The FTC warned 25 companies selling health plans during open enrollment

Federal Trade Commission staff sent warning letters to 25 companies that market healthcare plans or generate sales leads for them, the agency announced on October 29, with open enrollment season in progress. The letters cover Affordable Care Act Marketplace coverage and other products such as limited indemnity plans and medical discount programs. The agency expects to send more on a rolling basis.

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The letters allege no wrongdoing by any recipient, and the 25 companies have not been named. They put marketers on notice that the Commission is watching how plans are pitched.

Four practices the letters flag

According to the FTC’s release, the letters identify conduct that may violate laws the Commission enforces: misrepresenting the benefits or limitations of a plan, representing that a plan is major or comprehensive medical insurance when it is not, misrepresenting costs, and falsely claiming that people who enroll will receive free offers, cash rewards, rebates or other incentives. Christopher Mufarrige, director of the agency’s Bureau of Consumer Protection, said in the release: “Making healthcare more transparent and affordable is a top priority for the FTC.”

The release itself cites no statute or rule, referring only to laws the Commission enforces. The detail sits in the template attached to it.

Including lead generators in the mailing matters because of how the business works. A lead generator runs a website or call operation that collects the names of people shopping for coverage and passes them to agents or insurers, so a misleading claim at the front of the funnel can set what a buyer believes about a plan long before an agent comes on the line. The letter’s reach to third-party distributors, affiliates and sales agents covers that chain, and it places responsibility for each link on the company that sent the ad.

Laws cited in the template letter

The sample warning letter is signed by Lois Greisman, associate director of the Division of Marketing Practices, and tells recipients to review paid and online ads, website claims, social media, promotional materials and the work of third-party distributors, affiliates and sales agents. Compliance, the letter says, is the recipient’s own responsibility, and it states no response deadline. It notes that a limited benefit or discount plan is not the equivalent of major medical coverage, and it warns against falsely claiming affiliation with, or endorsement by, entities that offer ACA-based policies.

Three legal hooks appear: Section 5(a) of the FTC Act, which bars deceptive or unfair practices; the Telemarketing Sales Rule, which restricts robocalls used to sell health insurance and calls to numbers on the Do Not Call Registry; and the rule on impersonation of government and business, which prohibits posing as an agency such as the Department of Health and Human Services or as an insurance carrier. Civil penalties run up to $53,088 per violation, the letter says, and each unlawful call, advertisement or misrepresentation may count as a separate violation.

The cases the agency points to

The release lists earlier actions as examples of the pattern: Top Healthcare Options Insurance Agency, Innovative Partners, Assurance IQ and MediaAlpha, Simple Health Plans, Consumer Health Benefits, Benefytt Technologies and Partners in Healthcare. The letter counts eight enforcement actions in all, with monetary judgments ranging from $7 million to $195 million.

The best-known of them is Benefytt. In August 2022 the Commission announced a settlement requiring Benefytt Technologies to pay $100 million in refunds over plans sold as comprehensive coverage that left buyers exposed in a medical emergency. Samuel Levine, then director of the Bureau of Consumer Protection, said Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage, and the proposed orders would permanently bar two of its former executives from marketing healthcare products. According to the 2022 release, the company ran lead-generation websites such as Obamacareplans.com that drew people looking for ACA-qualified coverage, added products like accident insurance and telemedicine access often without clear disclosure, and made cancellation difficult. The new letters carry no penalty, but they establish that the recipients were told in writing.

Open enrollment and the official channel

For shoppers, the agency’s companion consumer alert says open enrollment for the Health Insurance Marketplace runs from November 1 to January 15 and recommends starting at HealthCare.gov or calling the Marketplace Call Center at 1-800-318-2596. It lists red flags: plans billed as comprehensive that offer limited benefits, discount cards presented as insurance, ads, calls or texts that appear to come from the government or a known insurer, and health insurance ads in paid search results or on social media.

Prerecorded robocalls marketing health insurance are illegal, the alert adds, which means the caller is likely a scammer. Misleading ads and illegal calls can be reported at ReportFraud.ftc.gov, and the Consumer Response Center takes calls at 877-382-4357. The release does not say how many more letters will follow or which companies received the first 25, so the open question is whether any names surface before the January 15 close of Marketplace enrollment.

This article was produced with the assistance of AI and reviewed by Morning Overview editors prior to publication.

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