Tricks Insurance Agents Use to Sell Medicare Policies

As the age and number of Medicare beneficiaries rises, so does the likelihood of more seniors being exposed to scams involved with Medicare insurance.



Predators may seize the opportunity to defraud elderly people by seeking out those with dementia, or identifying seniors who tend to trust easily. While the sums of money involved are small compared to other schemes that defraud victims, seniors can least afford to be victimized for even a few hundred dollars.

Medicare D

• Medicare D is Medicare's prescription drug plan.

  Medicare D, the prescription drug benefit implemented during the George W. Bush administration, set the stage for the defrauding of a large number of seniors. The plan was new and difficult to understand, making it easier for predators to scam seniors who believed that Medicare D was an opportunity for them to save on prescription medicine.

  Insurance agents would call to set an appointment -- more insidious agents would just show up unannounced -- and tell the beneficiary that he wanted to go over options for the drug benefit. Agents are paid about $60 to $80 per policy for selling Medicare D policies and between $400 and $800 for selling a Medicare Advantage policy. Medicare Advantage is a private Medicare plan administered by insurance companies that includes a drug plan, and provides benefits that are not available to regular Medicare beneficiaries. However, a beneficiary must use doctors and facilities contracted with their insurer of pay privately.

  Since agents receive 10 times more income for selling Medicare Advantage than a Part D plan, they may use high-pressure tactics to sell the consumer Medicare Advantage. If the client only wants a Part D plan, the agent may relent and sell it to him. However, the agent now has all the information needed to enroll the consumer in Medicare Advantage. Since the premium is paid directly by the government, the consumer is unaware of the change until he tries to use his original Medicare, at which time he learns it is no longer valid. Although this bait-and-switch scam is still prevalent, there is a newer Part D scam to be aware of.

  Seniors on Medicare that have spent more than $940 in 2010 for out-of-pocket prescription drug expenses will receive a check directly from the government for $250. There have been reports of phone calls to seniors about "new Medicare cards," and seniors are told that they need the new card as a result of the new Affordable Care Act and to get their $250 towards the "doughnut hole."

  An agent may tell the senior that she must fill out some forms to qualify for the check. In actuality, the agent is signing the senior up for Medicare Advantage.

Obama Care Scam

• With passage of The Patient Protection and Affordable Care Act, nicknamed "Obama Care," a new scam against Medicare recipients has been uncovered. Individuals are solicited at home by a person claiming to be from Medicare. That person tells the senior that information is needed to make sure his benefits stay in force. By doing this, the scammers often manage to collect personal information, such as Social Security number, bank account numbers and Medicare ID numbers -- enough information to steal the person's identity.

  The only government employee who will come to your house is a census taker. Medicare does not have field enrollment agents of any kind.

Avoid Being Scammed

• Do not sign up with anyone for a program to replace or enhance your Medicare coverage when first contacted. Find out the name of the agent, the insurance company and what plan is being offered. Call your state insurance commissioner or the Centers for Medicare and Medicaid at 1-800-447-8477 and ask them if the plans are real and if there is any derogatory information that will influence your decision.