With Open Enrollment deadlines looming, Americans looking to avoid the Affordable Care Act (ACA) tax penalty are rushing to get insured. While there are many reputable companies and agents helping people find the right health coverage for their needs, there are also plenty of bad guys out there trying to scam people for a quick buck.
You can protect yourself from fraud with these tips:
1. Stay Informed
With this deadline quickly approaching, you need to make sure you fully understand the legitimate insurance options available to you. Resources like this "ACA Deadline Cheat Sheet" will keep you on track to get 2016 coverage before the deadline.
The more you know about how scammers are currently operating, the less likely you are to become a target. Methods change rapidly and some can be very hard to spot. For example, website redirection scams take you to a site that looks legitimate, but the URL (the website address in the address bar) does not match the company to which you think you are sending your information.
Look for other red flags in communication, like an email from an unusual website and be alert to grammar and spelling mistakes that a legitimate company would have fixed. A fake email may come from an address very similar to a legitimate company address (e.g. An open enrollment email from @healt.hcare.gov versus legitimate @healthcare.gov).
You should also be aware of the terminology used by customer service representatives. Reputable companies tend to refer to the "Affordable Care Act" or the "ACA," rather than using slang terms or nicknames like "Obamacare."
2. Do Not Rush
While the ACA Open Enrollment deadline is steadily approaching, be sure to do plenty of research before choosing a plan. If you miss the (January 31st) deadline completely, you can obtain ACA-compliant health insurance outside of the marketplace individually or through an employer, but you would not qualify for the premium tax credits.
You will be required to pay a fee when you file your federal tax return, if you are uninsured for more than 2 consecutive months during the year. However, you can check to see if you can buy insurance mid-year due to a qualifying life event, if you would like to take advantage of the federal tax credits.
If you have not purchased a plan by December 31st, you will face a 15-45-day coverage gap. One solution to this gap is short-term medical insurance, which provides you with temporary coverage until you pick a long-term plan or your coverage begins.
Note: Short-term medical (STM) is not an ACA-compliant plan because it does not cover all of the essential benefits required by the ACA. If you choose to only purchase an STM plan during the year, you will be subject to the ACA tax penalty.
However, short-term medical plans are a great complement to ACA plans, as they provide temporary medical services for unforeseen illness and injuries. The best practice is to buy your ACA-compliant health insurance plan and then buy an STM plan to cover the time until your ACA-complaint plan kicks in.
3. Say No to Cash, Money Orders, and Prepaid Cards
Reputable insurance companies typically take payment via electronic funds transfer, major credit or debit cards, and by personal check. If any person insists that you wire funds, send a money order or prepaid card, or pay in cash, your fraud detector should sound the alarm.
Money orders, prepaid cards, cash, and Western Union transfers are guaranteed funds that you cannot recover in the event of fraud, which is why fraudulent businesses use them. Major insurance companies accept traditional payment methods which protect both the business and the customer from fraud losses.
In the event you do find yourself the victim of a scam or identity theft, contact your bank and credit card issuers right away. Depending on the situation, you may be able to recover some or all of your lost funds.
You can also put a freeze on your credit report to prevent any new accounts from being opened in your name. You can add a freeze through any of the three major credit reporting bureaus: Equifax, TransUnion, and Experian.
4. Follow Your Instincts
If something feels off in your gut, follow your instincts. Frauds steal billions of dollars from unsuspecting Americans each year, and your instincts are an important line of defense. If someone is pressuring you or makes you feel uncomfortable, stop to re-assess. When in doubt, just say no.
If you suspect you are dealing with a fraudulent person or company, you can research and report the situation to your state's attorney general, the Federal Trade Commission, or the Better Business Bureau. You can also sign up for free credit monitoring to be alerted to any changes on your credit report.