A health insurance policy is a contract between the insurance company and an individual. The individual pays a premium to the insurer and the insurer offers financial protection against healthcare expenses to the individual in return. Health insurance scams exploit individuals and systems through various deceptive methods. Here’s how these scams typically operate:
Table of Contents
Methods Used in Health Insurance Scams
1. Selling Fake Insurance Policies
– Scam : Fraudsters create fake insurance companies or policies that appear legitimate but provide no real coverage.
– How It Works : Scammers use professional-looking websites, advertisements, and sales pitches to sell policies. Victims pay premiums but find out later that their medical expenses are not covered.
2. Medical Identity Theft
– Scam : Stealing personal information to file false insurance claims or receive medical services.
– How It Works : Scammers obtain an individual’s insurance details through data breaches, phishing, or by buying information on the dark web. They then use this information to get medical treatment or submit fake claims, leaving the victim with incorrect records and potential out-of-pocket costs.
3. Medicare and Medicaid Fraud
– Scam : Targeting beneficiaries or providers to make fraudulent claims.
– How It Works : Scammers might pose as Medicare representatives, asking for personal information under the guise of updating records. They then use this information to bill Medicare for services never provided. Alternatively, dishonest providers may bill for more expensive services than were performed (upcoding) or for services that were never rendered (phantom billing).
4. Phishing and Vishing
– Scam : Using emails (phishing) or phone calls (vishing) to gather personal and financial information.
– How It Works : Scammers contact individuals pretending to be from an insurance company or government agency, asking them to verify their account information or provide their insurance details, which are then used for fraudulent purposes.
5. Medical Discount Scams
– Scam : Selling discount cards as though they are comprehensive health insurance plans.
– How It Works : Companies market discount cards, claiming they offer substantial savings on medical services. These cards often provide limited discounts at a few providers and do not offer the same protection as actual insurance policies.
Examples
1. Bogus Insurance Companies :
– A scammer sets up a fake health insurance company, offers attractive policies at low prices, and collects premiums from unsuspecting customers. When policyholders try to use their insurance, they find that the company doesn’t exist, and they have no coverage.
2. Fraudulent Medicare Calls :
– An elderly person receives a call from someone claiming to be a Medicare representative, asking for their Medicare number to ensure continued coverage. The scammer then uses this number to file false claims, leaving the victim with fraudulent charges on their account.
3. Fake Medical Billing :
– A scammer gets hold of an individual’s health insurance information and submits claims for expensive medical procedures that were never performed. The insurance company pays the claims, and the scammer pockets the money, while the policyholder’s claim history is affected.
Prevention Tips
1. Verify Legitimacy : Always confirm that the insurance company is licensed and reputable. Check with your state’s insurance department if in doubt.
2. Protect Personal Information : Be cautious about sharing personal details over the phone or online, especially if unsolicited.
3. Scrutinize Communications : Be wary of emails or phone calls asking for personal information. Legitimate companies will never request sensitive information in this manner.
4. Review Statements : Regularly check your insurance statements and Explanation of Benefits (EOB) for any unfamiliar or suspicious charges.
5. Report Suspected Fraud : If you suspect a scam, report it to your insurance provider, the Federal Trade Commission (FTC), or your state’s insurance commissioner.
By understanding these tactics and staying vigilant, individuals can better protect themselves from falling victim to health insurance scams.