment and eligibility for federal premium and cost-sharing subsidies to United States citizens, nationals and “lawfully present” immigrants. Undocumented immigrants have generally been excluded from marketplace plans and Basic Health Program (BHP) coverage authorized under the ACA. (Some states, however, hold federal waivers of these restrictions and allow undocumented immigrants to enroll in their state-based marketplaces.)  However, several groups of non-citizens, including individuals granted deferred action on their immigration status, are considered “lawfully present” for purposes of marketplace enrollment, premium subsidies, and cost-sharing assistance. 

In 2012, the U.S. Department of Homeland Security (DHS) issued its DACA Memorandum, which protects certain undocumented individuals who entered the United States as children from deportation. This executive action also enables these immigrants to receive renewable, two-year authorizations to work. Individuals eligible for DACA must have entered the United States before they turned 16 and before June 15, 2007; be younger than age 31 as of June 15, 2012; be enrolled in school, have completed high school or equivalent education or be a veteran; and have no lawful status as of June 15, 2012. Today, approximately 538,000 individuals, with a median age of 30, living in all 50 states and the District of Columbia, hold DACA status. 

A few months after issuing the DACA Memorandum, which did not address recipients’ eligibility for health coverage, the U.S. Department of Health & Human Services (HHS) amended its previous ACA eligibility policy to exclude DACA recipients from the definition of “lawfully present.” This meant that as the ACA marketplaces launched in January 2014, DACA recipients could not enroll in marketplace plans nor were they eligible for Medicaid coverage or the Children’s Health Insurance Program (CHIP). Similarly, subsequent implementing regulations for the BHP excluded DACA recipients from the definition of “lawfully present” for BHP enrollment eligibility.

For the next ten years, DACA recipients were not able to enroll in ACA marketplaces, secure premium subsidies or cost-sharing reductions, or enroll in BHP coverage. Without access to the ACA marketplaces, or Medicaid or CHIP coverage, DACA recipients were therefore far more likely to lack health insurance than other populations. Individuals who were likely eligible for DACA in 2022, for example, were almost five times more likely to lack health insurance than US-born individuals in their age group. In addition, while some studies suggest that DACA recipients navigate the health care system with greater ease than other immigrant groups, these individuals also experience many of the same barriers to critical health care services, such as affordability, discrimination, or unfair treatment, as other immigrant adults. 

Over this timeframe, the DACA policy roller coaster also started picking up speed. Multiple lawsuits challenged the underlying DACA memorandum’s legality, the Trump Administration sought to rescind the original DACA policy but failed on procedural grounds at the Supreme Court, and DHS under the Biden Administration codified the 2012 DACA memorandum into federal regulation. Legal challenges to this regulation continue to work through the federal court system.

In 2024, a turn in the roller coaster track also led to new coverage options for DACA recipients. To align with the DHS final rule and equalize eligibility across all individuals deferred action, HHS finalized new rules that included DACA recipients in the definition of “lawfully present,” thus enabling DACA recipients to enroll in marketplace plans and access premium tax credits and cost-sharing subsidies, depending on their income eligibility. This regulation also extended eligibility for BHP programs to DACA recipients if they live in a state with this option, and confirmed that DACA recipients with incomes below the federal poverty level can qualify for marketplace premium and cost-sharing subsidies, as they remain ineligible for Medicaid and CHIP coverage. HHS estimated that 100,000 individuals would newly enroll in coverage with this policy change. In another dip of the roller coaster, 19 states challenged this coverage expansion; after a decision in the North Dakota federal court and a rapid round of court orders, DACA recipients in these states could not enroll in marketplace coverage for the 2025 plan year, although DACA recipients living in other states could do so.

Reversing the Roller Coaster: Terminating Coverage for DACA Recipients

Last month, the roller coaster went into reverse, with a  proposed rule that would once again exclude DACA recipients from the definition of “lawfully present” for purposes of health coverage, thus making DACA recipients in all states ineligible for marketplace coverage, premium subsidies, and cost-sharing assistance as well as BHP programs. In the preamble, HHS notes that two early Trump Administration Executive Orders related to border security and the provision of public benefits to immigrants have prompted the Department to reconsider the arguments it relied on when it extended the definition of “lawfully present” to DACA recipients in the 2024 final rule. 

If the Administration finalizes this proposal, marketplaces in states where DACA recipients have enrolled in health insurance would need to terminate their coverage mid-year. Under the Biden Administration, HHS estimated that 100,000 individuals would newly enroll in marketplace or BHP coverage, but HHS now estimates that only 10,000 people would lose their health insurance under this proposal. HHS also acknowledges that removing DACA recipients from marketplace coverage could lead to higher marketplace premiums in the future, since DACA recipients are younger and healthier than the general risk profile of marketplace enrollees.

Takeaways

DACA recipients have experienced unexpected twists, turns, and drops on the public policy roller coaster. It appears they now will come to a screeching halt. Should the Trump Administration finalize this proposed rule, DACA recipients who have only recently acquired marketplace or BHP coverage will lose their health insurance, while others will be precluded from future enrollment. This will cause significant disruptions in the form of interrupted and canceled health care services, increased exposure to catastrophic medical bills for many members of this financially vulnerable population, and greater uncompensated care costs for providers. Some current Marketplace or BHP enrollees could lose coverage while in the middle of a course of treatment.