Health Insurance Scams

AARP

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En español

Published January 17, 2019

/ Updated October 13, 2020

Getting the right health plan can feel like navigating a maze, with bewildering coverage and cost choices around every turn. Shady operators count on that confusion to sell insurance products and health services that deliver far fewer benefits than promised — or none at all.

These schemes proliferate when health care is in the news and on our minds. The coronavirus pandemic has brought robocalls and phishing emails peddling bogus “corona insurance” supposedly covering COVID-19 treatment. And scammers get busy during the annual open enrollment periods for Medicare and Affordable Care Act (ACA) plans. Medicare open enrollment is Oct. 15 to Dec. 7. The ACA period is Nov. 1 to Dec. 15 in most states; a few have expanded sign-up options during the pandemic.

Scammers try to convince you they have a simple solution to the complexity and expense of getting covered. They cold-call potential marks or generate leads through websites, using paid advertising to get to the top of search results, and claim to offer “comprehensive” health plans that meet “Obamacare” or “Trumpcare” requirements.

Some feature the names and logos of well-known insurers or even AARP. People who respond are peppered with pitches promising full coverage with low premiums, deductibles and copayments.

The resulting policies turn out to be, at best, far skimpier than advertised and at worst outright fakes. Often, victims really are buying medical discount plans, in which consumers pay a monthly fee to get reduced prices on specific services and products from participating health care providers. Some discount programs are legitimate, but as the Federal Trade Commission (FTC) warns, they are not a substitute for health insurance.

In one major case, the FTC sued a network of Florida companies called Simple Health Plans, saying it sole more than $150 million from consumers by dressing up limited-benefit plans and discount-plan memberships as comprehensive coverage. Its plans left buyers uninsured and often stuck with big medical bills. A federal judge shut the firm down pending a resolution of the court case, which as of October 2020 was still in litigation.

During ACA enrollment, scammers impersonate representatives of the government-run health insurance marketplace. They’ll tell you they need personal information to verify an application or that they can help you choose the right plan — for a fee. Treat such solicitations and any offers of deep-discount coverage with a healthy dose of skepticism.

Warning Signs

High-pressure sales pitches that push low-cost plans or offer special rates if you sign up right away.
Claims that a plan is licensed under ERISA, the federal Employee Retirement Income Security Act. Insurance companies are licensed by the states, not by any federal body.
A plan requires you to join an “association” or “union” to get covered. These may be fake organizations designed to create the illusion that you are buying group health insurance.
Someone contacting you about health coverage claims to be from the government. No government representative will ever try to sell you insurance.

How to protect yourself from this scam

Do compare rates. Premiums for comprehensive coverage that are far lower than what you see elsewhere are probably too good to be true.
Do confirm with your state insurance commissioner that a plan provider is licensed.
Do insist on seeing a statement of benefits or a complete copy of the policy.
Do learn the difference between medical discount plans and health insurance. The FTC offers guidance. Ask specific questions to make sure you know what you’re getting.
Do research an association or union named in an insurance pitch. Look for a U.S. street address and phone number, and for evidence of activity other than selling health insurance.
Do check out an unfamiliar company that says it sells plans through a major insurer such as BlueCross/BlueShield. The affiliation should be confirmed with the big-name insurer.

Don’t enter personal information on a website in exchange for a price quote. You likely are setting yourself up for identity theft or a barrage of sales calls.
Don’t keep talking to a sales agent who gives vague or evasive answers to coverage questions or tells you the details are “in the brochure.”
Don’t sign up for a plan if the bar for acceptance seems too low — for example, if you are not required to get a physical or provide a medical history. Some scam sites claim you can get insurance just through filling out a form.
Don’t give bank, credit card or personal information, or make a payment, in exchange for assistance in getting ACA coverage. Help navigating the health insurance marketplace is available free. Go to HealthCare.gov and click “Find Local Help.” Real health insurance marketplace representatives will not ask you for personal or financial data.

More Resources

If you suspect a health insurance scam, file a complaint with the FTC online or at 877-382-4357, and contact your state insurance department.
HealthCare.gov, the official Affordable Care Act website, has information on preventing and reporting suspected Health Insurance Marketplace scams.

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