Dateline: October 22, 2014

As we approach the first year of actual Obamacare tax penalties, many Americans are busy shopping for health insurance online, where websites offering scam “discount” health plans abound, warns the Federal Trade Commission (FTC).

A Prime Example

In one court complaint, the FTC charged that IAB Marketing Associates, LP et al., a sham nonprofit trade association, operated several websites offering people “free” quotes for health insurance plans, but only after they had entered their personal information.

Sound familiar?

According to the FTC, the IAB websites were actually just “collection baskets” for users’ contact information, age, occupation, marital status, and whether they had health insurance or pre-existing medical conditions.

Using the personal information gathered on their websites, IAB’s telemarketers called people and used what the FTC called “aggressive” tactics to sell IAB memberships. Watch out, here it comes.

In return for upfront and monthly fees, both ranging from $40 to $1,000, IAB “members” were promised a “discount health plan" covering virtually every known medical condition and procedure.

Well, Not Really

In fact, charged the FTC, consumers were never enrolled in any real health insurance plan, certainly not one that would meet the Obamacare minimum coverage requirements.

Instead, the costly IAB membership included usually non-existent discounts on services such as identify-theft protection, travel, and roadside assistance, as well as equally non-existent healthcare related benefits, including limited discounts and reimbursements on visits to “certain doctors or hospitals.” Of course, any and all discounts were subject to the approval of IAB based on a vague and broad set of “exclusions and limitations.”

Naturally, IAB members who needed to use their “health plan” found it covered few, if any, of their medical costs, leaving them owing some major bills.

While there are legitimate medical discount plans on the market, they are not health insurance plans and are certainly no bargains, according to the FTC.

“If you buy a medical discount plan, you generally are paying for a list of providers and sellers who may be willing to offer ‘discounts’ on some of their services, products or procedures,” warns the FTC. “Medical discount plans don’t pay your health care costs.”

The Price of Wrongdoing

A settlement agreement reached in 2013 banned IAB and all of its officers from selling healthcare-related products, and ordered the defendants to turn over personal assets valued at almost $2 million, including five luxury cars -- a Lamborghini, two Mercedes, a Porsche, and an MG Roadster – and $502,000 in IRA funds to the government.