Insurance Fraud Bill Imposes $200,000 Fines and Prison Time on Agents for Marketplace Fraud

This section of the Insurance Fraud Accountability Act is a massive crackdown on agents and brokers who help people sign up for health insurance through the federal Marketplace (Exchange). Essentially, the bill says if you’re an agent and you mess up an enrollment application—either negligently or fraudulently—the government is coming for you with heavy penalties. It’s all about cleaning up the enrollment process and making sure consumers aren’t getting signed up for plans they didn’t want or didn’t authorize.

The New Cost of Carelessness: Fines and Jail Time

For agents and brokers, the stakes just got astronomically higher. If an agent is merely careless or ignores the rules (what the bill calls “negligence or disregard”) and submits an application with incorrect info, they face civil penalties ranging from $10,000 up to $50,000 for every person affected. That’s a serious hit for simply being sloppy. If they knowingly provide false or fraudulent information, the penalty jumps to a staggering $200,000 per individual. And if they commit that fraud “knowingly and willfully,” they could be looking at criminal charges, including fines and up to 10 years in prison. This isn't just a slap on the wrist; this is a full-scale deterrent against enrollment fraud.

Cutting the Commission Until the Paperwork is Perfect

For consumers, the biggest win here is the new verification system, which must be in place by January 1, 2029. Right now, a fraudulent agent can enroll someone, collect a quick commission, and disappear, leaving the consumer with a mess. This bill changes that. The government will now require agents to provide proof of consent for any enrollment or change. Crucially, any commission owed to the agent will be held until the enrollee confirms that any information inconsistencies have been sorted out. This means agents have a direct financial incentive to get the application right the first time and fix any issues immediately. For you, the consumer, this means less risk of waking up to a surprise health plan or an unexpected tax credit change because some agent was trying to hit a quota.

Regulating the Entire Sales Chain

The bill also gives the Secretary of Health and Human Services the power to regulate the entire “chain of enrollment”—that means everyone involved, from the third-party marketing company that generates the initial lead to the field marketing organization that hires the agent. This is a huge shift, requiring all these entities to follow specific marketing rules and, most importantly, requiring agents and brokers to act in the best interest of the person enrolling. That “best interest” standard is key; it moves the interaction from a pure sales pitch to a professional advisory role, which should mean better plan matching for consumers.

Mandatory Audits and Increased Oversight

To keep everyone honest, the bill mandates regular audits of agents and brokers starting no later than January 1, 2029. These audits will be triggered by consumer complaints or patterns suggesting fraud. Think of it as a quality control check. The Secretary will also maintain and share a list of suspended and terminated agents with health plans and states. The good news for you is that the bill explicitly requires that people not be dropped from coverage without their consent, even if their agent breaks a rule. Your coverage is protected while disputes are resolved. While the bill’s broad language about what triggers an audit leaves some wiggle room for regulators, the overall goal is clear: to ensure that the people selling health plans are held accountable and that consumers are protected from unauthorized enrollment changes.