They have very official sounding names. HealthcareOne, the American Trade Association, American Employers Association, Global Healthcare... But these supposed health insurance companies are bogus, and are scamming Americans who believe they need health insurance, in particular because they think they must fulfill the requirements of the Affordable Care Act (ACA), also called ObamaCare, the law passed for healthcare reform in the United States. One company has even named itself the ACA Insurance Company.
What kinds of scams have resulted from the ACA?
There seem to be three general types of ACA health insurance scams:
- Companies try to sell you a policy they purport to be necessary to fulfill the individual mandate requirements of the ACA. Those policies are often fake, may offer some coverage but not coverage you would ever need, or don't really insure anything at all.
- Companies try to sell you a "discount card" by claiming you can get reduced pricing on the care you must pay out-of-pocket for. There may or may not be real discounts, but these cards are not insurance.
- Companies that attempt to "verify" your coverage in order to fulfill the requirements of the ACA. They will call you, claim to be representing the government just making sure you have your coverage to fulfill the requirements of the ACA, and ask you for personal information which they can then use to steal your identity.
Why are there so many health insurance scams?
There are a number of reasons Americans are so easily scammed by these companies, but healthcare reform has made the problem more acute. Now patients are no longer only desperate for coverage; they are also worried that they must meet the letter of the law.
Further, because health insurance has become so outrageously expensive, scammers can make an easy buck by making promises they can't keep, while charging customers just slightly less (or a great deal less) than real insurance would cost, making it seem like a real bargain.
Finally, health insurance scammers find a bonus when they sell fake plans to patients. They can ask for, and patients supply, other personal identification information such as social security numbers. Providing that information can easily lead to identify theft; in particular medical identity theft.
How can you tell if a medical or health insurance policy or product is bogus?
Here are some red flags that at least suggest you need to do more research, or even better, let you know to turn and walk away.
- Someone tries to sell you "Obamacare" insurance. First, know that the law does not take effect until January 1, 2014 and you are not required to have health insurance (nor will you be penalized) until then. But secondly, there is no such thing as ObamaCare insurance since all health insurance you actually buy is still private.
- "We'll help clarify the law and your confusion." If the salesperson or company focuses on helping you better understand the law, then it's a red flag that they are preying on you.
- You're told you must sign up for the insurance (and probably pay at least part of the premium) in a very short period of time, probably called a "limited enrollment period." Yes, there are deadlines you must meet for open enrollment each year, but if you are purchasing a new policy because of some sort of trigger event (you've changed jobs, you've just turned 65, just got married, or for other reasons), you should have a period of many weeks to make your decision. Look closer at deadlines.
- The claim of "guaranteed coverage" is often a red flag. Again, it's an invitation to look deeper at the policy.
- Aggressive sales tactics - you know, that high pressure of doing it right now or "before it's too late." Also, if you begin receiving too many phone calls or faxes or emails, that's high pressure, and a good signal that you'll want to walk away.
- Non-disclosure - make sure they "disclose" a complete copy of the policy for your review - and review it. Never pay for something unless you have access to exactly what you are paying for. If they refuse to share the complete agreement, then it's your signal to look elsewhere.
How can you protect yourself from an ACA health insurance scam?
Begin by reviewing the red flags above. If the company or salesperson makes it past that review, then:
- Check with your state's insurance commissioner. Each state reviews and licenses insurance companies differently, and those reviews will be even more varied as the new State Health Insurance Exchanges are implemented.
- Be sure the company is licensed in your state. You can find a link to each state's licensing body here.
- Call your primary care doctor and any other doctors you see on a regular basis and double check with them that they work with the health insurance company you want to do business with.
Learn more about health insurance scams, and what steps you should take if you believe you've been contacted by a scammer.
• The Federal Trade Commission