Be On Guard for Medical Insurance Scams

Medicare's new programs were supposed to make prescription drugs more affordable for seniors. Instead, they've ushered in a whole new wave of scam artists.

Change is never easy for the elderly. With the new Medicare programs, it's also proving to be treacherous.

Medicare's Part D and Advantage Plans were introduced in 2006, and hailed as a breakthrough method for seniors to save money on prescription drugs. Their implementation has proved otherwise, as the program's incentives have created the conditions for scam artists and overzealous sales people to prey on seniors confused by the plan.

Incentive to scam

At the heart of the scams is the Part D coverage and the Medicare Advantage Plan. These are designed to shift more of the burden to the private sector. To prompt seniors to switch, the Federal government paid insurers for increased enrollment in the programs. The insurers passed these incentives onto the agents; typically, they were paid up to $80 to enroll a person in Part D coverage, and up to a staggering $500 for Medicare Advantage plan enrollees.

Agents naturally leapt at the money, aggressively converting seniors to the plans. Countless documented cases reveal agents often fraudulently enrolled seniors in the program. In many cases, seniors were unaware they had been converted to the new plan.

State insurance commissions have begun to crack down on insurers who hire and condone the over-aggressive agents. At this point, none of the larger insurers have been proven to condone or promote the activity of these less-than-ethical people. Nevertheless, many agencies have been warned, and are required to take steps to prevent future abuses.

Ancillary schemes

Commission-hungry agents are only part of the problem. Many of the scams have resulted from the confusion surrounding the implementation of the new program. Scam artists, posing as actual insurance agents, have convinced elderly people to provide them with personal financial information. They promise that the information will be used to enroll the senior in the Part D program, but instead, the financial data is used to commit identity theft.

The method of premium collection has also given rise to another scam. Because the government will pay the Medicare premium for you, people can be enrolled in the program without their knowledge. Crooks with the right personal information have enrolled unsuspecting people-alive and dead-and pocketed the resulting commissions.

It's a sad state of affairs when legislation intended to help a population is twisted and used as a criminal tool. Medicare Plan D and the Medicare Advantage plan are examples of government at its worst, a mix of political grandstanding and poor administration that has left many seniors confused and easy prey for scam artists. Now more than ever, seniors need to seek out trustworthy advice when dealing with their prescription drug insurance.