Trade association sues Trump administration over ACA broker, agent freeze

Dive Brief:

• The Trump administration is in hot water over its decision to stop thousands of agents and brokers from participating in this year’s Affordable Care Act enrollment season.
• The National Association of Benefits and Insurance Professionals sued the HHS on Thursday, arguing that regulators violated the Administrative Procedure Act by not giving the public an opportunity to comment on the new policy. The department also doesn’t have the statutory authority for the freeze, according to the NABIP’s complaint.
• The lawsuit asks the court to vacate the rule and compel the CMS to conduct training and registration for new agents and brokers so they can participate in the 2027 open enrollment period before it begins next month.

Dive Insight:

Last month, the HHS and CMS announced that agents and brokers who didn’t help people sign up for ACA plans for 2026 would be forbidden from registering to do so for 2027, barring new marketers from selling policies on HealthCare.gov for the coming year.

The moratorium was effective immediately and is expected to last until Feb. 1, meaning new agents and brokers are locked out of the entire upcoming enrollment period, which runs from Nov. 1 until Jan. 15 in most states.

Nearly 19,000 agents and brokers will be prevented from registering because of the pause, according to the CMS. Regulators said the moratorium would prevent fraud and improper enrollments. But insurance agent groups cried foul, arguing the freeze would harm legitimate professionals and the consumers who rely on them to understand and shop between coverage.

Now, the HHS is being dragged to court over the policy by the NABIP, which represents more than 100,000 licensed agents, brokers and benefits professionals in the U.S.

The CMS’ evidence that new brokers generate improper enrollments more frequently is shaky, and not a fair reason to penalize all new marketers, according to the group’s complaint, which was filed in Maryland district court. The CMS also ignored that the overwhelming majority of all agents and brokers — new and returning — have no track record of improper sign-ups.

The rule will cause harm to small businesses and independent agents that have spent months recruiting, training and licensing new agents in the expectation they could work during this year’s open enrollment season, according to the NABIP.

“NABIP supports strong action against fraud, and we have been telling CMS for years that the federal Marketplace needs stronger safeguards. But banning thousands of agents and brokers who have done nothing wrong — many of whom have long and distinguished records helping consumers — is not targeted fraud prevention. It is an overbroad response that harms legitimate professionals and the consumers they serve,” said NABIP President Mychal Walker in a Thursday press release.

Though there are disputes over the extent of the problem, fraud is a legitimate concern in the exchanges — including from brokers, which can switch enrollees from one plan to another without their permission or enroll people in coverage without their consent. The second Trump administration has made combating fraud a major priority. But regulators have frequently been criticized for taking a blunt approach to the problem, with crackdowns against fraud catching legitimate actors, including ACA enrollees and agents, in the dragnet.

For example, the CMS recently terminated ACA coverage for more than 760,000 people, saying their enrollment was unauthorized. But some people who lost coverage weren’t fraudulently enrolled, and the CMS has had to go back and reinstate their coverage, according to KFF Health News.