Phony health plans are sweeping the U.S. in a crime wave thatshould put every agent on alert. Now is the time for agents toenhance their value by educating consumers about the red flags offraud.

Scammers are peddling junk to your clients and prospects. Thesellers generally have no producer licenses and are sellingunauthorized coverage.

Read the Coalition Against Insurance Fraud's Hall of Shame

Con artists are promising full-benefit health coverage butdelivering worthless pieces of paper, stripped-down, low-benefitpolicies or medical discount cards that are basically buyer clubsfor discounted services for which people still must
pay themselves.

Hucksters have exploited people's vulnerability in thedownturned economy for more than 2 years. Millions of Americanshave no health insurance. Widespread layoffs and high healthpremiums amplify people's willingness to believe a smooth salespitch. Here are two real-life examples:

o Bob Harper unknowingly bought fake coverage. His heart thenwent bad and he urgently needed a pacemaker operation. But theOklahoma man discovered his coverage was useless, and legitimateinsurers were turning him down because of his preexistingcondition.

o Mary Lloyd's husband, Anthony, had a serious heart attackafter they bought what the Minnesota couple thought was a betterplan than their then-current health policy. But the new planwouldn't pay his bills. They were left with at least $67,000 inexpenses and a financial nightmare.

Overall figures on total victims, stolen premiums and unpaidmedical bills have yet to be compiled. But the cons likely areoperating in most states–actually all states, because some bogusplans have borderless websites. And just one outfit–American TradeAssn.–has stolen $14 million from 12,000 people nationally,regulators estimate.

More come-ons also sprouted right after healthcare reformpassed. They exploit consumer confusion about what reform means.Some swindlers are going door-to-door. They're lying that they'refrom the federal government and that consumers are “required” tobuy “ObamaCare” coverage immediately. “Limited-time” deals for aslow as $29.95 a month are being peddled, and prospects are urged tobuy in right away.

The Coalition AgainstInsurance Fraud has mounted a national news campaign and issueda detailed consumer alert to help the public and policymakersunderstand the trend, the dangers and red flags. NAIC is active andso are many insurance departments. U.S. Dept. of Health and HumanServices Secretary Kathleen Sebelius has issued a national alertabout the healthcare-reform cons.

Agents also have a stake in actively warning the public. Yourpersonal and commercial clients and prospects are being solicited.Some are giving up valid health coverage, believing they've found abetter deal. Beyond your lost clients and commissions, fake healthplans should trigger heightened concern for the well-being of thepublic you serve.

Partner with your insurance department and other state insurancegroups. Include alerts on your websites, and in client newslettersand social media marketing.

The Nevada Independent Insurance Agents (NIIA) has teamed withthe state insurance department and another insurance group onstatewide outreach campaigns.

NIIA President Kay Lockhart detailed the upheaval caused severalyears ago by an unlicensed health plan called Employers Mutual,which took its name from a legitimate carrier to confuse itsvictims.

“That heavily impacted the State of Nevada. Consumers and largerbusinesses were scooped up. They had no coverage for themselves ortheir employees and they had to pay for coverage themselves,”Lockhart recalled. “Our members lost a ton of money on it becausethey lost the clients, and our clients lost a ton of money becausethey had to pay hospital bills themselves.”

Licensed agents who sell fake health coverage also facecareer-threatening legal problems. Do your due diligence ifapproached by a suspect outfit. The tempting commissions aren'tworth it: When the inevitable crackdowns occur, involved producersface loss of their licenses, plus large fines, client lawsuits,possible criminal prosecution and destruction of their careers.

Shady health plans are more sickening than the medicalconditions they purport to cover. It's time to inject a cure.