FTC Issues Alerts to 25 Health Plan Marketers Ahead of Open Enrollment Over Deceptive Freebies and Coverage Claims

The Federal Trade Commission has issued warning letters to 25 companies that sell health plans or generate leads for them, telling them not to market plans as full coverage when they are not and not to lure consumers with fake free offers or cash incentives. The agency announced the letters shortly before the next open enrollment period for marketplace coverage begins.

The FTC did not accuse any company of violating the law, and it did not identify the recipients. Still, the letters describe the conduct regulators are monitoring, and the agency said more notices will be sent on an ongoing basis.

For people looking for coverage, the warning arrives as ads, texts and phone calls tied to health plans tend to increase during enrollment season. Consumers who respond to promises of cheap or “free” insurance may end up with a plan that covers very little when they need care, leaving them with unexpected bills.

Four Types of Claims Regulators Flagged

According to the FTC, the letters target four kinds of potentially deceptive statements: overstating a plan’s benefits or limits, describing a plan as major or comprehensive medical insurance when it is not, misstating the price of a plan, and falsely offering free items, cash rewards, rebates or other incentives.

The notices were sent to companies marketing Affordable Care Act marketplace plans, as well as limited indemnity plans and medical discount programs. A National Law Review analysis of the letters said they also warn against robocalls, calls to numbers listed on the National Do Not Call Registry, and pretending to be government agencies such as the Department of Health and Human Services or insurance carriers.

“Making healthcare more transparent and affordable is a top priority for the FTC,” said Christopher Mufarrige, director of the agency’s Bureau of Consumer Protection. He said open enrollment does not give companies permission to misrepresent what their plans cover.

According to the National Law Review analysis, companies that break the law could face federal court orders, consumer refunds and civil penalties of up to $53,088 per violation. The letters cite earlier FTC actions against health plan marketers and lead generators, including Simple Health Plans, Benefytt Technologies, and Assurance IQ and MediaAlpha.

Coverage That Looks Like Insurance but Is Not

The main danger for families is buying a product that is not full health insurance. Limited indemnity plans pay a preset amount, such as a fixed dollar figure for each hospital day, instead of covering most medical bills. Medical discount programs can reduce prices with participating providers, but they do not pay for care.

Those products are legal, but they are not the same as ACA-compliant coverage, which must include essential health benefits such as hospital care, prescription drugs, maternity services and mental health treatment, and cannot deny coverage because of preexisting conditions. A family may not realize the difference until after an emergency room visit or a serious diagnosis.

This is not the first time regulators have taken this step. The FTC sent similar letters to 21 health plan marketers in a previous round.

How to Spot a Misleading Pitch

HealthCare.gov is the federal marketplace for most states, while some states operate their own enrollment sites. The open enrollment period for marketplace coverage runs from Nov. 1 through Jan. 15, and people who enroll by Dec. 15 can have coverage begin on Jan. 1. State-based marketplaces may follow different deadlines.

Several warning signs suggest a pitch should be treated with caution. A caller says they are from Medicare, HHS or “the government” and asks for personal information. An ad promises a “free” plan, a gift card or a cash reward for signing up. A seller refuses to say whether the product is ACA-compliant or will not provide plan documents in writing before payment.

Before enrolling, ask directly whether the product is major medical insurance, whether it covers preexisting conditions and what it pays toward a hospital stay. Request the plan’s Summary of Benefits and Coverage. If the answers are unclear, it is sensible to end the call and use the official marketplace instead.

Free help is available from marketplace navigators and other certified assisters, who can be found by ZIP code on HealthCare.gov. Many people also qualify for financial assistance that lowers premiums without using a third-party marketer.

Consumers who believe they were misled can report deceptive marketing at ReportFraud.ftc.gov. The FTC said it will never demand money, threaten people, tell them to transfer funds or promise a prize. Anyone who discovers they were switched into a plan without permission can contact the marketplace call center and their state insurance department. Keeping records of calls, including dates, names and phone numbers, and checking bank statements for unexpected monthly charges can help when disputing a payment or restoring coverage.

Key Questions Answered

What did the FTC do? It sent warning letters to 25 companies that market health plans or generate sales leads for them, cautioning against deceptive claims.

Do the letters mean the companies broke the law? No. The FTC said the letters do not allege wrongdoing, and it did not name the recipients.

What claims did the FTC flag? Misrepresenting a plan’s benefits or costs, describing a plan as comprehensive when it is not, and falsely promising free offers or cash rewards.

What is a limited indemnity plan? A product that pays fixed amounts for certain services. It is not comprehensive health insurance and may leave large bills.

When is open enrollment? Nov. 1 through Jan. 15 on HealthCare.gov. Enroll by Dec. 15 for coverage starting Jan. 1. State-run marketplaces may have different deadlines.

Where can I report a misleading pitch? At ReportFraud.ftc.gov and to your state insurance department if you were enrolled without permission.