Consumers can begin enrolling in Obamacare today, October 1, for healthcare coverage beginning on January 1, 2014, although consumers should expect glitches. Because of privacy and security weaknesses in the implementation of Obamacare, which could lead to identity theft and other fraud, vigilant consumers should consider waiting as some state-run exchanges may not be ready for prime time. Open enrollment is scheduled through March 31, 2014 (unless the law is delayed by Congress). A delay in the start date may provide sufficient time to address some of the identity theft risks posed by the Affordable Care Act (ACA).
Obamacare poses three separate and different identity theft and fraud threats, two of which are directly related to weaknesses in the implementation of the ACA.
Navigators and other qualified helpers, who will be handling personal information, and the massive government databases in which consumer medical, personal and financial information will be stored and shared with at least seven different federal government agencies are each separate threats to consumer privacy and identity theft. Both systems, navigators and consumer data bases, require strict people and computer security, respectively.
The third risk is posed by crooks who use social engineering techniques to scam consumers out of their personal information to commit identity theft and financial fraud. These crooks will exploit any situation, calamity or confusing situation, such as Obamacare, to scam consumers.
Obamacare scams have been reported already in the months leading up to today's opening of enrollment. For example, over 1,100 complaints have been filed with the Federal Trade Commission (FTC) last May. It is likely that thousands more have gone unreported by consumers.
Social engineering is a clear and present danger to all consumers regardless if they will be enrolling for health care through the Health Insurance Marketplace or not. Scammers will be misleading consumers through email, fake Health Insurance Marketplace Websites, the U.S. Mail, and even by door-to-door contact to exploit the confusion that many Americans have about the new health care law.
What are the reported Obamacare-related scams that consumers should beware of?
Certain groups are likely to be targeted according to the Better Business Bureau and AARP such as senior citizens, the disabled and small business owners, although anyone can be duped into a fraudulent scheme.
Consumers must be aware that government agencies will not contact them by telephone, email, text messaging or at the door. If you receive such a communication delete it and do not respond. It’s a scam. Although government agencies may contact consumers by U.S. Mail there are no plans to due so under Obamacare.
Consumers must beware of anyone contacting them about Obamacare, even if the contact appears real. Con artists use fake or unauthorized logos in emails and on Websites, they will use a fake caller identification in phone calls that make the telephone call appear official, and they will use fake identification badges when they ring your doorbell.
Remember, these scam artists are trying to get your personal information such as your Social Security number, your financial information and a financial account number such as a credit card number. The government already has your Social Security number, so if someone contacts you and you are asked for that number, it’s a scam. The government is not going to ask you for a financial account number (bank, debit or credit) because they are not charging fees for Obamacare registration or participation, and the government is not selling the insurance.
Should Obamacare is delayed a year through Congress and President Obama, social engineering scams will persist as long as consumers are confused about the new health care law.
The most common scams reported include:
Fake Obamacare card scam. Scammers claim that consumers must have an Obamacare identification card for the Affordable Care Act (ACA) eligibility or for an insurance discount card. They request a Social Security Number and financial account information for payment of these cards. There are no special identification or health insurance cards associated with the new law.
Medicare eligibility scam. The crooks claim that new Medicare identification cards are being issued (similar to the Obamacare card scam), or that they need to update or verify personal information in order for the consumer to continue their Medicare benefits.
Fake health insurance coverage and mandatory payments scams. These are scams that convince consumers that mandatory payments are required or they sell fake insurance at prices too good to be true. Consumers should ignore these ruses and never provide personal or payment information. Requests to consumers to wire payments through Western Union or to provide payments in the form of a prepaid debit card are sure signs of fraud.
Consumers should be concerned about fake ACA Websites too. Official information can be obtained from the federal government’s official Website, www.healthcare.gov. Consumers can get information about the healthcare exchanges in their state from the same Website or through this direct link so they are absolutely certain they are on a legitimate Website and not a spoofed or fraudulent Website.
Fake navigator scams. Navigators and other qualified helpers are being put in place to assist consumers who are confused by the new law or who need assistance enrolling. Con artists can pretend to be navigators and scoop up personal information from unsuspecting consumers. Navigators will not make an unsolicited contact to consumers, and they will not ask consumers to pay a fee or charge for their services. Watch this informative video about what to watch out for.
Don’t fall for any of these or other scams related to ACA. If you are contacted notify the Federal Trade Commission by calling 877-382-4357 or filling out an online complaint form.
In addition to Fake Navigators Scams, many are concerned about he privacy and security threats posed by official Navigators too.
The federal government does not require Navigators to go through or have background checks, fingerprinting, licenses, or insurancer, although some states are mandating background checks. While states require health insurance sales agents to be vetted and tested, the Navigators, who perform essentially the same function as a licensed insurance agent including taking consumer applications, can qualify as a Navigator by going through a remedial training program. there are no other requirements that Navigator candidates go through to demonstrate their competency and trustworthiness.
Many are concerned that Navigators will have access to every registered personal information including their Social Security number and tax return (financial) information.
According to Forbes, it’s been reported that a Social Security number sells for $1 on the black market. But a person’s address, Social Security number, Medicare number, and medical history may bring in $50 up front, plus thousands more for the con men who use the information to buy prescription drugs and scam the consumer’s insurance company out of payments. Consumers are left facing bogus charges and ruined credit scores. Undoing the damage — if it’s even possible — can require countless hours of frustration and effort.
According to an independent study funded by the Medical Identity Fraud Alliance, medical identity theft is quickly becoming a national healthcare issue with life-threatening consequences, and is now the fast growing fraud. Medical identity theft is on the rise, and tainting the entire healthcare ecosystem.
Any personal information collected by Navigators including health and financial information or such information entered by consumers through official ACA Websites become part of a massive data base that will be shared among several Federal agencies and likely the states that are running their own exchanges. This massive database of consumer information may be subject to the risk of a data breach.
Some reports claim that information-rich government databases that will hold the consumer information that will begin to be collected today have not been thoroughly tested and secured as required under federal law and standards, although there are also claims that the data hub has passed all federal security standards.
In addition to the federal databases, 17 states will also maintain data through state-operated exchanges. One such database run by the Minnesota Exchange exposed the Social Security numbers of 2,400 health insurance agents through a data breach.
The recent report of a major data breach by three major commercial data warehousers suggests that the experts in the business of creating and securing large consumer databases have vulnerabilities even after years of commercial experience in protecting data. It raises the question how can the federal and state governments can protect consumer information adequately when rushed to comply.
One expert admits there are significant risks with or Obamacare because consumer information is all "over the place" already for crooks to snatch. He suggests the best way for consumers to protect themselves from identity theft resulting from Obamacare and other identity theft threats is by purchasing identity theft protection. We recently reviewed the criteria for selecting an identity protection plan in this column..