CMS boosts health insurance agent oversight in proposed Marketplace rule for 2026

Each fall, the Centers for Medicare and Medicaid Services proposes a new rule for the Health Insurance Marketplace. And each fall, the public provides feedback to shape policy for the next contract year. We’ve read all 278 pages of the proposal. Here’s what health insurance agents should be aware of:

The Department of Health and Human Services is stepping up enforcement on agents and brokers

Prompted by reports of bad actors wrongly changing consumers' Marketplace plans, the proposed rule addresses agent and broker behavior. The proposal states that the department can hold insurance agency leaders, called "lead agents," responsible for following Marketplace rules. These lead agents would also be held responsible for any infractions committed by their employees. Specifically, the agency would be allowed to periodically audit agents, brokers, or web brokers for compliance with all applicable rules.

Enforcement actions could include civil monetary penalties, suspension or revocation of Marketplace access, and suspension or revocation of Exchange agreements, which allow agents to work on the Marketplace. Notably, such authority would extend to both states that use the healthcare.gov platform, whether for federally facilitated enrollment or as part of a state-based exchange with a federal partnership.

Monitoring could occur through various channels. First, the government could select agencies and brokerages for audits on a random basis. During these audits, HHS would look through the insurance agency’s internal communications, marketing, and training materials for evidence indicating whether the agency approved or supported any fraud or abuse. 

But, an agency could also be targeted for review if their activity on healthcare.gov or an EDE pathway (think HealthSherpa) indicates potential fraud. The number one indicator, in this case, would be a high volume of unsuccessful person searches.
Other tell-tale signs include the number of application/plan changes submitted, the number of applications with missing Social Security Numbers, the number of enrollments submitted within a short time frame, and the volume of applications with NPN changes. Since bad actors often have incomplete information about consumers, they often try to brute force a search, trying different combinations of information to find, and later alter, an active application.

Long story short – should the rule be approved as proposed, the department intends to flex its oversight muscles, pay close attention to NPN activity on the marketplaces, and take action against those who are found out of compliance.

The Model Consent Form would get an update

In the 2024 Payment Notice, CMS required agents and brokers to document consumers’ consent to work with them on the Marketplace. Agents are also required to document the consumer’s opportunity to review their Marketplace application for completeness and accuracy.

To help with this requirement, CMS released a model consent form. But, to the consternation of many, no similar form was created to document the review process. Agents and brokers alike raised concerns to CMS, and now they have answered: the form will be updated to capture this documentation.

Since both consent and review can be gathered during an audio call, the agency would also add scripts that agents, brokers, and web brokers could use to assist in complying with both requirements.

It would be harder to trigger grace periods and plan terminations for small debts

As it stands, consumers are at risk of entering grace periods, or even having a plan terminated, if they don’t pay premiums in full and on time – even when they owe just a dollar or two. The proposed rule asks stakeholders to weigh in on two possible solutions that try to balance consumers’ and insurer’s interests in these cases:

The fixed-dollar threshold method would allow insurers to set a specific threshold (e.g. - $5 or less) at which they would begin penalizing consumers. Consumers owing less than that amount after a month – or series of months, depending on the size of their premium tax credit – would not be subject to a grace period or termination.

The percentage threshold method would function similarly. In this case, though, insurers could set a total percentage of annual premium that must be paid to avoid a grace period or plan termination (e.g. – 99%).

File and reconcile notices must be issued after two consecutive tax years

In 2024, CMS stated that Marketplaces could only determine enrollees ineligible for premium tax credit if they failed to file and reconcile for two consecutive tax years. And, in 2025, CMS required Marketplaces to send notices after the first year the household failed to file and reconcile. The proposed rule would also require exchanges to send a notice after the second year a household fails to file and reconcile.

Application filers would be allowed to file eligibility appeals

As of today, any licensed and certified agent or broker, or a trained Healthcare navigator may help a consumer file an application – and may do so on their behalf. However, there are cases when consumers may be deemed ineligible for Marketplace coverage. Only the consumer is able to appeal that decision.

Recognizing a need to streamline this process across both federal and state marketplaces, CMS is proposing to amend the rules to allow any application filer to appeal eligibility decisions. The current requirement for consumers to designate the filer as an authorized representative would be eliminated. 

CMS wants to limit the impacts of Marketplace insurers going bankrupt mid-year

Too often, insurers declare bankruptcy and steal off into the desert – leaving many folks without coverage in the middle of the year. That destabilizes the market for everyone, and stakeholders from all walks have asked CMS to intervene. On the table: periodic review of a plan’s risk-based capital ratio and quick ratio. The former tests the minimum amount of capital insurers must have to cover their risk; the quick ratio measures how quickly an insurer can access near-cash assets to immediately cover current liabilities. Insurers who could not meet these tests would not be allowed to offer coverage or would have their enrollment capped at a target number.

CMS might also work with state Department of Insurance to identify other insurers at risk of insolvency. In particular, new-to-the Market plans who boast low bronze or silver premiums tend to draw more enrollment than their capital can sustain, putting them at risk of going under. To head this off, CMS and states would coordinate to identify plans with disproportionate enrollment, and potentially cap their enrollment numbers. 

Risk adjustment models get a shake-up

HHS also oversees the risk adjustment model which predicts a plan’s liability for average enrollees based on the individual’s age, sex, and diagnoses. In 2026, the model would be updated using data from 2020, 2021, and 2022. CMS would also change how it calculates plan liability for Hepatitis C drugs, bringing those calculations more in line with other specialty drugs. Pre-Exposure Prophylaxis (PrEP) would be included in the child and adult risk adjustment models, which is intended to influence more carriers to cover the drug.

HHS funds its risk adjustment work by imposing a user fee on each state (and the District of Columbia) that uses it. Currently, plans must pay HHS a user fee on a per member, per month basis. That number would be set at $0.18 for plan year 2026, but CMS notes that the number may be revised based on whether Congress extends expanded premium tax credits, or significant changes in risk factors between now and then.

One more reason rates could increase

Barring Congressional action to extend expanded subsidies, CMS proposes a significant increase in the user fee rates it charges insurers using healthcare.gov for enrollment and eligibility verification. The FFE rate would climb to 2.5% of monthly premium, and the SBE-FP rate would climb to 2.0% of monthly premium.

However, these raises would not be necessary if the subsidies were extended. CMS sets a deadline of March 31, 2025 for Congress to act, because it’s uncertain whether insurers would have time to calculate appropriate rates without clarity on this issue.

Silver loading gets CMS’s blessing – where it’s reasonable and justifiable

Since HHS was directed to stop reimbursing carriers for cost-sharing reductions on silver plans in 2017, states have allowed insurers to raise premiums on silver plans to try and make themselves whole. CMS clarifies that this is allowed under federal law, and is looking to codify its existing policy on the matter.

Provider networks get another look

Many states perform their own plan management functions, and take the responsibility of certifying Qualifying health Plans each year. HHS will now require plans in these states, alongside states themselves, to validate they have an adequate number of Essential Community Providers – those who serve low-income, medically needy individuals -- in their network.

Other impacts

Currently, there’s no time-limit for state-based exchanges to resolve any enrollment data issues. The proposed rule would codify existing guidance, and require states to fix any issues within 60 days.

Two states, Minnesota and Oregon, implemented a Basic Health Program under the ACA. Under this program, the state provides health insurance coverage to those who do not qualify for Medicaid or CHIP, and have income between 133% and 200% of the federal poverty level. These plans must include at least the 10 essential health benefits, and their premiums and cost-sharing cannot exceed what enrollees would pay on the Marketplace.

States operating these plans receive federal funding equal to 95% of premium tax credits and cost-sharing reductions enrollees would have been eligible for had they enrolled through a qualifying health plan. The proposed rule clarifies and simplifies how premiums for these plans would be calculated.

What does it all mean?

There’s a ton to digest in this rule. We’ll forgive you if your head is spinning. But here’s the long and short of it: CMS is cracking down on all the fraud that’s giving agents and brokers a bad name. They’re making it easier for you to comply with consent and review documentation. And, they’re generally making it easier for consumers to maintain coverage – while acknowledging that they need to balance consumer interests with those of carriers.