Health Issues

In recent weeks, we’ve seen alarming news reports of Marketplace enrollees’ coverage being switched to a different plan without their knowledge. The story was first reported in early April 2024 by Julie Appleby, and CMS subsequently released a statement, acknowledging the problem and noting that the agency is “taking swift actions to protect consumers from unauthorized activity by agents and brokers.”

CMS has said that they received roughly 40,000 complaints about unauthorized plan switches in the first quarter of 2024, and roughly 50,000 complaints of unauthorized enrollments (meaning a new enrollment, as opposed to a plan change.

HealthCare.gov policyholders at risk

So what’s going on here? A lawsuit filed in April 2024 in U.S. District Court for the Southern District of Florida (Turner et al v. Enhance Health LLC et al) sheds some light on what’s been happening.

The lawsuit alleges that the problem started with lead-generating firms running fraudulent ads (see examples here) that “lure consumers with the false promise of hundreds of dollars per month in cash benefits, such as subsidy cash cards to pay for common expenses like rent, groceries and gas.” The alleged plan: to deliberately misrepresent the ACA’s advance premium tax credits – APTC – which are paid directly to an insurance company, not to the consumer.

According to the complaint, consumers who responded to these ads provided their personal information – and the defendants in the lawsuit purchased that information – allegedly knowing that “consumers are calling for the promise of cash benefits that do not exist.” The defendants were then able to use that data to access the consumers’ Marketplace accounts.

How was that possible? In states that use HealthCare.gov – the federally facilitated Marketplace (FFM) – agents and brokers only need an enrollee’s name, state, and date of birth to access the person’s Marketplace account. ^{Those personal details were among the information that people provided when they responded to the fraudulent ads.}

Scammers circumvent consumer protections

In 2023, CMS began requiring brokers to obtain documentation of consent from clients before enrolling them in an FFM plan. ^{But according to one analysis these fraudulent operations have devised ways of getting around the consent requirement under the premise that clicking on a fraudulent ad is considered “consent.”}

The complaint in Turner alleges the scheme was devised by several defendants – insurance brokerages – who then instructed their agents to use that information to access existing Marketplace accounts and switch the agent of record to themselves, thus stealing the actual agent’s commission. The lawsuit claims the defendants could also switch the enrollee to a different plan to generate a new or higher commission.

The damage to affected Marketplace buyers

It’s easy to see how this can be devastating for Marketplace enrollees who find out their health plan and/or broker has been switched without their knowledge or consent. For example, consumers may find that their new plan has higher out-of-pocket costs, a different provider network, or different covered prescription drugs.

The complaint in the Turner lawsuit also illustrates an example of a person who was enrolled in a Marketplace plan after trying to claim the cash mentioned in the ads. The entity enrolling the consumer deliberately underrepresented the buyer’s household income to maximize their subsidy amount (APTC). This meant the household had to repay that APTC to the IRS when they filed their tax return. (Here’s more about how APTC gets reconciled on a tax return.)

The lawsuit also includes an important point about the way enrollments are completed: It alleges that some of the defendants were utilizing two proprietary Enhanced Direct Enrollment (EDE) platforms, which allowed them “to enroll the maximum number of consumers in the shortest amount of time without outside scrutiny.”

To be clear, most agents and brokers enrolling people in FFM coverage are using a Direct Enrollment (DE) or EDE pathway rather than directly utilizing the HealthCare.gov platform. Eighty-one percent of all agent/broker-assisted active enrollments in the 2023 open enrollment period were completed via a DE or EDE pathway.

These entities are providing a valuable service, as the majority of legitimate agents and brokers are utilizing a DE or EDE pathway. But given the information in the lawsuit, it’s clear that the issue of unauthorized plan changes must be addressed on EDE platforms as well as the FFM platform.

Second, a new special enrollment period (SEP) became available in March 2022 (optional for state-based Marketplaces), allowing subsidy-eligible applicants with household income up to 150% FPL to enroll in Marketplace coverage year-round. According to the lawsuit, “the year-round special enrollment period provided Defendants with the perfect opportunity to market and sell ACA plans to a market segment of low-income individuals that have may be in need for [sic] low-cost health insurance.”

And third, CMS issued guidance in June 2022, requiring health plans to ensure that agent/broker commissions were the same – regardless of whether the enrollment was submitted during the annual open enrollment period or during a special enrollment period (SEP). Before that, some insurers had reduced or eliminated commissions for SEP enrollments, but with the CMS guidance, that practice was no longer allowed.

Before 2021, enrollees with household incomes up to 150% FPL had to pay roughly 2% of their household income for the benchmark Silver plan. (The exact amount was adjusted each year.^{). The ARP reduced that to 0% for 2021 and 2022, and the Inflation Reduction Act} extended that through 2025.

To be clear, some people had access to zero-premium plans even before 2021, if they selected a plan with a total premium that was less than the amount of their premium subsidy. ^{But the number of people eligible for zero-premium plans increased significantly starting in 2021, due to the ARP’s adjustment to how subsidy amounts are calculated.}

And the number of enrollees with income up to 150% FPL has grown significantly:

• During the open enrollment period for 2021 coverage (before the ARP was enacted), 12 million people enrolled in Marketplace coverage, and 3.8 million of them had household income between 100% and 150% FPL.
• During the open enrollment period for 2024 coverage, 21.4 million people enrolled in Marketplace coverage, and 9.4 million of them had household income between 100% and 150% FPL.

So while overall Marketplace enrollment has grown by 79% since 2021, enrollment among people with a household income up to 150% FPL has grown by 144%.

Only ten states have not yet expanded Medicaid, and they all use the FFM. In a state that has not expanded Medicaid, Marketplace subsidies are available to enrollees with household income of at least 100% FPL, and premium-free benchmark Silver plans are available to those with household income up to 150% FPL. For a single adult enrolling in 2024 coverage, that means premium-free benchmark Silver plans are available in non-Medicaid expansion states within an income range of $14,580 to $21,870.

In states that have expanded Medicaid, including all of the states that use SBMs, Medicaid is available with a household income up to 138% FPL, and Marketplace subsidy eligibility starts above that level. So a single adult can qualify for a premium-free benchmark Silver plan with an income above $20,782 but not higher than $21,870 ^{– a much smaller range than the one that applies in states that haven’t expanded Medicaid.}

(Note: Medicaid eligibility is based on 2024 household income compared with the 2024 FPL guidelines; Marketplace subsidy eligibility is based on 2024 household income compared with the 2023 FPL guidelines.)

As noted above, 9.4 million people with household income between 100% and 150% FPL enrolled in Marketplace coverage during the open enrollment period for 2024 coverage. And 8.7 million of them were in states that use the FFM.

Here’s information about how CMS and the FFM work to resolve the issue and get the person’s correct coverage reinstated. CMS has said that of the roughly 40,000 complaints about unauthorized plan switches they received in the first quarter of 2024, 97% have since been resolved. And of the roughly 50,000 complaints of unauthorized enrollments, 88% of the enrollments have been canceled during the resolution process. ^{(Note that the number of complaints doesn’t necessarily reflect the full scope of the problem. It’s possible that some enrollees may not be aware that their plan was changed or that they were enrolled in coverage without their consent, or they may not have realized that they should file a complaint.)}

If you have been working with a broker, reach out to them as well, so that they can assist with the process of getting any unauthorized changes reversed. And if you enrolled via an EDE, you should also reach out to the EDE to alert them about the fraudulent activity in your account.

You should also contact the Insurance Department in your state, which licenses and oversees agents and brokers authorized to conduct business in the state. CMS has noted that they are working to “root out bad actors who are violating CMS rules” and indeed, CMS can suspend an agent or broker’s Marketplace certification, and has noted that they are doing so in response to this issue. ^{But the Insurance Department is the entity that can suspend or revoke an agent or broker’s license altogether, preventing them from selling insurance in any capacity within the state.}

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.

During the open enrollment period for 2024 health coverage, more than 21.4 million people enrolled in private qualified health plans (QHPs) through the Marketplaces (exchanges) nationwide. ^{This was a 31% increase over the previous record high set in 2023, when 16.4 million people enrolled in Marketplace QHPs.}

In addition to the 21.4 million QHP enrollments, another 1.3 million people enrolled in the Basic Health Program (BHP) coverage offered via the Marketplaces in New York and Minnesota, for a total of more than 22.7 million enrollees.

There are a variety of factors that could be driving the increased enrollment in 2024, including the “unwinding” of the pandemic-era Medicaid continuous coverage rule, the continued enhancement of ACA premium subsidies under the American Rescue Plan and Inflation Reduction Act, as well as state-specific factors.

According to CMS data (for HealthCare.gov ^and here for state-based Marketplaces^{), more than 3.4 million people who had Medicaid/CHIP in March 2023 or a more recent month had enrolled in Marketplace QHPs by the end of December, along with more than 257,000 who had enrolled in BHP coverage.}

The approximately 3.4 million “unwinding” QHP enrollees account for about two-thirds of the approximately 5.1 million additional Marketplace enrollments for 2024 versus 2023. (To clarify, it’s unlikely that everyone who transitioned from Medicaid to the Marketplace in 2023 kept their Marketplace coverage for 2024, so we can’t say that all approximately 3.4 million of the “unwinding” QHP enrollees are among the additional approximately 5.1 million QHP enrollees for 2024. However, the Medicaid unwinding is widely regarded as a primary driver of the enrollment increase in 2024).

A significant portion of the enrollment growth in 2024 was among lower-income enrollees, some of whom may have been among those disenrolled from Medicaid due to an income that increased above the Medicaid eligibility limits. For applicants with household incomes between 100% and 150% of the poverty level, enrollment was more than 54% higher in 2024 than it had been for 2023 Marketplace plans.

On the higher end of the income spectrum, enrollment was about 9% higher in 2024 than it had been in 2023 for enrollees with household income above 400% of the poverty level. (Details of enrollment by income ranges can be seen in the state-level public use files for 2023 ^{and 2024.)}

Continued enhancement of ACA subsidies

Not only is current Marketplace enrollment at a record high, but Marketplace enrollment has grown each year since 2021. ^{This has largely been due to the subsidy enhancements created by the American Rescue Plan (ARP), which were extended through 2025 by the Inflation Reduction Act (IRA).}

For 2024 coverage, 19.7 million QHP enrollees – 92% of the approximately 21.4 million total – are receiving advance premium tax credits (APTC). ^{The average full-price Marketplace premium is $605, but the average after-APTC premium – even accounting for the 8% of enrollees who pay full price – is just $111/month. And nearly 9.4 million enrollees are paying no more than $10/month for their coverage, after APTC is applied.}

Although the subsidy enhancements took effect in 2021, utilization of them has been steadily growing since then, helping to drive enrollment higher each year.

Future of subsidy enhancements uncertain

The subsidy enhancements will continue for 2025 health plans, but it will require a literal act of Congress to extend them past the end of 2025. (To clarify, the basic ACA premium subsidies will continue indefinitely; it’s only the ARP/IRA subsidy enhancements that are scheduled to sunset at the end of 2025.)

The Congressional Budget Office has projected that Marketplace enrollments would drop by about 3.2 million people in 2026 (compared to projected 2025 enrollment) if the APR subsidy enhancements are allowed to expire.

President Biden has called on Congress to make the ARP’s subsidy enhancements permanent. But there is political division on this issue, and the Republican Study Committee’s recently published budget proposal calls for the ARP/IRA enhancements of premium tax credits to end.

So while we can’t say what the future holds, we do know that Marketplace enrollment has reached an all-time high in 2024, driven largely by improved affordability as well as Medicaid disenrollments. And although open enrollment for 2024 coverage has ended everywhere except New York, consumers in every state can still enroll if they’re eligible for a special enrollment period.

According to West Virginia’s Office of the Insurance Commissioner, the sharp increase in enrollment this year was due to a combination of the ongoing ARP/IRA federal subsidy enhancements and the Medicaid unwinding – both discussed above – along with increased outreach and education on the part of insurance carriers and enrollment assisters. This included the first annual Cover West Virginia Day that was held in early January.

But it’s also worth noting that there were some changes in pricing dynamics in West Virginia that might have had an impact. The state confirmed that the carriers continue to set their own CSR-defunding load, as opposed to states like Texas ^{and New Mexico, where state regulators set them.}

(CSR-defunding load refers to the fact that the federal government stopped reimbursing insurers for the cost of cost-sharing reductions in late 2017, and carriers have been adding the cost to premiums since then. In most cases, the cost is added to Silver-level plans, which increases Silver plan prices and thus also increases premium tax credit amounts, which are based on the premium of the second-lowest-cost Silver plan.)

However, a 50-year-old in Charleston, WV, earning $40,000 in 2024 can get a Gold plan for as little as $124/month after subsidies, as opposed to the lowest-cost Silver plan which is $151/month. ^{In other words, low-cost Silver plans are priced higher than low-cost Gold plans.}

This drives up subsidy amounts – which are based on the price of the second-lowest-cost Silver plan – and results in Gold coverage being relatively more affordable. In 2023, that was not the case. The lowest-cost Gold plan was $208/month for a 50-year-old Charleston, WV resident earning $40,000, while the lowest-cost Silver plan was $190/month.

These pricing changes that ultimately made coverage more affordable — combined with Medicaid unwinding and the increased Marketplace outreach activities — resulted in a sharp increase in the number of West Virginia residents enrolled in Marketplace plans.

How and why premiums vary from state to state

Pricing dynamics vary from one state to another. This includes how the available plans in a given area stack up against each other in price and CSR defunding loads. The bigger the pricing difference between the benchmark plan (second-lowest-cost Silver plan) and less-expensive plans, the more affordable those lower-priced plans will be after the subsidy is applied. And higher CSR defunding loads mean higher prices for Silver plans and thus larger premium subsidies.

There are also state variations in income, access to Medicaid, government support for the Marketplace, etc. Several states also offer additional state-funded subsidies, some of which are newly available or expanded as of 2024. With all that in mind, here’s a state-by-state summary of some of the data from the 2024 open enrollment period:

Open enrollment data highlights by state