CMS Cancels Obamacare Coverage for 760,000 People in Marketplace Fraud Crackdown

The federal government has canceled Affordable Care ActAffordable Care Act (ACA)The Affordable Care Act (ACA), also known as Obamacare, is a federal health care law enacted in 2010 that expanded access to health insurance, created health insurance marketplaces and premium subsidies, expanded Medicaid in participating states, and established consumer protections for people with private health coverage.Read more → coverage affecting more than 760,000 people as part of a broad effort to remove what officials say are unauthorized enrollments from the federal Health Insurance Marketplace.

The Centers for Medicare & Medicaid Services announced Tuesday that it canceled about 315,000 Marketplace enrollments on August 31 after reviews with health insurers concluded the enrollments were unauthorized.

For people who rely on Marketplace insurance for medications, physician visits or ongoing treatment, a coverage change can have consequences almost immediately. The announcement also raises practical questions for consumers who believe their enrollment was valid or who are unsure why their coverage ended.

CMS described the action as part of a larger campaign against fraud, improper enrollment and unauthorized activity involving insurance agents and brokers. The agency says it will continue reviewing potentially improper enrollments with health insurers, cancel those it determines were unauthorized, and seek to recover federal subsidies already paid on those policies.

CMS has identified several warning signs across the federal Marketplace, including applications missing Social Security numbers, unresolved income discrepancies, unresolved citizenship or immigration-status documentation, and cases in which consumers may have been enrolled without their authorization.

CMS says the 315,000 enrollments canceled in August went through its existing process for investigating unauthorized coverage. The agency has also said some Marketplace consumers in previous years were enrolled or had their plans changed without their knowledge by agents or brokers.

The Trump administration has estimated that improper or fraudulent Marketplace enrollment could account for as much as $6.6 billion in federal spending during the 2026 plan year, Reuters reported. The administration says the cancellations announced Tuesday are expected to recover or prevent about $2.2 billion in subsidy payments tied to the affected enrollments.

The enforcement effort comes during a period of historically high ACA enrollment. CMS reported earlier this year that 23.1 million people selected or were automatically re-enrolled in plans through HealthCare.gov and state-based exchanges during the 2026 open enrollment period.

CMS is also taking new action against insurance agents and brokers. Since January, the agency says it has sent termination notices to more than 200 agents and brokers for failing to comply with Marketplace requirements. During the summer, it sent another 569 notices of intent to terminate Exchange agreements involving brokers who submitted 2026 applications without identifying information such as Social Security numbers. The first 100 of those cases have passed through their response period, and CMS says 66 brokers have already received termination notices. Proceedings involving the remaining brokers are continuing.

CMS is also temporarily closing the door to many new Marketplace brokers. Under an interim final rule, agents and brokers who do not already have an active 2026 Exchange agreement generally cannot register for the 2027 federal Marketplace until February 1, 2027.

The agency says newly registered brokers represent a relatively small share of broker-assisted Marketplace enrollment but account for a disproportionate amount of activity it considers high risk. According to CMS, applications handled by brokers who first registered for 2026 were 2.6 times more likely to contain unresolved citizenship or immigration-status verification issues and 2.7 times more likely to lack Social Security numbers than applications associated with brokers who had registered earlier.

The National Association of Benefits and Insurance Professionals supports stronger enforcement against fraudulent activity but has criticized the broader registration moratorium. The organization argues that restricting new licensed brokers could also make it harder for legitimate agents to help consumers navigate Marketplace enrollment.

CMS is adding other safeguards ahead of the next enrollment period. Existing Marketplace agents and brokers will have to verify their identities again through Login.gov or ID.me. Broker-assisted applications will also require verifiable Social Security numbers or immigration document numbers for most applicants, and CMS plans to require electronic consumer authorization before a broker can take action on someone's application or enrollment.

For consumers, the first sign of a problem may be a Marketplace notice asking for additional documents or explaining a change in eligibility. HealthCare.gov says consumers can be asked to provide records confirming information such as income, citizenship, or immigration status when application information cannot be matched with government records. In most situations involving a documentation discrepancy, consumers receive at least 90 days to resolve the issue, along with warning notices before coverage or financial assistance changes.

Anyone receiving one of those notices should pay close attention to the reason given and the deadline. A missed documentation request can affect both insurance coverage and the premium tax credits that make a Marketplace plan affordable.

The appeal rules depend on what the Marketplace has decided. Consumers generally have 90 days from an eligibility notice to appeal certain Marketplace decisions, including findings that they are not eligible to purchase Marketplace coverage, receive financial assistance, or enroll through a Special Enrollment Period. HealthCare.gov advises consumers who were asked to submit documents to do that first because the additional information can produce a new eligibility determination without an appeal.

There is an important limitation. HealthCare.gov states that the date on which Marketplace coverage ended is generally not itself an appealable decision, although a consumer may still have appeal rights involving the underlying eligibility determination or loss of financial assistance.

Consumers who believe an agent or broker enrolled them or changed their coverage without permission can also report the problem to the Marketplace. CMS has previously instructed affected consumers to contact the Marketplace Call Center so it can investigate unauthorized coverage and, when appropriate, correct or restore it.

Health insurance can feel largely invisible when it is working properly, but it becomes much more immediate when a prescription cannot be filled, an appointment is approaching, or a family learns that coverage it expected to have is no longer active. The government has a legitimate interest in preventing public subsidies from being paid for fraudulent or unauthorized enrollments, while the scale of the current action also makes accurate notice and a workable process for correcting mistakes particularly important for people whose legitimate coverage could be affected.

CMS says its campaign will continue as it works with insurers, state regulators and other agencies to identify unauthorized enrollments and tighten controls over the federal Marketplace. For consumers, the safest response to an unexpected notice is to review it promptly, confirm that the information in the Marketplace application is accurate, and determine what documentation or appeal rights apply before a coverage problem becomes a healthcare problem.