GAO Report Finds Persistent Fraud Risks in ACA Premium Tax Credit Program

The U.S. Government Accountability Office (GAO) has released preliminary findings on the persistence of fraud risks in the Advance Premium Tax Credit (APTC) program under the Affordable Care Act. Despite prior efforts dating back to 2014-2016, the GAO's covert testing for the 2024 and 2025 plan years found that the federal Marketplace approved nearly all fictitious applicants created by GAO, with CMS paying significant subsidy amounts for these non-existent enrollees. Some requests for documentation to verify Social Security numbers (SSNs), citizenship, and income were made, but coverage was granted without verifying this information. Further GAO analysis revealed vulnerabilities related to misuse of SSNs and unauthorized changes made by agents or brokers, which can impact the accuracy of APTC payments. Notably, over 29,000 SSNs in 2023 and nearly 68,000 in 2024 were used to obtain multiple insurance coverages within a single plan year. CMS allows multiple enrollments per SSN to mitigate identity theft impacts but this can also facilitate fraud. Additionally, GAO identified thousands of likely unauthorized enrollment changes, a practice that CMS began addressing with new controls in July 2024. The GAO's review also highlights shortcomings in CMS's fraud risk management practices. CMS has not updated its fraud risk assessment since 2018, despite evolving program risks, and lacks a comprehensive antifraud strategy based on that assessment. These gaps suggest CMS may be limited in proactively managing and mitigating fraud within the APTC program. The APTC program is a significant component of federal health insurance subsidies, with CMS disbursing an estimated $124 billion for about 19.5 million enrollees in 2024. Consumer protection concerns have been raised due to reports of unauthorized enrollments and changes, reflected in nearly 275,000 complaints received by CMS in 2024. GAO’s ongoing work including covert testing, data analyses, and evaluation of CMS practices aims to inform improvements in regulatory oversight and fraud controls. Overall, this report underscores ongoing challenges in fraud detection and prevention in health insurance subsidies administered through the federal Marketplace. Strengthening enrollment verification, updating risk assessments, and implementing robust antifraud strategies are critical to safeguarding public funds and maintaining program integrity.