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Why Consumer Protections are Important to the Direct Enrollment Process

By Claire McAndrew,


Health insurers and web brokers who follow certain federal rules (relating to topics such as protecting consumer information and displaying standardized disclaimers) are allowed to directly enroll consumers in marketplace health coverage and financial assistance; the consumer does not need to directly visit a marketplace website or contact a marketplace call center in these instances.

A Families USA Health Action webinar held earlier this month focused on this process, which is known as direct enrollment. You can watch the webinar here.

Families USA experts, state advocates, and other stakeholders from around the country came together for the webinar to discuss three key topics:

  • The direct enrollment process and how it works,
  • The existing protections for consumers who are directly enrolled through web brokers and health insurers, and
  • The pros and cons of allowing this kind of enrollment into marketplace coverage and financial assistance.

Consumers deserve comprehensive information before choosing a health plan

Webinar participants also brainstormed additional standards needed to protect consumers in the direct enrollment process.

Allowing health insurers and web brokers to directly enroll people in marketplace coverage can be beneficial because they can reach a wide audience through advertising about marketplace coverage and financial assistance, which can raise awareness about these opportunities for getting covered. This, in turn, can lead to increased enrollment.

The downside, though, is that these private companies have financial incentives that can influence how they inform consumers about health coverage options, potentially leading people to enroll in plans that might not be in their best interests.

For example, on the webinar, we heard concerns that consumers in Michigan are enrolling in health coverage with financial assistance through an insurance company that does not disclose that the marketplace also offers health plans from other companies. Consumer advocates worry that when applicants receive only this limited information instead of comprehensive information about all available marketplace plans, applicants may not end up with the health plan that is most affordable and best-suited to their needs.

Why consumer protections are necessary for the direct enrollment process

Families USA recommends that the U.S. Department of Health and Human Services (HHS) and health insurance marketplaces enact additional protections for consumers who enroll directly through web brokers or insurers.

In our issue brief, Consumer Protections for Web Brokers that Participate in the Health Insurance Marketplace, we describe direct enrollment protections that should be put in place so that consumers:

  • Receive complete and accurate information about health plan options and financial assistance,
  • Receive disclosures regarding the financial incentives that can drive health insurers and web brokers to steer consumers into certain health plans,
  • Do not have to worry that their personal information will be misused.

HHS clarifies that web brokers cannot use consumers’ personal information for marketing purposes

The Department of Health and Human Services issued a final rule in early March that includes some good news for consumers who use web brokers to directly enroll in coverage.

The preamble to the final 2015 Notice of Benefit and Payment Parameters clarifies that web brokers may not use enrollees’ personally identifiable information collected during the enrollment process for marketing purposes (a policy that Families USA recommended in our comments to the Department of Health and Human Services). This is because web brokers are bound by Affordable Care Act requirements that such information may only be used for necessary health insurance marketplace functions, like eligibility determinations.

Therefore, web brokers should not be using information about an enrollee’s age, gender, income, or any other personal characteristic to conduct targeted marketing. We think this is important to protecting the security of consumer information and also for ensuring that consumers aren’t prey to sales campaigns that target them because of their age or financial status.

What are you hearing about direct enrollment?

Is your marketplace allowing or considering allowing health insurers or web brokers to directly enroll consumers? Are consumers benefitting from direct enrollment? Are they feeling confused or misled in the process?

Tell us what you’re hearing by emailing cmcandrew@familiesusa.org. We’d love to talk to you about this important consumer issue.