An international crime ring helps Americans get licensed as insurance agents or brokers, then uses the new producers’ credentials to bilk health insurers and the federal government.
Officials at the Iowa Division of Insurance put out a warning about the new enrollment fraud strategy Tuesday.
The criminals start by contacting job hunters or other would-be insurance producers.
The criminals generate revenue by getting the new producers’ National Producer Numbers and other information, then using the producers’ information and stolen consumer information to apply for individual health insurance and Affordable Care Act premium tax credit subsidies for the consumers through the ACA public exchange system.
Once the criminals obtain the insurance, they collect the sales commissions and any premium subsidy payments.
Iowa officials believe the criminals are operating in multiple states.
Would-be insurance producers should avoid working with organizations that offer them too much help with making individual health insurance sales, officials said.
“Receiving unsolicited communications urging you to obtain a resident insurance producer license — paired with promises that a third party will write or manage policies under your name — is an immediate red flag,” officials said. “Allowing offshore entities to use your NPN exposes you to legal liability, license revocation and potential criminal charges for fraud.”
Officials asked would-be agents who have been approached by the scammers to notify the National Association of Insurance Commissioners.
The backdrop: News of the crime ring has surfaced as ACA exchange system supporters and critics are clashing about the level of enrollment fraud in the system.
Officials in the administration of President Donald Trump have argued that fraud has accounted for, and continues to account for, a large share of ACA exchange plan enrollment.
ACA system supporters say that the critics are exaggerating the extent of the problem and adding application verification rules that hurt legitimate users’ efforts to get covered.