Taking Care of Mom and Dad: Protecting Your Parents from Scammers
There are agents and companies selling Medicare supplement policies whose lack of professionalism and ethics harm consumers. But there are also ways for your parents to protect themselves. There are definite warning signs to watch out for when shopping for a Medicare supplement insurance policy.
Insurance agents and companies can't claim that they represent the Medicare program, the Social Security Administration, the Health Care Financing Administration or any government agency. They can't imply that the policy they're selling is guaranteed, approved, or otherwise backed up by the government. If someone calls your parents claiming to have been authorized by the government to contact them in order to review, modify or discuss their existing insurance, tell your parents to hang up.
Remind your parents to beware of anyone who tells them that he or she is a "counselor" or "adviser" for any association of senior citizens. This person may in fact just be an insurance agent trying to sell them a Medicare supplement insurance policy. Your parents should ask for credentials, the licenses they hold, and what kinds of products they are authorized to sell. A business card is not a license.
Your parents should not let an agent talk them into signing any form, application or document in blank. When they are buying a policy, they should never pay a premium in cash or make out a check to an agent's personal account. The agent should make it clear that they have the option of paying their premiums directly to the insurer.
Be careful of any description of benefits that sounds too good to be true. It probably is. Agents have been known to give inaccurate, exaggerated and misleading descriptions of the benefits provided by both Medicare and Medicare supplement policies in order to convince an unsuspecting consumer to purchase a policy from them.
Any agent who tries to sell your parents a number of identical policies is ripping them off.
Similarly, agents may try to get your parents to surrender insurance they already own and replace it with a policy they are selling by:
- misrepresenting the policy they are selling,
- making an incomplete comparison of the policies, or
- claiming that your parents' current insurer is in financial trouble.
As with all insurance policies, it pays to compare the costs of similar policies available from different insurers. The 10 standardized plans make it easier: Plan A is always a company's lowest priced Medicare supplement policy and is identical in coverage to the Plan As offered by other companies.
A study by the Missouri Department of Insurance found annual premiums for Plan A ranged between $347 to $785 (for the same coverage!) while premiums for Plan F ranged from $732 to $1,436.
The best strategy is to shop aggressively when your parents first buy a policy; after that, they should change insurers or policies only when they want to make substantial changes to the coverage. If your parents cancel one policy to purchase another, there is generally no refund of premium and they may be subject to new policy limitations and restrictions.
