What Is Enhanced Direct Enrollment? - Verywell Health

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Enhanced direct enrollment is a program that the federal government debuted in 2019. It allows approved third-party websites to help consumers enroll in plans through the federally run health insurance exchange using the third-party websites instead of HealthCare.gov.

This article will explain what these sites provide, where you can find them, and the pros and cons.

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Enhanced Direct Enrollment Sites

If an entity has been approved for enhanced direct enrollment, people applying for health insurance can use that entity’s website to complete the enrollment process.

Their enrollment will be considered “on-exchange.” If they’re eligible for premium tax credits or cost-sharing reductions, they’ll be able to obtain those during the enhanced direct enrollment process.

On the backend, the consumer’s data is transmitted to HealthCare.gov via secure application programming interfaces (APIs). This data transfer allows the exchange to determine whether the person is eligible to enroll, and if so, whether they’re eligible for cost-sharing reductions and/or premium tax credits.

The benefit is, all of that is conducted seamlessly without the consumer having to jump back and forth between multiple websites. From the consumer’s perspective, the enrollment is simply completed on the third-party website.

The enhanced direct enrollment process replaced a more cumbersome system in use in 2018 called “proxy direct enrollment pathway.”

That system allowed approved third-party websites to enroll consumers in on-exchange health plans, but the consumer was directed to HealthCare.gov midway through the process for eligibility determination and then redirected back to the third-party website to complete the enrollment.

Thus, the enhanced direct enrollment pathway offers a more streamlined approach.

What Entities Can Provide Enhanced Direct Enrollment?

As of 2021, 46 entities were approved to use enhanced direct enrollment.

Most are insurance companies, but eight are web brokers—online stores that sell health insurance, essentially the same concept as the exchange itself but privately run—and four are direct enrollment technology providers.

The insurance companies that use the enhanced direct enrollment pathway are localized, mostly offering plans in a single state or region. Some have fairly wide-ranging coverage areas, however, which is becoming more common as insurers expand their footprints in health insurance exchanges.

The web brokers and direct enrollment technology providers that use enhanced direct enrollment can generally offer plans in a much wider area, mainly encompassing the states that use HealthCare.gov. This is because these entities can sell whichever plans are available in a given area instead of being limited to one insurance company’s coverage area.

An entity’s enrollment platform must be approved by the Department of Health and Human Services to use the enhanced direct enrollment pathway. There’s an extensive audit system in place for this, and the approved entities have to continue to prove that their systems are secure and effective.

The entities also must demonstrate that accurate consumer data is being transmitted to HealthCare.gov for eligibility determinations.

Where Is Enhanced Direct Enrollment Available?

Enhanced direct enrollment is available in any states where the federally run health insurance exchange—HealthCare.gov—is used.

As of 2021, the federally run exchange is used in 36 states. This will drop to 33 as of 2022, when Kentucky, Maine, and New Mexico begin running their own exchanges and no longer use HealthCare.gov.

The remaining states run their own exchanges, rather than using HealthCare.gov. Examples include Pennie, Covered California, and Connect for Health Colorado.

The state-run exchanges can choose to establish their own direct enrollment platforms with third-party websites, although this has not been a widely pursued option in those states.

But in the states that use the HealthCare.gov exchange platform, enhanced direct enrollment accounts for a growing percentage of enrollments.

Pros and Cons of Enhanced Direct Enrollment

The main upside of enhanced direct enrollment is that it provides additional avenues for consumers to obtain on-exchange coverage and the financial assistance that’s available under the Affordable Care Act (and enhanced by the American Rescue Plan).

Because of the enhanced direct enrollment program, there are 46 additional websites—as opposed to only HealthCare.gov—that consumers can use to enroll in plans offered in the federally run exchange.

But there are potential downsides as well, which vary depending on which enhanced direct enrollment platform a consumer uses. One concern is that the majority of the enhanced direct enrollment entities are insurers, which means that they’re only showing consumers their own health plans.

In most areas of the country, plans are available in the exchange from two or more insurers, but a consumer who is using a single insurer’s enhanced direct enrollment platform will not see competing insurers’ products. In contrast, if the consumer used HealthCare.gov directly, they would see all of the plans available in their area.

There are also concerns that enhanced direct enrollment entities might not provide any guidance if an applicant is eligible for Medicaid or CHIP, since insurers and web brokers do not have any financial incentives to enroll people in those programs.

Additionally, although not an issue with all of the enhanced direct enrollment entities, there are concerns that some of the platforms also offer consumers non-ACA-compliant plans, such as short-term health plans and fixed indemnity plans.

Unless the consumer is fairly savvy about health insurance, they could easily enroll in one of these plans inadvertently, without realizing that it’s not actually providing major medical coverage.

Enhanced Direct Enrollment vs. Off-Exchange Enrollment

Although enhanced direct enrollment is completed using a third-party website, it is very different from “off-exchange” enrollments. Consumers can enroll in health coverage directly through various third-party entities, including web brokers and insurance companies.

But if the entity is not approved under the enhanced direct enrollment program (and assuming the entity does not direct the applicant to the exchange website during the process), the enrollment will be “off-exchange.”

Assuming the plan is an individual/family major medical policy, it will still be compliant with the Affordable Care Act, even if it’s purchased off-exchange. But premium tax credits and cost-sharing reductions are not available off-exchange.

In addition, some special enrollment periods (triggered by qualifying life events) are only available through the exchange. Thus, they would be available to a person using an enhanced direct enrollment pathway, but not to a person using an off-exchange website.

Summary

Are you shopping for health insurance and you’ve found yourself on a website that’s on the list of approved enhanced direct enrollment entities? Rest assured that you will be able to enroll through that site and obtain an “on-exchange” health plan, with financial assistance if you’re eligible for it.

However, you may only see plans from a single insurer, and depending on what enhanced direct enrollment entity you’re using, you might be seeing plans that aren’t ACA compliant, as well as plans that are.

A Word From Verywell

If you only see plans from a single insurer, you might want to use the quick plan finder tool on HealthCare.gov to see if there might be more options available there.

If you’re trying to purchase real health insurance, be sure you focus on ACA-compliant plans. Those are the only plans that can be purchased with premium subsidies, so the good news is that they might be among the least expensive options available to you, depending on your household’s income.

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