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Beware of Health Insurance Scams


It was bound to happen: health care reform triggered a flood of health insurance scams across the nation, fueled by consumers’ fears and confusion over what impact the new laws will have on them and their families. Bogus health insurance policies are being peddled via every media possible, so buyers beware.

In an April 6 letter to state officials, Secretary of Health and Human Services, Kathleen Sebelius urged them to be on the alert for scammers who are looking to lure people into buying worthless health insurance policies. Her agency had noted a recent increase in the number of health care-related crimes, and the numbers are likely to continue to rise.

The letter noted that “Media accounts indicate that fraudsters have gone door to door selling phony insurance policies. Some have attempted to make dishonest profits by urging consumers to obtain coverage in a non-existent ‘limited enrollment’ period that they falsely claim was made possible by the new legislation.”

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Among those most often victimized are seniors. Sebelius said that her department was contacting seniors groups to alert them of possible fraudulent sales pitches for health insurance policies and health care related issues. Such sales pitches often come via a telephone call or door-to-door salesperson who uses high-pressure scare tactics.

Consumers should be wary of tactics that scammers often employ to lure in their victims. Here are some red flags:

  • High-pressure scare tactics: If a salesperson tells you that a health insurance policy is only available at a special price or with special options for a limited time because of the new federal health care laws and that you should buy now, don’t.
  • “Urgent” Internet and TV ads: Beware of advertisements that urge you to call a toll-free number to take advantage of special insurance coverage because of the new health care laws.
  • Door-to-door sales: Legitimate health insurance companies do not use this sales approach any more. Do not fall for it.
  • Too good to be true: If someone offers you a health insurance policy at a very low cost with great comprehensive coverage, it’s too good to be true. Health insurance is not inexpensive.
  • Verify: If you are considering a policy with a company, verify that the company is licensed to conduct business in your state. Contact your state insurance office, or you can visit the website for the National Association of Insurance Commissioners, which provides detailed information and access to commissioners in all 50 states.
  • Examine all documents carefully: Make sure you read all the documents the insurance agent gives you, that all the blanks are filled in, and that you keep a copy of anything you sign.
  • Review your policy: After you get a copy of your health insurance policy, compare its contents with the paperwork that you signed to make sure you got what you agreed to buy, nothing more and nothing less. If there is any discrepancy, contact the insurance company immediately.

The search for affordable health insurance can be a challenge. Don’t be frightened into becoming a victim of a health insurance scam. If the individual who is trying to sell you a health insurance policy is offended because you ask lots of questions or you try to verify their credentials, that is an instant indication that something is not right. Protect yourself and your family.

Department of Health and Human Services
NY State Insurance Department news release, April 14, 2010