FTC Warns 25 Health Plan Marketers in Consumer Protection Push

The news: In a consumer protection move timed to open enrollment, Federal Trade Commission staff have sent warning letters to 25 companies that market healthcare plans or sell leads for them. The agency announced the letters on Thursday. They put the recipients on notice that deceptive or unfair claims in their advertising likely violate laws the Commission enforces. The FTC says more letters will follow on a rolling basis.

Key takeaways:

• The letters went to marketers and lead generators, not only to insurers.
• They cover Affordable Care Act Marketplace coverage and other products, including limited indemnity plans and medical discount programs.
• A warning letter is a notice, not an enforcement action, but the FTC says it will hold violators accountable.
• Additional letters are expected.

Why it matters: Shoppers comparing coverage this season often start with an online ad or a form that hands their contact details to a third party. Lead generators sit in the middle of that process. The FTC’s letters signal that it is watching how plans are described at that first touchpoint, not just what the final policy says.

The products named in the letters are the ones where confusion can be costly. A limited indemnity plan or a medical discount program is a different product from Marketplace insurance. A consumer who believes an ad is describing comprehensive coverage, but has actually signed up for something narrower, could face large bills when care is needed.

Christopher Mufarrige, director of the FTC’s Bureau of Consumer Protection, said making healthcare more transparent and affordable is a top priority for the agency. He said Americans facing rising healthcare costs should not also have to wonder whether a plan or program is what it claims to be. He added that open enrollment “is not an invitation to misrepresent what their plans actually cover.”

The big picture: The letters fit a familiar FTC approach. Staff warn an industry about conduct that likely breaks the law, which puts companies on record as having been told. The agency says it will keep monitoring this market and will not hesitate to act against companies that unlawfully market or advertise healthcare plans. The letters also reach beyond the insurance brands to the advertising and lead-generation chain that feeds them.

What’s next: Expect further letters as the FTC works through the market. Companies that received one will have to decide whether to change their ads and lead-capture pages. Consumers should read what a plan actually covers and what it excludes before enrolling or handing over personal details. They should also be wary of any ad that is vague about the type of product it is selling.