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Health Insurance Fraud & Scams – 4 Warning Signs to Watch Out For


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Health care reform may give hope to millions of uninsured Americans. They’re waiting eagerly for their chance to get affordable health insurance coverage for themselves and their families. At the same time, unfortunately, schemers and crooks are willing to take advantage of uninsured people’s vulnerabilities and exploit them by offering bogus insurance policies.

Scam artists follow the news and understand the public’s hopes and expectations. When they try to manipulate people, they often use popular terms and buzzwords like “Obamacare” and “health care reform.” Just dropping these words often helps them gain trust and credibility with their victims.

Luckily, there are common elements to most of these financial scams that will alert you when someone is “full of it.”

1. The Deal Is Too Good to Be True
Swindlers feed off of other people’s greed. They figure that as long as their deal sounds better than all the others, their victims will go along with it. Like your parents warned, if a deal seems too good to be true, it probably is. Con artists know you’d never buy into an unfamiliar program if the terms were the same as a major national provider, so they tempt you with lofty promises of great coverage and enticingly low premiums. For better or worse, legitimate private companies are in business to make a profit. If a deal looks like the company is taking a major loss, it’s probably a fraud.

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2. The Terms of the Deal Are Vague
Many elements of scams simply don’t make sense. Valid programs explain the key points before you sign anything (although you may still have to ask for clarification). Impostors gloss over major points or leave them out altogether. They’re prepared in case they get inbound questions, and they’ll often share a link to a seemingly sophisticated website. Don’t let fancy graphics distract you from the fact that their offer is vague and ambiguous. Understand health insurance terms and basics so that you can know when something is out of place.

A legitimate health insurance program is going to give you every detail that could possibly be relevant. They’ll include:

  • Types of coverage available
  • Premiums and deductibles
  • How different plans change your regular payments
  • What you can do to reduce your premiums
  • Terms for termination
  • Where you can call if you have further questions

It’s relatively easy to check up on a provider’s authenticity. Since government agencies regulate insurance companies, your state will have a history on the real ones. If your state insurance commissioner doesn’t have a record of a company, they need to be reported. Even if it’s not a hoax, unregistered companies still aren’t licensed to sell health insurance. Scam artists may also pretend to be affiliated with a legitimate company. Always get the names of the representatives you speak with, so you can confirm that they’re truly affiliated with that provider.

3. They Pressure You to Make a Decision
The last thing a crook wants to do is give you time to realize their offer has more holes in it than a piece of Swiss cheese at a firing range. They’ll probably tell you that the deal expires the moment you hang up the phone. No legitimate company would rush you with such an unscrupulous sales tactic. Ask for more information so you can do your research on the validity of the company, and so you can let others know the warning signs.

4. They Claim to Be Affiliated with a Government Agency
In an attempt to appear credible, phony insurance agents often masquerade as government employees or affiliates. They throw around commonly-used terms like “Obamacare” to gain the trust of gullible people. Obamacare isn’t a brand name, and real government employees don’t use these terms. Again, always take the name of everyone you contact with. A real government employee should give you additional information and numbers to contact. If they don’t bore with you with policy details, they probably aren’t from the government. Do your research and verify the information they provide.

Final Word

Anyone is going to be frustrated when they can’t afford health insurance and medical care. Policymakers are working hard to bring affordable health coverage to your front door. In the meantime, don’t sign up for an insurance policy that isn’t going to give you any real coverage.

Have you seen any fraudulent health insurance offers come your way? Share the warning signs that tipped you off here.


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Kalen Smith has written for a variety of financial and business sites. He is a weekly contributor for Young Entrepreneur and has worked as a guest blogger on behalf of Consumer Media Network. He holds an MBA in finance from Clark University in Worcester, MA.