5 Health Insurance Scams to Avoid
Key takeaways:
Before you purchase a new health insurance plan or product, you should be aware of common scams and red flags.
Health insurance scams can take many forms, from fake health insurance plans to Medicare card renewal fees.
If a salesperson tries to pressure you to make a quick decision, it’s probably a scam. Do your research before enrolling in a new plan or product.
Healthcare scams include everything from fake health insurance plans to Medicare card renewal fees. They pop up online and in spam emails all year long. Healthcare fraud is a felony in most states and a federal criminal offense under the Health Insurance Portability and Accountability Act (HIPAA).
Fraudulent activity typically increases when healthcare is in the news and on consumers’ minds — for example, during the Affordable Care Act (ACA) health insurance open enrollment period from November 1 to December 15.
There were over 4,000 healthcare scams reported in the U.S. from 2015 to 2022. They resulted in over $800,000 in total losses for people across the country. Here’s how to avoid becoming a victim of fraud.
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What are the most common examples of health insurance fraud?
Healthcare scammers are always looking for new ways to take your money or information. Knowing about the most common scams can help you make better decisions. Below are five health insurance scams you should watch out for.
1. Selling fake health insurance plans
Over the last few decades, Congress has been investigating the growing problem of fake health insurance plans. People have been persuaded to pay for plans that don’t exist by scammers who, among other things:
Go door to door selling fake health insurance policies
Pretend to be health insurance brokers selling coverage over the phone
Set up fake health insurance websites
One of the hallmarks of a fake health insurance plan is claiming to offer full benefits at an almost “too good to be true” price.
Unfortunately, no reliable list of fake health insurance companies exists. As a general rule, the names of these companies often sound authentic, and they may have impressive-looking logos or marketing materials. But if you search for the company online, you'll notice that the results are limited to the website you were directed to.
2. Charging you for help getting new insurance
Scammers will cold-call consumers with an offer to help them navigate the health insurance marketplace — for a price. In this scenario, you would likely be told you have to pay a fee for the assistance or that you owe a penalty because you didn’t seek advice sooner. This is a good time to hang up the phone to avoid wasting your time and money.
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3. Demanding a Medicare card renewal fee
Scammers target older adults with phone calls about an approaching expiration date or regulatory changes that require them to obtain a new Medicare card. The scammer will tell the person that they might lose Medicare coverage if they don’t pay a fee for a new card. But this is not true.
Current federal regulations do not require you to obtain a new Medicare or health insurance card every year. And you won’t lose coverage if you don’t obtain a new Medicare card. If your card is lost or damaged, you can log in to your Medicare account to print or order an official copy of your card. You can also call 1-800-MEDICARE (1-800-633-4227) to order another card at no cost.
4. Selling expensive medical discount programs
Some scams are packaged as paid discount programs that supposedly cover or reduce the cost of healthcare services and products.
The discount card or program might claim that it meets the minimum healthcare plan requirement under “Obamacare” and that it can save you a bundle. It may sound logical at first, but if you have to pay money to get a discount on your healthcare, that isn’t a discount.
5. Impersonating government representatives
Neither state nor federal government representatives will ever call you to verify your Social Security number or bank information. Agencies like the Internal Revenue Service or your state’s Medicare office may send a letter by mail asking you to contact them, but they will not request or demand that you wire money or provide credit card or banking information over the phone to make a payment.
Warning signs of an insurance scammer
Along with watching out for the most popular scams, be on the lookout for these characteristics of fraudulent sites or salespeople.
Pushy sales pitches
Scammers are often very pushy and aggressive with their demands. They may push you to make an immediate decision about what they describe as a “deal of a lifetime,” telling you the offer will expire soon. They may talk in circles to confuse you and become irritated if you ask questions. And they may try to obtain your bank account and credit card information before you even sign up for or receive details about an offer.
Claims about healthcare reform
It’s common for scammers to sell fake health insurance that they claim is required as a result of recent healthcare reform. They may say that they’re offering a limited-time deal or that there’s a limited open enrollment period. Watch out for blast faxes, emails, and TV ads that use this kind of language.
Instead of falling prey to a scam, you can get free help navigating the ACA health insurance marketplace by visiting healthcare.gov and clicking “find local help.”
Evasive answers
If a health insurance salesperson is evasive and avoids giving specific coverage details, that’s a red flag. Anyone selling insurance should be able to provide you with information about:
Healthcare professionals in the plan
Other relevant plan information
You shouldn’t have to search a website or brochure for more information. If a salesperson doesn’t clearly answer your questions, that’s your cue to end the conversation.
Membership is required
You should not have to join an association or union to buy health insurance coverage. In general, groups that make these claims are fraudulent.
How can you avoid health insurance scams?
You can avoid health insurance scams by being an alert consumer. Here are a few best practices to keep in mind when you’re approached with an offer.
Don’t pay for help to get health insurance
You should not pay anyone who offers to help you enroll in a government health insurance program. Whether this offer comes via phone or email, don’t be tempted to accept. Their goal is to obtain your personal and financial information so they can steal your money or identity.
Become familiar with Medicare rules and regulations
It’s important to become familiar with the Medicare rules and regulations, and call 1-800-MEDICARE if you have any questions. Here are some steps you can take to avoid becoming a victim of Medicare fraud:
Don’t give your Medicare information to anyone except your doctor or people who need it for healthcare purposes.
Read about Medicare’s privacy practices to better understand how your information may be used.
Don’t join a Medicare prescription medication or health plan over the phone unless you call Medicare directly.
Don’t pay for a Medicare card renewal fee.
Understand what you are signing up for
To weed out scams from legitimate savings options, you can:
Read all the terms and conditions of a program before you sign up.
Check out the FAQs on a company’s website.
Contact your state insurance commissioner’s office for information about a health plan.
Find out how any fees or discounts work before signing up for a plan.
These tips can also help you understand legitimate money savings opportunities. For example, you can read more about GoodRx online and then take advantage of free coupons to help you save money on prescription medications.
Be very wary of strangers
You should never give any personal information, like your birthdate or Social Security number, or financial information, like your credit card or bank account number, to anyone who initiates contact with you and claims to be a government or insurance representative. Even representatives from health insurance companies are unlikely to call you.
If you receive a suspicious call, you should:
Ask for a name, department, and phone number to call the person back.
Avoid providing personal or financial information.
Verify that the company or agency calling you exists and is legitimate.
It’s important to make sure you’re purchasing health insurance from a licensed insurance agent. If possible, get recommendations about insurance contacts from family or friends. Or purchase a health insurance plan through a reputable site like healthcare.gov.
How to report health insurance fraud
If you suspect you’ve been a victim of a health insurance scam, there are several local and federal agencies available for help and guidance:
The bottom line
Healthcare scammers may try to steal your personal or financial information in many ways. The best way to protect yourself is to do your research before signing up for plans and avoid making quick decisions over the phone. If you’ve been a victim of a health insurance scam, you should reach out to a local or federal agency for help.
Why trust our experts?
References
Centers for Disease Control and Prevention. (2022). Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Federal Trade Commission Consumer Advice. (2021). Spot health insurance scams.
Medicare.gov. (2013). Notice of privacy practices for original Medicare.
U.S. Senate Committee on Finance. (2004). Grassley exposes growing problem of fake health insurance.
Weiss & Paarz. (2022). The U.S. cities with the most healthcare scams.
