Fraudsters are duping homeless people into signing up for ACA plans they can’t afford

Daniel Chang | (TNS) KFF Health News

MIAMI — Mary Zhelyazkova was surprised when pharmacists at Florida’s largest safety net hospital said they could not fill her prescription.

Zhelyazkova, 40, was living at a homeless shelter and needed Suboxone, a medication to manage the symptoms of opioid withdrawal.

She said she had been getting Suboxone at the Jackson Memorial Hospital pharmacy for free through the Ryan White HIV/AIDS Program, which provides medical care at little or no cost to people with HIV.

But at the end of 2021, she said, a stranger approached her on the street and offered her $5 to sign up for a “free” health insurance plan with Florida Blue. The person instructed her to use a false address and falsify her income so she could be seen as eligible for coverage, she said.

When the plan took effect the following year, Zhelyazkova learned the downsides.

Signing up for private insurance disqualified her from Ryan White coverage. And Florida Blue’s provider network did not include the hospital pharmacy; she would need to go to Walgreens, which would require transportation. She’d also need to come up with a $20 copay, which she could not afford.

“I went into withdrawal. It was horrible,” said Zhelyazkova, who added that she went without medication for days, until a nonprofit needle exchange program paid for the drug.

Zhelyazkova is one of potentially hundreds of homeless people in Florida who have been approached by commission-seeking agents and brokers, who sign them up for zero-premium health plans on the Affordable Care Act marketplace, according to state insurance regulators, doctors, and enrollment counselors.

The presumption is that dishonest agents and brokers are signing up homeless people to earn a sales commission and that they are engaging in fraud by lying about the enrollees’ income and home addresses.

And though the federal government pays the monthly premium for qualified low-income consumers on an ACA plan, the policies often come with copayments, deductibles, and other out-of-pocket costs that are unaffordable to people earning little to no income.

Amid an uptick in reports, state and federal regulators are investigating cases of agents and brokers providing fraudulent information on applications for ACA coverage.

The federal agency that oversees the ACA marketplace said that for the fiscal year that ended Sept. 30, 2022, the agency received more than 25,000 complaints from people who alleged they had been enrolled in policies without their consent or that incorrect information was submitted on an application by an agent or broker. The Centers for Medicare & Medicaid Services also said it performed more than 700 license verifications to identify potentially problematic brokers during that same period.

Opportunistic recruitment of homeless people into ACA plans is most likely in states like Florida, one of 10 that have refused to expand eligibility for Medicaid to nearly all low-income adults. In one case from 2015, a North Carolina agent signed up hundreds of homeless people for ACA coverage. That state adopted Medicaid expansion in March, though the change has not yet been implemented.

In an expansion state, most single adults in poverty would qualify for Medicaid. In non-expansion states, including Florida, consumers generally must earn at least 100% of the federal poverty level to qualify for the health law’s tax credits, which reduce monthly premiums and out-of-pocket costs. In 2023, that would equate to $14,580 for a single person and $24,860 for a family of three.

But having no income in the current year does not preclude a consumer from projecting they will earn enough next year to qualify for tax credits. Consumers are not required to document their income on a marketplace application if government data shows their income was insufficient in prior years.

On the surface, it may look like uninsured homeless people are gaining coverage, said Sabrina Corlette, a health insurance policy expert at Georgetown University. “That’s not such a bad thing,” she said.

But that doesn’t make it a victimless crime. The federal government ends up paying subsidies to health insurers to cover people who are not qualified for the plans. Meanwhile, people who are homeless lose eligibility for more suitable programs, like hospital charity care and Ryan White. “That’s a serious problem,” Corlette said.

Doctors who work with homeless people also say disruptions in care put these patients at risk of relapse into drug use, a mental health crisis, or having to stop ongoing treatment for chronic illnesses, such as cancer and diabetes.

“Patients are stuck in this situation where they can’t afford copays under their insurance plan,” said David Serota, an infectious disease specialist at the University of Miami’s Miller School of Medicine. “But they also cannot get those services through our programs for the indigent uninsured.”

Serota sees patients at Jackson Memorial, a Miami-Dade County hospital that provides charity care. In the past three years, he said, at least 20 of his patients, and “many more” seen by his colleagues, have been affected.