Swindlers on the Rise in the Arena of Health Insurance

Medicare regulators have issued an alert about an increasing number of swindlers in the guise of insurance agents targeting older adults as well as senior citizens. According to them, this increase is the number of swindlers is because this is the start of the holiday season and is also the time for Medicare prescription drug coverage enrollment.

There are a number of ways swindlers can get at your Medicare. These involve blatant violation of the federal regulations in place to combat door-to-door selling of insurance and also signature forgery. As the director of Ohio Department of Insurance Mary Jo Hudson says, ‘it is the wild, wild West out there.’

Medicare launched its program focused on prescription drugs, also called Part D, about a couple of years back. This program was designed to help the subscriber get insurance against the rapidly increasing cost price of medicines having regular brand names and also generic ones. The last date for enrollment currently is December 31, 2007.

One of the problems associated with Medicare is the complexity involved. Ms. Hudson went on to say the complexity involved in the process of getting Medicare made it ‘very bad news.’ There are quite a few hurdles when it comes to signing up for Medicare, and this is where swindlers and frauds make a killing.

One area where problems crop up usually is when insurance agents try and sell the Medicare Advantage programs to insurance beneficiaries. It is true the Advantage programs offer insurance beneficiaries certain benefits not included in the original package, but they also limit insurance coverage to just a few specific insurance carriers. Beneficiaries usually end up changing doctors frequently or even paying extra money.

According to Laura Dillon, an examiner working with the New York State Insurance Department, beneficiaries initially think they are getting signed for a prescription drug problem, but end up buying a Medicare Advantage program instead.

Most often, insurance agents breach the provisions laid down by the federal government against door-to-door sales of Medicare insurance. Insurance regulators say the frequent occurrence is because such violations are not easily detectable in the rural areas.

Sometimes, insurance agents fix legitimate appointments, usually inside buildings housing or meant for senior citizens, and once inside, ask the potential insurance buyer to introduce them to other people around. This is a blatant violation of the federal rules governing door-to-door sales of insurance and another instance of fraudulent practices agents indulge in.

There are other such instances of fraudulent practices as well. Sometimes, participants in luncheons are required to fill in what they think are informational cards, but are in reality applications for buying insurance. Another common practice involves swindlers claiming to be from Medicare and presenting themselves to prospective customers. They even have business cards that closely resemble the official Medicare cards.

So what is causing this increase in fraudulent practices by insurance agents? According to critics, the basic cause involves the structure of commissions. Per these structures, agents are encouraged to push a specific plan over other plans regardless of the actual need of the prospective customer.

The commissions are also often lucrative. There are instances of insurance carriers organizing contests for sales people, with lucrative prizes like a trip to Las Vegas. So how would prospective customers fix such a situation? Usually, it is difficult to change plans once you are in a particular one.

The best way for prospective customers to protect themselves is to take steps before signing for any insurance type. Steps older adults can take include having someone trusted along with them when they are meeting the insurance agent; and asking the agent to provide a written list of available doctors, prescription drugs, and also hospitals for each plan.