Why a Meaningful Minimum Premium Is Essential to Curb Obamacare Fraud

Fraud in the Obamacare exchanges has exploded in recent years. In 2025, there were 6.4 million improper enrollees in fully-subsidized plans. In 2024, 40 percent of enrollees in fully-subsidized plans did not use their health plan a single time—evidence of phantom enrollees within the market. Zero-premium plans expanded rapidly over the past few years due to rising subsidies driven by COVID-era subsidy add-ons.

From 2014 (the year Obamacare took effect) until 2020, all exchange enrollees were required to pay a share of the premium for a benchmark plan. Subsidies were constructed to limit the percentage of income that a household had to pay for a benchmark plan. Households at the federal poverty level (FPL) were required to pay 2 percent of their income—with the subsidy covering the difference. That framework changed dramatically during COVID. In 2021, Congress enacted temporary COVID-era subsidy expansions that eliminated premium payments entirely for many low-income enrollees—as well as for households that misestimated or misreported their income to claim eligibility for a fully-subsidized plan. Congress set those COVID credits to expire after 2025, reverting to the original pre-COVID contribution structure.

Despite the many problems with the COVID credits, including high budgetary costs, discrimination against people with employer-based coverage, and large-scale fraud, some lawmakers are seeking to reinstate the COVID credits with a minimum payment. They are proposing a $5 minimum monthly premium payment—with the option of paying the entire year’s worth of premiums with a $60 upfront payment at enrollment.

Such a policy would be ineffective and would likely lead to far more fraud relative to current law. If Congress chooses to reinstate the COVID credits, the best way to reduce fraud would be to require a minimum premium payment of at least $25 a month regardless of the plan selected—as along with requirements that insurers obtain verbal consent from enrollees in a recorded call, enforcing prohibitions on insurers waiving the premium payment, and ending payments of advance subsidies for enrollees who fail to pay their share of the premium. Critically, the minimum payment must be large enough that brokers or intermediaries cannot profitably pay it on an enrollee’s behalf and it cannot include an option for an upfront payment to cover enrollment for the entire year.

Under Obamacare, the Minimum Monthly Premium for a Benchmark Plan is $27

Under Obamacare, individuals at 100 percent of the federal poverty level (FPL) pay 2 percent of their income for a benchmark plan—with a federal subsidy covering the difference. Individuals at 150 percent of the FPL pay 4 percent. These rules applied from 2014 to 2020 after starting again this year as the COVID credits only applied from 2021 to 2025. Forty states expanded Medicaid, and in those states, enrollees with income below 138 percent of the FPL are eligible for Medicaid. Enrollees at 138 percent of the FPL must pay 3.3 percent of their income for a benchmark plan. In 2026, the respective monthly payments for enrollees at 100 percent, 138 percent, and 150 percent of the FPL would be $27, $45, and $54 a month. For these enrollees, the federal subsidy would cover 97 percent, 95 percent, and 94 percent of the total premium, respectively—an extraordinarily high share.

These minimum payments would be for a 94 percent actuarial value plan—meaning one with extremely low deductible and cost-sharing amounts. A person could take the subsidy and apply it to a bronze plan, paying a $0 premium for a plan with much higher deductibles and copayments. For example, the deductible for a bronze plan would likely be at least 10 times higher than the deductible for a 94 percent actuarial value silver plan.

While the minimum payment would apply to any plan, including the bronze plan, it is simply not high enough to counter other problems with lowering the minimum payment for a benchmark plan. Continuing the COVID-era subsidy bonuses with a minimum payment of $5 would result in a minimum payment for a silver plan (which more than half of exchange enrollees choose) that is considerably lower than under current law and would thus lead to more fraud and wasteful spending.

Enrollment Intermediaries Would Have Large Incentives to Pay the $5; Minimum Monthly Premium Payment Should Be the Original Obamacare Amount

The minimum payment amount must be high enough to make it economically unviable for brokers, agents, or other enrollment intermediaries to pay the amount for the enrollee. To avoid these bad incentives, the minimum payment amount should be about the size of the average broker or agent commission. A monthly premium payment roughly equivalent to a broker’s commission would help deter inappropriate broker behavior. A $5 premium payment would still create strong incentives for brokers or agents to pay that amount on behalf of the enrollee. The average commission is about 3 percent of premiums. Given that the average premium is about $850 a month, 3 percent of that amount is about $25—or about the minimum amount required under original Obamacare rules.

The underlying Obamacare subsidies are already extremely generous for lower-income enrollees. The best policy combination would permit the expanded subsidies to expire and include a minimum premium payment that would apply to enrollees regardless of the plan they select.

One Upfront Payment is a Recipe for Fraud

An upfront, one-time payment—such as a $60 annual contribution in lieu of a monthly obligation—is a recipe for large-scale fraud. A single payment severs the only ongoing verification mechanism in the exchanges: whether an enrollee is sufficiently engaged to make even a modest monthly contribution. If a third party pays $60 at enrollment—potentially without the individual’s knowledge or consent—the federal government then transmits the full monthly premium to insurers for the entire year, even if the individual never intended to enroll, never pays another dollar, and never uses coverage. Any minimum contribution that can be prepaid eliminates the continuous enrollment test that a monthly premium payment is meant to provide. This structure transforms a minimal upfront payment into a lever for extracting thousands of dollars in federal subsidies per enrollee.

A Meaningful Minimum Payment, Verbal Consent, and Ending Subsidies for Nonpayers

To reduce fraud most effectively, there must be a meaningful minimum premium regardless of the plan selected. This would also address the problem of fully subsidized plans resulting from silver-loading, which drives higher subsidies and zero-premium bronze and gold plans.

Moreover, a true minimum premium should be a monthly obligation that remains tied to continued enrollment. Monthly payment requirements serve an essential function: they create a recurring checkpoint that confirms an enrollee’s intent to remain covered. Unlike a prepaid annual contribution, a monthly obligation cannot be satisfied once and forgotten, nor can it be easily absorbed by third parties at scale. This ongoing requirement—so long as the amount is meaningful—sharply limits the ability of brokers, agents, or lead generators to lock in coverage on behalf of individuals who are unaware, unreachable, or ineligible.

These protections must be reinforced by clear consent and strict subsidy enforcement. Given the large-scale fraud, insurers should be required to obtain verbal consent from enrollees through a recorded call to establish an auditable record that coverage was knowingly and affirmatively accepted, with such action required annually. Auditors should conduct random sampling of these calls to hold insurers accountable.

More importantly, the federal government should immediately terminate advance subsidy payments to insurers for any enrollee who fails to pay their share of the premium and require the recoupment of subsidies already paid during months that enrollees do not make payments. Insurers should not be permitted to waive premiums or continue receiving federal subsidies on behalf of enrollees who do not pay their share of the premium. Ending subsidy payments—and clawing back improperly paid subsidies—when enrollees fail to pay is essential to restoring integrity to the exchange system.