CMS cutting off ACA subsidies to another 189,000 people raises some troubling questions...

 

This morning, via the Health & Human Services (HHS) website:

Trump Administration Delivers Second Year of Savings by Stopping Taxpayer Payments for Duplicate and Deceased Enrollees in Obamacare

WASHINGTON—October 14, 2026—The Centers for Medicare & Medicaid Services (CMS), a division of the U.S Department of Health and Human Services (HHS), continue to crush fraud, waste, and abuse in America’s healthcare programs by stopping duplicative enrollment in government health programs, with the potential to save taxpayers approximately $1.5 billion annually.

At a press conference today in Washington, D.C., Secretary Kennedy announced that in 2026, CMS identified 189,000 people with subsidized Obamacare coverage through the Federal Marketplace with duplicate Medicare, Medicaid or Children’s Health Insurance Program (CHIP) coverage, or who were deceased — and took swift action to remove Obamacare subsidies for these people to save taxpayer dollars.

“Taxpayers should not foot the bill for duplicate coverage or subsidies for people who have died,” said HHS Secretary Robert F. Kennedy, Jr. “HHS is identifying improper enrollments, stopping those payments, and making sure federal dollars support the Americans these programs were created to serve.”

“When it comes to program integrity, the Biden Administration was sleeping on the job,” said CMS Administrator Dr. Mehmet Oz. “They paused looking for duplicate Medicaid and Obamacare coverage for four years, creating a backlog of hundreds of thousands of duplicate enrollments. We’ve already saved nearly $6 billion, and we will continue to work hard to restore taxpayers’ confidence that the programs they fund are spending their hard-earned dollars wisely and efficiently.”

The Trump Administration restored duplicate enrollment enforcement in 2025, ending duplicate Obamacare subsidies for approximately 551,000 enrollees already receiving coverage under Medicaid.

CMS routinely checks to ensure taxpayers are not subsidizing duplicate Obamacare policies on the Federal Marketplace for beneficiaries already on Medicaid or Medicare. It also checks if taxpayers are paying for Obamacare plans on the Federal Marketplace for deceased people.

Federal regulations require Exchanges to periodically examine data for dual enrollments in Medicaid to guard against improper enrollments in subsidized Exchange plans through a process called Medicaid/CHIP Periodic Data Matching (PDM). These essential examinations were strengthened under the first Trump Administration and increased to at least twice a year but were paused for the duration of the Biden Administration, allowing potentially millions of individuals to be enrolled in multiple federal health insurance programs at once.

Individuals whose records show they receive Obamacare subsidies while also being covered by Medicaid or Medicare are contacted and provided 30 days to dispute they have duplicate coverage or to cancel duplicate coverage. If such individuals fail to do so, CMS ends subsidies for their Obamacare plan.

This process also contacts individuals, or their estate, when federal records say they are deceased. CMS provides 30 days to dispute this record, otherwise their Obamacare subsidy and plan is cancelled.

There's a lot to digest here, some of which overlaps with a question I had last month when CMS announced that they were "terminating Obamacare" for ~760,000 ACA enrollees due to suspected fraud:

It's important to note that this doesn't clarify whether "removing enrollments" means actually canceling their policies (which is a contract between the enrollee and a private insurance carrier) or if it just means canceling their federal subsidies (which would mean that the enrollees have to start paying full price, and may have subsidies from earlier this year clawed back).

Today's press release doesn't specifically answer this question either, but if you take the plain wording of it at face value, it sounds like it's just the subsidies which are being terminated, not the policies themselves. The thing is, either situation could prove to be disastrous for a lot of enrollees depending on their situation, for several reasons.

Before I begin, I want to be clear that I agree that people shouldn't be enrolled in two different types of duplicative healthcare coverage at the same time, and yes, if they've died then they shouldn't be enrolled in any type of healthcare coverage. To that extent, the basic concept they're talking about here is perfectly reasonable.

HOWEVER, the details of how these terminations are being executed is vitally important.

For starters, it says that they "contacted" everyone whose subsidies were terminated (or their estates in cases where they're listed as deceased) and "gave them 30 days to dispute" the termination.

It does not clarify how they were "contacted," however.

Were they sent an email which could easily have gone straight to a spam folder? Were they given a phone call which could easily have been blocked as being from an unrecognized number? Were they sent something via the U.S. Postal Service which could easily have been mistaken for junk mail and recycled/thrown out?

What about enrollees who don't speak English very well or at all? Was the notice sent (or the voicemail left) in a language which the enrollee could understand?

It says they were given 30 days to "dispute" the termination. What sort of procedure does that involve? A phone number to call? An online form for someone who may not even have an internet connection much less a computer?

...according to the ACS, over 5.2 million U.S. households--3.9% of the total--still didn't have any computer of any sort as of 2023--that means no laptops, desktops, smartphones or tablets of any kind.

In addition, over 10.3 million households--7.8% of the total still had no internet service of any type--broadband, DSL, satellite, fiber optic, cellular data or even dial-up.

Guess which income demographic is the most likely to still not have either a computing device or an internet connection? That's right: Lower-income households, which are also the most likely to be enrolled in Medicaid or CHIP for obvious reasons.

The press release also doesn't clarify how much notice these folks were given before the subsidies were actually cut off. It says they had 30 days to dispute it, but what's the actual timeline on that? Let's say that a family of four is enrolled in a plan which runs $3,000/month at full price but is only paying $700/month after $2,300/month in federal subsidies. On August 20, 2026, they receive a notice that they're also enrolled in Medicaid/CHIP at the same time, which they presumably didn't realize. They're given 30 days to dispute this.

Let's say that whoever brought the mail in that day mistook the notice for junk mail and threw it out. 30 days go by. On September 19th CMS terminates their federal subsidies. Do they receive a follow-up notice letting them know this? Which month do they get hit with an extra $2,300 on their invoice? October or November?

In addition, assuming they've been unknowingly dual-enrolled in both ACA plans and Medicaid/CHIP all along, what happens to the 9 months worth ($20,700) in subsidies which they had already received from January - September? Do they have to pay that back when they file their 2026 taxes in spring 2027?

Keep in mind that the only way the parents in this household would even be eligible for Medicaid in the first place would be if a) their household income is below 138% FPL to begin with ($44,367 for a family of four) and b) they live in one of the 10 remaining non-expansion states (8 of which are fully GOP-controlled at the moment). If they have to pay back the subsidies already received, that would amount to nearly half of their gross household income for the year.

The questions above also apply to any of the 189,000 enrollees who are currently deceased: Are their loved ones about to be hit with a massive premium invoice for the last month they were alive? If they died in August but their spouse didn't get around to removing them from the policy until October, will the grieving widow/widower be hit with an extra thousand dollars owed for September?

I should note that up until this year, there were caps on how much of the federal subsidies ACA enrollees had to pay back if they underestimated their annual income...but starting in 2027, that's no longer the case:

The Working Families Tax Cuts Act [actual name: The One Big Beautiful Bill Act, or H.R.1] made several changes to the Premium Tax Credit (PTC). One key change is the removal of the repayment limitation. Beginning with tax year 2026, the taxpayer must repay the full amount of any excess advance payments of the premium tax credit (APTC). The repayment limits that previously capped how much taxpayers had to pay back no longer apply. To avoid a balance due or reduced refund, taxpayers must promptly report changes to the Marketplace.

For what it's worth, in case you're wondering how someone could be enrolled in both Medicaid and an ACA plan at the same time without realizing it, it's actually a lot more plausible than you may think. For instance, back in November 2024, I managed to unintentionally enroll my wife and I in Medicaid here in Michigan while attempting to enroll in an ACA exchange plan!

As I noted at the time:

In the household income section of the application process, Healthcare.Gov asks both how much you expect to earn this month specifically (November 2024) as well as how much you expect to earn for all of 2025.

It was the first of these questions which is what caused the problem for us.

You see, both my wife and I are self-employed, which means we have highly variable incomes--we may earn $10,000 one month but not earn anything the next.

...We entered "$0" for our expected income for November (as it happens, that ended up not being the case anyway since a payment I didn't expect to show up until December ended up showed up earlier than expected). We then entered our normal projected annual income for 2025.

However, when we completed the application process, HealthCare.Gov informed us that we weren't eligible for any ACA financial subsidies...but were likely eligible for Medicaid or CHIP.

Ut-oh.

I immediately realized what our error must have been--it seems pretty clear that the system assumed that we were claiming that we earn nothing--so we went back & re-applied, this time entering a more reasonable monthly income for November (ie, roughly 1/12th of what our typical annual income is).

This time the application went through properly, displayed our estimated monthly APTC subsidies, and we were able to go ahead and enroll in a Blue Cross Blue Shield of Michigan Silver PPO policy without any further issues.

I assumed all was well...until about a week ago, when I started receiving mail from the Michigan Dept. of Health & Human Services telling me that they need us to provide various documentation, verification of our identities & income by December 2nd...and a few days later, I received a notice telling us that we have to choose a Medicaid plan by December 5th or a plan will be selected for us. But wait, there's more: MI DHHS has even already sent us "MI Health" cards.

That's right: The Michigan Dept. of Health & Human Services thinks that we applied for Medicaid even though that wasn't our intention at all, we don't want it and we're absolutely not eligible for it.

In our case I was able to resolve the issue fairly quickly, but keep in mind that I'm tech savvy, speak English natively and literally write about ACA and Medicaid policy for a living...and I still somehow managed to screw up on this issue. Now imagine you're someone who doesn't speak English very well, isn't technically literate and doesn't understand much if anything about the complexity of health insurance protocol.

I also want to briefly address one other item in the CMS press release, in which Dr. Oz claims that....

"...the Biden Administration...paused looking for duplicate Medicaid and Obamacare coverage for four years.

ASSUMING that this is what actually happened (the Trump Regime in general and RFK Jr./Dr. Oz specifically haven't exactly earned a reputation for speaking truthfully), I'm not excusing the Biden Administration for pausing this initiative for the full 4 years of his term, but keep in mind that for the first 2+ years of his administration the Families First COVID Response Act prevented anyone from being kicked off of Medicaid for ANY reason anyway (the federal Public Health Emergency declaration was terminated on May 11, 2023). Again, the context of the situation is kind of important to keep in mind.

Anyway, I truly hope that all 189,000 of the people CMS just cut off really are a) also enrolled in Medicaid/CHIP/some other type of comprehensive coverage; b) are aware of this; c) don't have any critical healthcare providers or drug formularies which were in their network under their ACA plan but which aren't in network under Medicaid/CHIP; and d) don't have to also pay back thousands of dollars in federal subsidies already received to date.

Oh yeah, one more thing: The HHS press release specifies that all 189,000 of those whose subsidies were terminated live in one of the 30 states hosted by the federal ACA exchange, HealthCare.Gov, which makes sense. It also says that they fall into 4 categories: People dual-enrolled in Medicaid, CHIP, Medicare or who have died.

While all of these could technically refer to folks in any of those 30 states, I'm willing to be that nearly all are people dual-enrolled in Medicaid/CHIP...and my own mistake a couple of years ago notwithstanding, nearly all of those are likely cases where the dual enrollee lives in a state which never expanded Medicaid to begin with, since you have to earn at least 100% FPL in order to be eligible for ACA subsidies but have to earn less than 138% FPL in order to be eligible for Medicaid via ACA expansion.

In other words, the vast majority of these 189,000 people are very likely low-income residents of Alabama, Florida, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin or Wyoming.

Guess what 8 of these 9 states have in common?

Don't worry; it'll just work itself out naturally.