Protect Yourself from Health Insurance Scams

One of the many responsibilities of the Federal Trade Commission is to provide guidance to consumers about scams and hoaxes, including those perpetrated online. Lately, the FTC has been warning consumers about health insurance scams, which can lead to massive financial losses, inconvenience, and identity theft. 

To protect yourself from these scams, it is so important to understand what this kind of fraud looks like and how to avoid it!

Being an informed consumer can prevent you from becoming a victim. Let’s take a look at why these health insurance scams are effective, who tries to pull them off, and what you can do to protect yourself. 

What is a health insurance scam? 

Most health insurance scams offer appealing deals on fraudulent health insurance plans. Scammers run ads for discounted plans, or they contact their victims directly to sell them a “great deal on a plan with excellent coverage.”

Scammers may pretend to be from an established health insurance company, the government (state or federal), or a new healthcare organization. Regardless, the deals are fake, and the plans aren’t real. 

These scams exist because the fake insurance provider wants to collect personal data from their targets, including: 

• Social Security Numbers
• Financial account information
• Insurance information

They may even collect payment and reap the financial benefits of their scam. 

These scams are especially devastating if the victim cancels their existing coverage because they have bought the fake plan, or if they fail to enroll in coverage because they think they already have it. 

“You need a new insurance card” scams

A subcategory of health insurance scams is a trick in which cybercriminals pretend to be a healthcare company representative and contact targets, claiming a need to confirm their personal information to send them a new card. 

This is a phishing scam that depends on the victim believing that they are interacting with a legitimate representative from their insurance company. The scammer will go to great lengths to present as a real insurance company rep through things like: 

• Emails that look like they’re from the company
• Spoofed email addresses and phone numbers
• Websites that look almost identical to the real company’s site

Why do scammers like medical insurance scams? 

Cybercriminals like these scams for the same reason they like any other type of scam: they work. 

For many Americans, health insurance is an overwhelming, frustrating, and confusing part of their lives. People who pay out of pocket for their insurance are likely interested in getting a better deal. Some are even desperate for one! 

When a fraudster can offer what sounds like an amazing price on insurance coverage, victims may be willing to hand over their personal information and payment methods. They are even more likely to do so if the “representative” tells them that they need to make the decision quickly–scammers love to create a sense of urgency by saying that they can only make this offer during the call. 

For the scams that involve a new insurance card, cybercriminals take advantage of the fact that it’s not uncommon for people to get unexpected notifications and alerts from their insurance company. If you frequently receive explanations of benefits, claim denial forms, requests for additional documentation, bills, and more, then you might think a call about insurance cards is normal. 

How to spot a health insurance scam

Here are 6 ways to recognize a health insurance scam when you see one!

Unsolicited Contact

You should always be wary of unsolicited contact from anyone you don’t know, but that’s especially true if you are contacted by a person claiming to be a healthcare professional representative. Robocalls are especially suspicious. 

Although we can’t say that insurance companies never make cold calls, we can say that it’s very, very rare. You are highly unlikely to ever receive a cold call from an insurance company trying to sell you a policy. 

Time-Sensitive Pressure Tactics 

Legitimate companies will never use high-pressure sales tactics or tell you that you need to act now to take advantage of a “limited-time offer.” 

Scammers are good at playing on our psychological weaknesses. One of those things is that we often cave in to time-sensitive pressure. Scammers know this, and so they create artificial urgency by claiming you have to act immediately to secure a special rate. 

If they are calling to give you a fake new insurance card, they may say that without this card, you won’t be able to go to any of your doctor’s appointments, so you need to act right away. 

If you are being pushed to make an immediate decision while on the phone, that should be a big red flag! 

Suspiciously Low Prices 

If you are savvy at navigating the health insurance marketplace, you may be able to find one deal that is a little bit better than the others. But you should be suspicious of prices that seem too good to be true. 

Everyone wants to save money on healthcare. When you encounter drastically discounted rates, this is a sign that you are probably encountering a fraud scheme. If the price seems shockingly low compared to your current plan, be skeptical! 

Vague Coverage Details

It’s true that insurance coverage can be confusing, but scammers probably won’t be able to give you any clarity. In fact, their answers will typically be vague or evasive. Alternatively, they may over-promise what the plan will cover. 

Legit representatives will be able to clearly explain deductibles, copays, network providers, and exact details of what the policy covers. If you think that you are dealing with a real company, ask them to provide in-writing details about the coverage. Scammers will rarely have that kind of forethought. 

Unusual Payment Methods 

Health insurance can only be paid through standard payment methods: online payments from your bank, checks, or credit cards. 

They are never going to accept gift cards, wire transfers, PayPal, Venmo, CashApp, Zelle, or cryptocurrency. If the caller pressures you for payment through one of these channels, just go ahead and hang up the phone because this is guaranteed to be a scam.

Stay Informed & Stay Safe

The rise in insurance and healthcare scams shows no signs of slowing down, which makes it essential to stay vigilant when dealing with insurance matters. Remember that legitimate insurance providers will never pressure you into making quick decisions, demand unusual payment methods, or contact you unexpectedly with too-good-to-be-true offers.

If you suspect you’ve encountered a health insurance scam, report it to the Federal Trade Commission (FTC) immediately. And don’t forget to keep an eye on the WhatIsMyIPAddress.com blog to learn more about scams and how to avoid them!