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It’s been more than seven years since the health insurance marketplaces (exchanges) first opened for business. Well over 11 million people have enrolled in plans through the exchanges for 2021, and some people also have ACA-compliant individual market coverage obtained outside the exchanges (directly from insurers). And thanks in large part to the ACA’s expansion of Medicaid, enrollment in Medicaid coverage has grown by nearly 20 million people since 2013 (there’s been a significant increase in Medicaid enrollment as a result of the COVID pandemic). And the uninsured rate is still in the single digits, despite the fact that it’s been rising during the Trump administration’s tenure, after dropping to a record low by 2016.
But while there’s plenty to celebrate, any major change like the ACA — especially with the subsequent decade of additional health care reform debate — comes with scammers who take advantage of the confusion that invariably surrounds a major policy shift. Here are some tips to keep in mind:
The ACA was signed into law in 2010, and almost immediately, scammers began looking for ways to make a quick buck. Soon after the law passed, Jim Quiggle, spokesman for the Coalition Against Insurance Fraud, says he wasn’t surprised by the sudden influx of health insurance scams. “Crooks are exploiting the mass confusion over what the health reform means to the average consumer,” Quiggle said. “With each new aspect of reform, another opportunity for fraudulent marketing opens up.”
Quiggle explained that rip-off artists go door to door and use blast emails or pop-up ads to convince unsuspecting customers that they’re selling “ObamaCare.” And, to create a sense of urgency, the scammers tell potential scam victims that the law requires them to buy the insurance they’re selling and do it before an “enrollment period” closes.
It’s true that the ACA created an annual open enrollment period for individual market health insurance; outside of open enrollment, coverage can only be obtained if you have a qualifying event (prior to 2014, people could apply for individual health insurance whenever they liked, but the applications were then medically underwritten and could be rejected based on medical history). But again, buyer beware. If in doubt, double-check the facts with a third party to make sure you’re dealing with a legitimate source of coverage.
Marc Young, spokesman for Insurance Commissioner Kim Holland, co-chair of the National Association of Insurance Commissioners’ Anti-Fraud Task Force, explains that criminals sometimes cleverly mask themselves as insurance companies, selling plans that are completely fraudulent. “Unfortunately, the criminals provide all of the materials that legitimate companies provide,” Young says. “They’ll use the industry language to describe levels of coverage. They’ll issue authentic-looking insurance cards.”
Some companies will even set up storefronts in communities, selling policies and sticking around just long enough to file bogus claims – only to completely vanish into thin air overnight. These companies are “very deceptive, very misleading, with very professional looking materials,” Young says.
Again, it’s a good idea to double-check with your state’s department of insurance to make sure that the person and company you’re dealing with are both licensed to do business in your state.
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 can still be purchased outside of the exchanges. Like exchange plans, they are ACA-qualified which means they are guaranteed issue, cover the essential health benefits, and have the ACA’s limits on out-of-pocket maximums. Some are sold by carriers who also sell policies in the exchange, but some carriers only offer plans outside the exchange.
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 official exchange where subsidies are available and in 36 states as of 2021, it’s Healthcare.gov.
If you’re in DC or one of the 14 states that run their own exchanges, you can still use Healthcare.gov to get to the exchange website in your state so that there’s no doubt you’re on the correct site. 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.
It’s important to understand, however, that there are approved direct enrollment entities that are authorized to enroll people in on-exchange plans via their own websites, without having to use the actual exchange website. HealthSherpa is an example of this; they only enroll people in on-exchange plans, and enrolled 1.9 million of the 8.2 million people who signed up for plans through the federally-run marketplace (HealthCare.gov) for 2021. CMS has a list of entities that are approved to provide direct enrollment. But if you’re using one of them, you’ll still want to confirm that you’re enrolling in an on-exchange plan, if that’s your preference.
Another commonly misunderstood aspect of the ACA – and one that scammers have tried to target – is that the majority of Americans do not need to obtain health insurance through the exchanges.
Most Americans haven’t had to make any changes at all under the ACA. If you get your coverage through Medicare, Medicaid, or your employer, you do not need to worry about the exchanges at all.
[If you’re enrolling in Medicaid, you may be able to do so through the exchange, depending on why you’re eligible for Medicaid. For MAGI-based Medicaid (most enrollees under the age of 65), some states have switched their entire application system to run through the exchange, so check with your state Medicaid office if you have questions.]
In addition to being a portal for Medicaid enrollment, the exchanges were primarily designed to provide a shopping platform for people who purchase individual health insurance (and for small-business health plans if the employer chooses to obtain coverage through the SHOP exchange, which is still available in some states). This includes people who already had individual health insurance prior to 2014, as well as people who were previously uninsured and didn’t have access to a group plan through an employer. But nearly two-thirds of the population have either employer-sponsored coverage or Medicare — and can ignore the exchanges — while another 20 percent have Medicaid and may be able to ignore the exchange, depending on how their states have set up the enrollment and renewal process.
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 department of insurance 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, your state’s department of insurance can help you make sure you’re working with a properly licensed agent and buying a legitimate health insurance policy.
Navigators and brokers will not charge you any sort of fee for their services (in a few states, brokers are allowed to charge fees if they’re not paid a commission by the insurer; but these fee-based brokers are rare and there are extensive rules regarding the disclosures they have to provide to their clients). The only money you need to pay is your first month’s premium, either when you enroll or once you get the invoice. If people are asking you for any additional fee, be wary of a scam.
Seniors who are enrolled in Medicare don’t need to do anything differently. They benefit from Obamacare, but don’t need to make any changes to their coverage and certainly don’t need to “enroll in Obamacare” or do anything with the exchanges.
If you enroll in a health plan, you’ll need to provide relatively extensive personal information, particularly if you’re applying for premium subsidies (and if you get a premium subsidy, you have to reconcile it on your tax return). There’s no legitimate way to enroll in just a minute or two with nothing more than a name and social security number, so be wary of potential scams in which the salesperson is attempting to gather some basic — but personal — information under the pretense of enrolling you in health coverage.
If the plan you’re enrolling in will take effect immediately, chances are it’s not an ACA-compliant plan. The same is true if it excludes pre-existing conditions or doesn’t cover some of the essential health benefits. Here’s more about how you can determine whether the plan you’re considering is compliant with the ACA.
Some salespeople offer discount medical cards or “buyers clubs” – some of which legitimately provide discounts on certain expenses such as prescription drug costs and dental services through a network of providers. In some cases, however, unscrupulous marketers are overstating the size of those networks, or offering unbelievable discounts – “sometimes up to 85 percent off,” Quiggle says.
And, in some cases, consumers are being drawn into those plans on the false promise that the discount card programs will pay for major medical expenses. “We see cases where people are showing up at hospitals presenting their discount card because they think they have health insurance, only to be told they’ll have to pay for services out of pocket,” Quiggle says.
In other cases, consumers incur large medical expenses, then find out that “pre-authorized surgeries” or other large expenses won’t be reimbursed.
Discount plans have existed since long before the ACA was written. But since they’re not considered insurance, they’re not regulated under the ACA, which means that unless a state takes steps to limit them, they can still legally be sold. They don’t provide much in the way of benefits though, particularly in the case of a large claim.
What has changed as a result of Obamacare is the affordability of real health insurance for people with low- and mid-range incomes. Discount plans stood out in the past because of their price, which was far cheaper than real health insurance. But because of the ACA’s premium tax credits (subsidies), the average after-subsidy premium for the 86 percent of exchange enrollees who got a subsidy in 2020 was just $84/month.
It’s inevitable that there have been some unscrupulous people who attempt to sell worthless “insurance” under the guise of Obamacare. If a policy seems too good to be true, it probably is. If in doubt, contact your state’s department of insurance before you submit an application.
Consumers should also be aware that some groups have a vested interest in fighting against Obamacare. 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 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. Open enrollment for 2021 individual market coverage ended in most states in December 2020, but opportunities to enroll in ACA-compliant coverage are available year-round if you experience a qualifying event. If you do, take your time, compare all of the available plans, seek help from a reputable source, and be sure that you read the fine print on the plans you’re considering before you enroll.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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