Health Insurance Scams
There have always been people who look to profit from the needs and hardships of others. Now they’re exploiting misunderstandings about the new health care law in many different ways. They may advertise on hand-lettered signs, post ads on Internet sites, or go door-to-door. They may be completely fly-by-night or they may have a legitimate-sounding 800 number. The one thing they have in common is that they are after your money.
The main types of health insurance scams
A common tactic is to offer a stripped-down insurance policy that doesn’t meet the law’s requirements for covering major illness. These policies are cheap because they make you pay for most of your own health care. By the time you find out you have a serious illness it may be too late to get real coverage.
Another way is to offer a medical discount card that gives you minor discounts but leaves the big payments up to you. Sellers might call this “coverage” or “protection,” but it’s neither. Discount cards can be helpful, but they don’t take the place of health insurance.
The third offers completely fake health insurance. The seller takes your money and gives you a piece of paper. They may promise lower rates if you buy right now. The seller might say that they’re “required” to offer this great, low-cost coverage by the Affordable Care Act or “Obamacare”. Sometimes scammers say that it’s government-sponsored insurance or that they work for the government. (No government agency will ever call you to sell you insurance.) Or they’ll use a well-known insurance company’s name, even though they don’t work for the company.
Some fraudsters have gone to great lengths to create websites that look just like official marketplace websites. These sites are made to fool people into thinking they are on an official marketplace site. They may offer anything from fake health insurance to a policy that doesn’t cover serious illnesses. Be sure you are on healthcare.gov, your state’s official website, or a site that links directly from it before you enter any personal information.
Federal government employees will never call you to sell you insurance or update your insurance data. If anyone calls you and says they’re from the government and they need personal information – don’t fall for it!
Identity theft scams
Scammers may exploit you by trying to get your personal and financial information for identity theft. Some might even call and pose as government workers looking to “update” your information, asking for your date of birth, Social Security number, or bank account numbers. According to the Federal Trade Commission, federal government employees never call you to update your insurance data.
If you get a call from someone who says they’re from the plan you chose and they need more information, never give it unless you are absolutely certain of who is on the phone. Contact your plan directly to see if they called. (You can get your plan’s toll-free phone number by going to www.healthcare.gov or calling 1-800-318-2596.)
If you suspect a call is from a scammer, get as much information about them as you can (phone number, company they say they work for, and the name of the caller). Then call 1-877-FTC-HELP (1-877-382-4357) or notify the FTC online at www.ftccomplaintassistant.gov.
How to spot scammers
The best way to avoid scammers is to sign up for insurance at work, or at your spouse’s or parent’s workplace, if you’re eligible. If not, shop for your insurance at your state Marketplace. Start at www.healthcare.gov or call 1-800-318-2596.
If you want to hear from non-marketplace plans, watch out for aggressive sales people, very low premiums and a push for you to sign up today. They may try to get around your questions, and often don’t have the full policy details in writing. Some offer you coverage only if you join an association, union, or other group.
A better approach is to find a reputable insurance agent and contact them. Don’t respond to people who call you, unless you contacted them first through a trusted agent. If you’re not sure the caller is associated with or referred by your agent, get their name and company, then contact your agent again to be sure.
Here are some tips to help you protect yourself from would-be scammers and identity thieves:
- Don’t give them money, but especially don’t give them credit card information, birth dates, Social Security numbers, or bank account numbers unless you are sure exactly who they are and what you’re getting.
- Ask for the policy’s Summary of Benefits and read it carefully (see our information on Managing Your Health Insurance). If you’re in doubt, read the full policy or have someone read it for you.
- Check out any association you have to join to get insurance – go online, be sure they have a US address and phone number, and find out if they have any legitimate activity besides selling insurance.
- Call your state insurance department to be sure the plan is licensed in your state. Also ask if the plan has had complaints made against it.
- Finally, check with your doctors, your pharmacist, and any facilities you use, to be sure they accept the plan you’re considering.
If you do accidentally sign up with one of the fraudulent companies, you might not get an insurance card and policy for some time after you sign up, if ever. And when you file a claim, there’s no response or a very slow response; when you call they explain it’s a glitch or processing error – if they answer at all. If this has happened to you, contact your state Insurance Commission. (In some states, it’s the Insurance Department).
Find your state’s Insurance Commission by contacting the National Association of Insurance Commissioners online at http://naic.org/state_web_map.htm, or you can call them at 1-866-470-6242. Once you get your state’s Insurance Commission contact information, you can report the name and contact information of the company, along with the problems you’re having and what you have tried so far.
Coalition Against Insurance Fraud. Fake Health Plans Accessed at www.insurancefraud.org/scam-alerts-fake-health.htm on February 16, 2015.
US Federal Trade Commission. Suspect a Health Care Scam? Here’s What to Do. Accessed at www.consumer.ftc.gov/articles/0394-suspect-health-care-scam on February 18, 2015.
Last Medical Review: November 18, 2015 Last Revised: March 1, 2016