Unauthorized Sign-Ups Cast Shadow on Obamacare’s Record Enrollment

The Biden administration faces what looks like a growing problem for the federal Affordable Care Act’s insurance exchange: disreputable insurance brokers enrolling people who don’t need coverage or switching them to new plans without their authorization.

It happened to Michael Debriae, a restaurant server who lives in Charlotte. Unbeknownst to him, an agent in Florida with whom he’d never spoken enrolled him in an ACA plan in March 2023. Debriae had insurance through his job and discovered the Obamacare coverage only when his longtime pharmacy rejected a 90-day refill because the ACA plan didn’t allow it.

He filed a complaint with the federal marketplace and canceled the plan. But because the pharmacy had billed the ACA plan for other prescriptions, federal investigators told him they couldn’t retroactively cancel his coverage. He got stuck with a $700 tax bill — his entire tax refund, he said — for some of the tax credits the IRS paid his Obamacare insurer from March until July.

The ACA saw record enrollment for this year of more than 21 million people, but growing complaints from consumers like Debriae and agents who say they’ve lost clients to unauthorized switches cast a shadow on that achievement, a KFF Health News investigation found.

On Feb. 26, the Centers for Medicare and Medicaid Services sent an “unauthorized plan switch” update to insurance industry representatives acknowledging “a large number” of 2024 cases and outlining technical efforts to resolve problems.

“CMS is committed to protecting consumers in the marketplace,” Jeff Wu, deputy director for policy for the Center for Consumer Information & Insurance Oversight at CMS, said in a March statement.

Wu’s office didn’t disclose the number of complaints that have been filed or how many brokers it has sanctioned. CMS reports enforcement actions to state insurance departments, whose authority includes revoking licenses, Wu’s statement said.

Brokers say the ease with which unscrupulous agents can get into policyholder accounts in the 32 states served by the federal marketplace plays a major role in the problem. With only a person’s name, date of birth and state, a licensed agent can access a policyholder’s coverage through the federal exchange or its direct enrollment platforms. It’s harder to do in ACA marketplaces run by states, which often require additional information.

Federal regulators imposed new rules in June that require brokers to get policyholders’ written or recorded verbal consent before making changes to their coverage. But brokers say they’re rarely asked to provide that documentation to regulators.

CMS is “actively considering further regulatory and technological solutions,” Wu said.

Many state-run exchanges do more than the federal marketplace to secure accounts. In Colorado, for example, customers specify which brokers can have access. California sends a one-time passcode to enrollees to provide to their agents.

Jonathan Kanfer, an insurance broker in West Palm Beach, Fla., says his agency lost 700 clients to unauthorized plan switches. He said he’s had telemarketers offer him lists of potential clients, telling him, “You don’t even have to speak with the people.”

He turns them down, but he said rival agents might be enticed by the opportunity to collect the monthly commissions that insurers pay.

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Julie Appleby:
jappleby@kff.org,
@Julie_appleby