The Centers for Medicare & Medicaid Services canceled the policies Aug. 31 but did not publicly announce the action until Sept. 22. CMS estimates the cancellations will result in the return of approximately $2.2 billion in advance premium tax credits, federal subsidies paid to insurers to reduce consumers monthly premiums.
The size of the action is striking, but there is an important distinction: federal officials are not saying all 760,000 people personally committed insurance fraud. CMS describes a broader problem involving fraudulent, improper and unauthorized enrollments, including activity by agents and brokers who allegedly enrolled consumers or changed coverage without their consent.
CMS Administrator Dr. Mehmet Oz said the agencys actions are intended to ensure consumers, rather than unauthorized actors, maintain control over their health coverage.
Consumer Complaints Helped Trigger Federal Enforcement
Federal concern over unauthorized ACA enrollment predates the latest cancellations. Between January and August 2024, CMS received 183,553 complaints from consumers who said they had been enrolled in federal Marketplace coverage without their consent. Another 90,863 reported that their existing health plans had been switched without authorization. Those complaints led CMS to tighten its enrollment systems and take disciplinary action against agents and brokers. By October 2024, the agency had suspended Marketplace agreements for 850 agents and brokers based on suspected fraudulent or abusive conduct involving unauthorized enrollment or plan switching.
The enforcement continued this year. Since January 2026, CMS says it has sent termination notices to more than 200 agents and brokers. Another 569 received notices this summer after the agency identified what it described as implausibly high numbers of applications submitted without identifying information such as Social Security numbers.
How Were the 760,000 People Identified?
The canceled policies were not selected solely because an enrollee failed to use his or her insurance. According to federal records, the policies involved agent- or broker-assisted enrollments where citizenship or immigration documentation had not been verified. Insurers also were unable to identify claims associated with the policies or establish contact with the consumers. Those factors prompted further review. CMS says the agency and participating insurance companies investigated the enrollments through its existing unauthorized-enrollment process before confirming the cancellations. Having no medical claims does not necessarily mean a policy is fraudulent. A healthy person may have insurance for an entire year without needing medical treatment.
The administration has offered several explanations for what investigators believe happened.
Vice President JD Vance said some of the affected policies involved what the administration calls phantom enrollees, while others involved real people who may not have qualified for federal subsidies or may have been enrolled without realizing a policy had been opened in their names. Reuters reported that administration officials pointed to unverified eligibility information, lack of claims and unsuccessful attempts to reach consumers as part of the review. CMS has not publicly disclosed when the specific investigation of these 315,000 policies began or released a case-by-case explanation of how each enrollment was determined to be unauthorized.
What Happens if Someone Was Wrongly Canceled?
That remains one of the largest unanswered questions. CMS has not announced a special reconsideration or redetermination process specifically for the Aug. 31 cancellations. The agencys announcement also does not provide detailed information about how each affected consumer was notified. Health policy experts told The Associated Press that while unauthorized and fraudulent enrollment should be addressed, questions remain about how accurately the government identified everyone whose coverage was canceled.
CMS does have an existing process for consumers who discover that an agent or broker enrolled them or changed their coverage without permission. In previous unauthorized-enrollment cases, the agency has worked with insurers to restore correct coverage, address eligible medical claims and correct tax records. The latest announcement does not make clear whether affected consumers will use that same process if they dispute an Aug. 31 cancellation.
More Enrollments Face Verification
The federal review is continuing. Vance said Tuesday that approximately 419,000 additional enrollments will receive further verification to determine whether consumers qualify for Marketplace coverage and subsidies, according to AP. Reuters reported Vance gave a broader range of approximately 419,000 to 450,000 people and said the reviews would include immigration or citizenship status and income eligibility. That number comes from Vances remarks and does not appear in CMSs written Sept. 22 fact sheet.
Those consumers therefore should not be described as having committed fraud or as already losing coverage. At this point, they are facing additional eligibility verification. Meanwhile, CMS has temporarily restricted certain new agents and brokers from registering for the 2027 federal Marketplace while it adds additional identity-verification and consumer-authorization safeguards. The National Association of Benefits and Insurance Professionals has argued that broad restrictions could also affect legitimate brokers who have not engaged in misconduct.
What Does This Mean for Illinois?
Illinois consumers have an important distinction to make. Illinois transitioned away from HealthCare.gov for 2026 and now operates its own state-based Marketplace, Get Covered Illinois. Illinois residents who buy ACA coverage through the individual Marketplace now enroll through the state system rather than the federal platform. That means Illinois consumers should not assume their Get Covered Illinois policies are among the more than 760,000 people affected by this particular federal cancellation action.
Illinois residents are dealing with separate changes to ACA coverage, including reduced federal premium tax credits in 2026 and new eligibility and verification requirements. Get Covered Illinois advises consumers to keep income, household and contact information current and respond promptly when documentation is requested. The federal action highlights two sides of the same problem. Unauthorized enrollment can lead to improper federal spending, but consumers themselves can also become victims when agents use their information or alter their insurance without permission. As CMS continues reviewing Marketplace coverage, the question will be whether its enforcement efforts can identify improper enrollments without removing legitimate consumers who qualify for and depend on their health insurance.