Lack of secure identity verification systems leaves the healthcare marketplace vulnerable to fraud.
The U.S. Government Accountability Office (GAO) recently released a report on the fraud risks found in the Advanced Premium Tax Credit (APTC), which expired on December 31, 2025. Efforts are still being made to extend the credits, but for now, the subsidies reverted to previous rules.
It may be a very good thing that the tax credits expired, as GAO found many weaknesses in the enrollment process that left the program vulnerable to fraud, waste, and abuse. By creating 20 fake applicants and submitting applications for healthcare coverage in the federal marketplace, GAO successfully obtained fully subsidized healthcare for 18 of these applicants in plan year 2025. The APTC paid insurance companies for these 18 applicants, totaling over $10,000 per month. This may be a small drop in the bucket of fraudulent tax credit dollars wasted due to a lack of identity verification during healthcare enrollment. While these results are not necessarily generalizable, they do highlight the vulnerability of the system to those who would take advantage of free health care.
Beyond fake applicants with unverified Social Security numbers and identity information, this report found other issues with Social Security numbers being overused, use of Social Security numbers associated with deceased individuals, and unauthorized broker and agent activity on behalf of consumers. For example, consumers who have the credit paid through APTC must reconcile the amount actually paid with the amount they were ultimately eligible for. Consumers may receive more tax credits or be responsible for repaying the excess credit paid to an issuer.
This reconciliation data preliminarily showed there has not been reconciliation for over $21 billion in Advanced Premium Tax Credits as of April 2025. This represents 32% of APTC paid on behalf of enrollees who provided a Social Security number to the federal marketplace for that plan year. While this is not necessarily fraudulent activity, it is partially due to fraudulent activity as well as overpayment from the APTC.
Beyond 32% of APTC being unreconciled to consumers, GAO also found 66,000 Social Security numbers with more than 365 days of insurance coverage, indicating these numbers were used by multiple people to gain coverage in 2024. Further, 58,000 Social Security numbers were found to match the Social Security Administration’s death data. GAO was able to identify that for 26,000 of these numbers, the Centers for Medicare and Medicaid Services (CMS) paid over $94 million in APTC for households with one of these numbers in plan year 2023.
The Affordable Care Act subsidies cost an estimated $138 billion in 2025, up from $18 billion in 2014. Extending the APTC or enhanced subsidies for two years would cost $60 billion. Although the GAO’s estimate of $94 million in possible fraudulent coverage is a small fraction of the total subsidies, it is still a sizable amount of taxpayer dollars going to people who may not be eligible for coverage.
Too much fraud, waste, and abuse is tolerated in subsidy programs, especially in Medicaid. The Government Accountability Office has been raising alarms since at least 2016 about their testing the system by creating fake applicants and receiving full coverage for them without verifiable identification. If a government agency can accomplish this with a simple test, it is not difficult to imagine bad actors taking advantage of vulnerabilities or insurance brokers obtaining coverage for ineligible or fake applicants in order to get paid more.
Bottom Line
The expiration of the Advanced Premium Tax Credit provides a great opportunity for the Centers for Medicare and Medicaid Services to thoroughly implement safety and fraud prevention measures in such high-cost public programs.