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Avoid scams while shopping for insurance

If you plan to seek health insurance in the ACA's state exchanges, your first step is making sure you're looking in the right place

  • By
  • contributor
  • September 27, 2013

The health insurance marketplaces (commonly referred to as exchanges) are set to open in just a few days, and while excitement is running high, so is confusion. Unfortunately, there are plenty of scammers who will take advantage of that confusion.

Know who you’re buying from

Health insurance is closely linked with personal information, so scams are a gold mine for identity thieves. If you’re providing personal or financial information, make sure that you initiated the contact. Check with your state’s Division of Insurance (DOI) before doing business with agents or health insurance carriers with whom you are not already familiar.

In addition to outright scams like identity theft, consumers need to be aware of the possibility that some agents might try to portray their agency as “the exchange” and attract customers who think they’re purchasing coverage through the official exchange. This is further complicated by the fact that licensed agents and brokers who are certified by their state’s exchange can help consumers enroll in exchange plans.

Individual policies will still be sold outside of the exchanges. Like exchange plans, they will be guaranteed issue and have the same out-of-pocket maximums. Some will be sold by carriers who also sell policies in the exchange. Although the plan designs will likely be a little different for off-exchange plans, there will be a lot of overall similarities.

From a consumer perspective, the primary difference between exchange and non-exchange plans is the availability of subsidies. Premium subsidies and cost-sharing subsidies are only available on plans that are purchased through the exchange. Each state has just one exchange for individual health insurance (run by either the state or by HHS) where subsidies are available. If a certified broker or agent assists you with your exchange plan application, you will still be submitting your application on the official exchange web site. If you’re submitting an application anywhere else, you’re applying for an off-exchange plan and subsidies will not be available.

Know how the law affects you, or doesn’t

Another commonly misunderstood aspect of the ACA – and one that scammers are likely to target – is that the majority of Americans do not need to do anything when the exchanges open on October 1. If you get your coverage through Medicare, Medicaid or your employer, you do not need to worry about the exchanges at all.

The exchanges are designed to provide a shopping platform for people who purchase individual health insurance. (They will also be a marketplace for small-business health plans, but in 2014, it will only be benefits managers – not employees – who use the exchange to select a plan). This includes those people who already buy individual health insurance, and people who are currently uninsured and don’t have access to a group plan through an employer. Almost three quarters of the population can largely ignore the exchanges.

If you’re purchasing individual health insurance, the exchanges are likely the best option if you’re eligible for subsidies. If not, you can shop both in and out of the exchange to find the policy that best fits your needs and budget. Although the exchanges’ online comparison and enrollment features have been heavily publicized, applicants can also enroll by mail or in person. You can contact your state’s DOI to verify that the person, agency or website you’re working with is certified with the state’s exchange. If you’re shopping for an off-exchange plan, the DOI can help you make sure you’re working with a properly licensed agent and buying a legitimate health insurance policy.

Ignore exchange naysayers

Because the individual mandate requires everyone to have health insurance starting in 2014, it’s inevitable that there will be some unscrupulous people who attempt to sell worthless “insurance.” If a policy seems too good to be true, it probably is. If in doubt, contact your state’s DOI before you submit an application.

Consumers should also be aware that some groups have a vested interest in seeing Obamacare flounder. They are often politically motivated, and aren’t above spreading outright lies about the ACA in order to turn people against it. Focus on what’s best for you and your family, and ignore people who tell you to avoid the exchanges (or even worse, to go uninsured and pay the penalty instead) without having any knowledge of your specific situation.

There is no one-size-fits-all when it comes to healthcare, which is why there are a variety of plans available in the individual market, both in and out of the exchanges.

The initial open enrollment window is six months long. So take your time, ask lots of questions, and seek help from your DOI or HHS if you need to verify the authenticity of the agent or carrier you’re considering.