HHS proposal for marketplace plans carries a hefty dose of consumer caution

Some insurance brokers are enrolling people into Affordable Care Act health plans without their consent, perhaps for the commissions, a move that could put consumers in danger of owing back the subsidies connected with the coverage. The damage could be hundreds or even thousands of dollars.

A consumer's first hint that something is wrong is a big one: a letter from the IRS or a delay in their tax refund.

Although the practice does not appear widespread, it has prompted the Department of Health and Human Services to seek changes to some oversight rules affecting brokers. They would start in 2023.

HHS wants the changes, according to its proposal, because it "has observed several instances in which agents, brokers, and web-brokers have provided inaccurate consumer household income projections" and that "this is problematic in situations when consumers are enrolled without their knowledge or consent."

The changes are part of a 400-page proposed rule governing the federal health insurance marketplace and a few states that use the federal platform for their own exchanges. The new broker provision aims to deter fraudulent sign-ups by clarifying that applicants must attest that the income projections listed are correct. It also would bar brokers or services who help people enroll in coverage from using "disposable" email addresses, which disappear after a set number of days, or listing the brokers' phone numbers instead of the consumers'.

That there is a proposal at all "tells me they had a significant number of cases on this" and that previous actions have not done enough to curb the problem of people getting fraudulently enrolled, said Tara Straw, director of health insurance and marketplace policy at the Center on Budget and Policy Priorities.

A spokesperson for the Centers for Medicare & Medicaid Services said in an email that the agency is not seeing a pervasive problem, but he declined to provide data on how often such cases occur or how the agents or brokers get the personal information needed to enroll unsuspecting people.

Nonetheless, experts in law, policy and enrollment say it has been a recurrent issue. Many cited examples beginning with a 2015 case in which an agent allegedly signed up hundreds of people from North Carolina homeless shelters for plans in which the federal government paid the entire premium, often referred to as "zero-premium plans," by using questionable estimates of their annual income.

Jodi Ray, who oversees a Florida organization that helps people enroll in coverage, said her employees saw cases last year in which clients seeking help with enrollment in a county health plan discovered they were already enrolled in a federal ACA plan but had no idea who had signed them up.

In another example, a partner organization learned that an agent was enrolling people with job-based coverage in subsidized ACA plans, said Ray, director of Florida Covering Kids & Families, a program at the University of South Florida. Such double enrollment is not allowed under the law and could leave the employees on the hook for paying back the subsidies.

"That sets consumers up to be harmed," said Ray, whose office reports these types of findings to state regulators.

She emphasized that the vast majority of brokers and others who help people enroll are honest and protect consumer information carefully but said that the few who do not create distrust among the public. Groups like hers, often called navigators or assisters, have no incentive to falsify enrollments because they are not paid commissions, she said.

But agents, brokers and web-based services are.

"The profit motive is a really important thing to keep in mind as to why this happens at all," said Straw, who noted that insurers pay commissions even on zero-premium plans.

The proposed changes come as government estimates show that at least 42% of people served by the federal health insurance marketplace likely could qualify for a zero-premium plan based on their income.

That might be one factor behind the growing concern about consumers enrolled without their consent — with no monthly bill, consumers have few ways of knowing they're in a plan.

"There are a lot more zero-dollar premium plans available," said Sabrina Corlette, a researcher at Georgetown University's Center on Health Insurance Reforms. Bad actors "can essentially fake an email address or phone number, fake someone's income to say they are eligible for a zero-dollar plan, and the person would never know."

Regulators have seen "several instances where consumers have gone months" without realizing they are enrolled, according to the proposed HHS rule. By that time, their insurers may have been paid hundreds — even thousands — of dollars in subsidies, also called tax credits, which the policyholder might have to pay back if their actual income is above the subsidy threshold.

Under the ACA, sliding-scale subsidies are available to help low- and moderate-income people buy coverage. Those who underestimate their income for the year may owe back all or part of those subsidies, although payback amounts are capped for those in lower income ranges.

Consumers have some recourse. If they are signed up for coverage without their consent, for example, they can appeal to the federal exchange to retroactively cancel their coverage. But they have only 60 days after discovering the fraudulent enrollment to do so.

"It's complicated to fix on the back end," Straw said.

The health insurance marketplaces and insurers, which can lose customers because of such practices, "need to be more proactive on the front end" — for example, asking questions if they notice "a dozen people with the same address or the same telephone number," she said.

Christine Speidel, an associate professor at Villanova University law school and the director of its federal tax clinic, which helps low-income taxpayers with IRS-related concerns, agrees that prevention is better than fixing the problem after the fact.

"When you have a fraudulent enrollment and it's discovered a year or more later, it's a lose-lose situation: The insurer is screaming, and the taxpayer is frustrated and worried that they might be on the hook," said Speidel, who has not seen a recent case of this kind but has previously handled some in which people did not know they had been enrolled in coverage.

Agents who violate the rules set by the federal exchange can be barred from selling coverage through it or face civil monetary penalties, said Kristine Grow, a spokesperson for AHIP, an industry trade group formerly known as America's Health Insurance Plans. States also can revoke agents' licenses.

"Enrolling people in coverage without their consent is fraud, and health insurance providers support protections for consumers against this sort of fraud," she said.

Consumers who seek help when buying insurance should check to make sure the person selling it is licensed because the problems with fraudulent sign-ups "often are from someone not licensed," said Marcy Buckner, senior vice president of government affairs at the National Association of Health Underwriters, which represents brokers.

The group supports additional protections for consumers, she added.

HHS is gathering comments on the proposed rule through Jan. 27.