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NAIC fraud alert highlights consumers' PPACA ignorance

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Health insurance agents, make sure all of your licensing is up to date.

The National Association of Insurance Commissioners (NAIC) is warning that that people posing as insurance agents or representatives of the federal government are trying to obtain sensitive information like Social Security and bank account numbers in attempts to sell fake policies under Patient Protection and Affordable Care Act (PPACA).

The organization of state regulators is telling people to confirm agent licensing with the state regulatory officials. 

The warning of fraudsters poised to take advantage of consumers reveals just how much consumers do not know about the PPACA.

As most in the industry know, open enrollment in the new marketplaces begins Oct. 1., but a man-in-the-street poll would reveal many people have no idea aobut the plan, thus creating the need for a PR blitz such as the kind Covered California has implemented, with its $45 million to be spent on “paid media” from now through March, and another $35 million from April through the end of 2014 to get the state’s uninsureds to sign up.

Taking advantage of that lack of awareness are bogus websites that purport to be part of the exchanges, which have been appearing online for more than a year.

The NAIC is thus warning people to not enter any personal or financial information into a website that says you can purchase a policy before the open enrollment period.

Another myth the NAIC fears is that some consumers believe they could go to jail for not having health insurance.

“You will not face jail time if you do not purchase health insurance,” the NAIC consumer alert states comfortingly (perhaps).

However, for those who remain uninsured and do not qualify for any exemptions, there will be a tax penalty that increases each year from 2014 through 2016.

One worrisome trick can quickly be parried by remembering something a bit unsettling for many consumers these days: “(A)nyone who is a legitimate representative of the federal government will already have your personal and financial information and should not ask you to provide it.”

That’s what the NAIC says in its consumer alert in response to what it calls a common ploy that involves unsolicited calls from scammers who claim to have your new “Obamacare insurance card” — they just need to get some information before they can send it to you. 

In this ploy, the caller then asks for credit card numbers, bank account information or your Social Security number. Sadly, a variation of this trick specifically targets seniors on Medicare.

No, citizens, you are not required to obtain a new insurance or Medicare card under PPACA.

Another misconception that may make consumers vulnerable is that the premium a fraudster may offer is only good for a limited time.

“Be skeptical of someone who is trying to pressure you into buying a policy because the rate is only good for a short time,” the NAIC is telling consumers. 

The best way to protect yourself from insurance fraud is to research the agent and company you’re considering through one’s state insurance department and confirm the agent and the company are licensed, the NAIC says.

However, if someone claims to be a health insurance exchange navigator, he or she won’t necessarily be licensed because the navigator is not acting in all instances as an insurance agent, but as more of a guidepost for consumers in the exchanges. 

PPACA requires state health insurance exchange to hire navigators – who are not paid by health insurers – to help consumers understand how to use the exchange system. Navigators will be hired in the 34 states in which the federal government is running the marketplaces or where the state is engaged in a partnership with the federal government. The administration has said that navigators do not have to be licensed agents or brokers and may not be paid by insurance companies.

The Department of Health and Human Services (HHS) did not respond when asked what it is doing to alert consumers of fraud pertaining to the exchange enrollment, although it is heavily involved in Medicare and Medicaid fraud prevention and awareness. 


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