8 Costly Health Insurance Mistakes

Mistakes made when choosing health insurance can lead to surprise medical bills and high out-of-pocket costs when it’s time to use your coverage. However, some common mistakes can lead to even bigger problems, like falling for a health insurance scam. Here is our list of 7 costly health insurance mistakes that can leave you financially exposed to unpaid medical bills, medical debt, and even identity theft!

Table of Contents

Health Insurance Scams
Tips to Protect Yourself from Health Insurance Scams
Confusing Health Insurance with Access
Automatic Re-enrollment
Junk Insurance
Choosing Health Insurance Solely by Premium Price
Health Plan Documents and Fine Print
Open Enrollment Deadlines
Medical History and Pre-existing Conditions
Frequently Asked Questions (FAQs)

What’s the Most Costly Health Insurance Mistake?

1. Falling for a Health Insurance Scam

We will start with the most costly health insurance mistake people make—falling for a health insurance scam. This type of healthcare fraud is a serious problem—especially during Open Enrollment. How health insurance scams happen can be illustrated with a couple of scenarios.

Imagine searching online for “cheap health insurance,” “affordable healthcare,” or  “Obamacare plans.” You click on the top result. It takes you to a website that looks legitimate—it may even look identical to a website for a well-known health insurance company. You type sensitive information into a form—enough for a criminal to commit identity theft. 

Another common health insurance scam involves unsolicited phone calls, emails, or texts. It’s from someone offering cheap health insurance that covers everything, or “Obamacare” plans with zero premiums and low out-of-pocket costs. They may even offer free goodies like gift cards, medical equipment, gym memberships, and more. 

The caller ID displays a local area code, or even the name of a well-known insurance company or government agency. You engage with the person on the other line, give them sensitive information, and perhaps a credit card number. However, the person on the other line isn’t a legitimate agent or broker, but a scammer.

These scenarios illustrate the costly health insurance mistake of accidentally becoming a victim of a health insurance scam—more specifically, you’ve been spoofed and phished. 

Spoofing

Spoofing is when someone disguises an email address, sender name, phone number, or website URL to convince you that you’re interacting with a trusted source. With URL spoofing, criminals often change just one letter, symbol, or number in the URL, making it easy to miss. Or they may spoof your caller ID to impersonate a legitimate company, bank, or government agency. And forget blocking random spam numbers. Those same fraudsters will just call and text you from other spoofed numbers.

Phishing

Phishing is a scam designed to lure you in and trick you into giving criminals sensitive information or money. This includes personal data such as your full name, Social Security number, and health insurance information. Criminals involved in health insurance scams use numerous phishing schemes and spoofing techniques to commit medical identity theft, which can result in losses far beyond your credit and finances. Phishing schemes often use unsolicited calls, texts, and emails, fake websites (sometimes looking identical to a legitimate company), advertising, and social media to reach consumers shopping for health insurance and coverage—especially during Open Enrollment.

Protect Yourself from Health Insurance Scams

To avoid the costly health insurance mistake of getting scammed, always make sure you know who you’re talking to or engaging with. It could be a legitimate company or a convincing scammer using a fake website, a spoofed URL and domain, or a spoofed phone number. It could be a human or an AI bot.

Some Tips to Protect Yourself from Health Insurance Scams

• Don’t answer unsolicited calls, emails, texts, social media messages, or advertising from someone you didn’t contact first.
• Don’t answer or click on any links in unsolicited emails or texts.
• Don’t trust your caller ID. If you get a call or message from what looks like a legitimate, well-known company or government agency, contact them directly using a phone number or website you find independently, not the one provided by the person contacting you or the ad.
• If you get your insurance from the ACA Marketplace or Medicare, contact the companies directly at their official websites and phone numbers:
  • For Marketplace Plans, go to HealthCare.gov, or call 800-318-2596.
  • For Medicare, go to Medicare.gov or call 800-633-4227
• Never give sensitive information or payments to an insurer until you have researched the company. Search online for any company or plan name listed in the documents with the words “complaint,” “scam,” or “fraud.” You can also contact your state insurance department to determine if the agent or company is legitimate.

Follow Decoding Health Care for future articles on medical identity theft and healthcare scams.

Health Insurance Mistakes that Lead to Higher Out-of-Pocket Costs

Now that we’ve covered the most frightening and costly health insurance mistake on our list, the following mistakes can leave you financially exposed to high out-of-pocket costs, unpaid medical bills, and even medical debt.

You may find it helpful to review Health Insurance Terms: Costs and Coverage Explained and our Glossary for help understanding terms related to coverage, exclusions, networks, formularies, and out-of-pocket costs.

2. Confusing Health Insurance with Access to Health Care

Why would anyone choose a health plan they can’t use? Yet, you could make that costly health insurance mistake if you don’t do your homework. Having health insurance isn’t the same as having access to medical or healthcare services. When comparing health plans, make sure your providers and medications are covered in-network to ensure access and lower out-of-pocket costs.

Check and Verify the Provider Network 

Failing to check if your existing or nearby primary care doctors, specialists, therapists, clinics, hospitals, and pharmacies participate in a plan’s network can lead to full-price or out-of-network charges. 

A health insurer’s provider directory could contain ghost networks. This refers to inaccurate listings of providers or clinics as available and in-network when they are not. Incorrect provider information could include the wrong specialty, practice location, or contact details. Ghost networks may list providers who have moved, retired, don’t exist, are out-of-network, aren’t taking new patients, or don’t have appointments available for many months, making them essentially unavailable.

Protect yourself from ghost networks in four steps.

1. Check the insurer’s Provider Directory for providers listed as in-network with the health plan. 
2. Contact the providers directly to verify in-network status with both the insurer and the individual health plan. 
3. Verify the in-network status of both your chosen doctors and the facilities where they work. One may be in-network while the other isn’t.
4. If the provider is new to you, ask if they are taking new patients and how long it takes to get an appointment.

Don’t Overlook the Prescription Drug Formularies 

Assuming all plans cover your medications the same way is another costly health insurance mistake. Plans often change and update their formularies. Formularies use different price tiers, and your drug may require prior authorization, carry strict limits, have higher out-of-pocket costs, or not be covered at all. 

3. Automatically Re-Enrolling In Last Year’s Health Plan Without Review

It’s a common health insurance mistake to assume last year’s health plan will be the same next year. Never automatically re-enroll in last year’s plan without reviewing the policy details, networks, and prescription formularies. The health plan’s rules and costs also may have changed. Not reviewing the policy changes for the next plan year can lead to unexpected out-of-pocket costs after your plan goes into effect. 

4. Accidentally Buying Junk Insurance

Don’t confuse comprehensive insurance with alternative health insurance, alternative health plans, and other coverage products. Many are marketed using the terms “health insurance” and “health plans.” If you can’t tell if you are looking at real health insurance or something else, you may be looking at junk insurance.

These alternatives are not the same as traditional insurance, like you get from an employer, the ACA Marketplace, or a government-sponsored program. They aren’t regulated like health insurance and don’t offer the same level of coverage and benefits.

However, these options may be a good fit for people looking for more affordable, less comprehensive coverage. If you are considering these options, read our article, Decoding Alternative Health Insurance and Alternative Health Plans.

5. Choosing Health Insurance Solely by Premium Price 

Picking the plan with the lowest monthly bill often means you will face much higher deductibles, copays, and out-of-pocket costs when you actually need care. Misunderstanding the total cost of health insurance is a common health insurance mistake that can lead to big medical bills, even medical debt. Beyond the monthly premium, you must calculate the combination of deductibles, coinsurance, copays, and the annual out-of-pocket maximum.

This topic is covered in greater detail in our previous article, How to Compare Health Insurance Plans.

6. Failing to Understand the Health Plan Documents and Fine Print

Don’t feel pressured to decide on the spot or “act now”. That could be a sign of a health insurance scam. Always take the time to review your plan details, rules, and documents. Pay particular attention to a health plan’s coverage, exclusions, and limitations.

Skipping the fine print regarding service exclusions, mental health coverage, maternity care, or limits on therapies like physical or occupational care could leave you responsible for high out-of-pocket costs for medical bills you thought were covered.

On insurer websites, look for “coverage details” or “what’s covered” or similar phrases. 

Essential Documents to Prevent Costly Health Insurance Mistakes

Common coverage documents that can be found on insurer websites or mailed in paper copies include:

• Summary of Benefits and Coverage (SBC) for standard ACA-compliant private or employer-sponsored health plans
• Summary Plan Description (SPD) for other employer-sponsored health plans 
• Evidence of Coverage (EOC), often used in HMOs or Medicare plans 
• Certificate of Coverage – a summary document of specific medical benefits, plan operations, provider networks, and cost-sharing rules 

Note: If a salesperson or agent can’t provide written documentation and explain clearly the plan rules, coverage, costs, limitations, and exclusions, stop! They may be a scammer or selling “junk insurance.”

7. Missing Open Enrollment Deadlines

Forgetting deadlines, or failing to make the initial payment required to activate your coverage, is a costly health insurance mistake that will leave you uninsured. Enrollment dates and deadlines vary according to where you get your insurance.

If you get your insurance from your job, your open enrollment period is determined by your employer. 

Marketplace Open Enrollment Dates

In most states, if you buy health insurance through the ACA Marketplace (HealthCare.gov), Open Enrollment runs from November 1 through January 15. 

• November 1: Open Enrollment starts. You can enroll in, renew, or change your health plan.
• December 15: Last day to enroll or change plans for coverage starting January 1.
• January 1: Coverage begins for people who enrolled and paid their first premium by December 15.
• January 15: Open Enrollment ends. After this date, you cannot change or buy a plan unless you qualify for a Special Enrollment Period (SEP).
• February 1: Coverage begins for people who enroll between December 16 and January 15.

If you get Medicare, you need to be aware of a different set of enrollment dates.

Key Medicare Enrollment Dates & Periods

• Initial Enrollment Period (IEP): This is the 7-month window surrounding your 65th birthday (3 months before, the month of, and 3 months after) or your eligibility month for Medicare.
• January 1 – March 31: General Enrollment Period (GEP)
  Sign up for Medicare Part A and/or Part B if you missed your Initial Enrollment Period (late enrollment penalties may apply).
• October 15 – December 7: Annual Open Enrollment Period (AEP / Fall Open Enrollment). You can join, drop, or switch to a Medicare Advantage Plan (Part C) with or without drug coverage; add or drop a Medicare Part D prescription drug plan; or switch from Original Medicare to a Medicare Advantage Plan (or vice versa).
• January 1 – March 31: Medicare Advantage Open Enrollment Period (MAOEP)
  If you are already enrolled in a Medicare Advantage plan, you can switch to a different Medicare Advantage plan or drop your Medicare Advantage plan to return to Original Medicare (and add a standalone Part D plan) once during this period.

You can only change or sign up for comprehensive health insurance outside standard windows if you qualify for a Special Enrollment Period (SEP). Moving, losing employer-sponsored health coverage, having or adopting a baby, or losing Medicaid are examples of qualifying life events that could make you eligible for a SEP.

Note: Alternative health insurance and health plans that are not traditional insurance are typically available year-round. Additionally, you can enroll in Medicaid or the Children’s Health Insurance Program (CHIP) any time, if you qualify.

8. Concealing or Forgetting Medical History or Pre-existing Conditions

When purchasing alternative health insurance and alternative health plans, hiding pre-existing conditions, not accounting for waiting periods, or not understanding the plan’s limitations can result in denied claims or delayed coverage.

Note: ACA Marketplace Plans and many federally regulated health insurance plans are prohibited from considering pre-existing conditions or imposing waiting periods.

Frequently Asked Questions (FAQs)

What is considered the single most costly health insurance mistake?

Falling for a health insurance scam is identified as the most costly mistake a consumer can make. In addition to financial losses, this type of healthcare fraud can expose you to identity theft.

How do scammers use spoofing and phishing to target consumers looking for insurance, especially during Open Enrollment?

Scammers use URL and caller ID spoofing to disguise sender names, phone numbers, and web addresses to trick consumers into believing they are dealing with a trusted government agency or reputable insurer. Through phishing schemes, fraudsters deploy unsolicited calls, text messages, emails, fake websites, and social media advertising promising “zero premiums” or free incentives like gift cards and medical equipment to harvest sensitive personal details, including Social Security numbers and payment card credentials.

How do health insurance scammers use spoofing to trick consumers?

Scammers use URL and caller ID spoofing to disguise sender names, phone numbers, and web addresses, tricking consumers into believing they are dealing with a trusted government agency or reputable insurer.

What steps protect consumers against health insurance scams and fraudulent offers?

Consumers should avoid clicking links in unsolicited communications, never trust incoming caller ID displays, and independently contact official agencies such as HealthCare.gov (800-318-2596) or Medicare.gov (800-633-4227). Before sharing payment details or personal information, individuals should search the plan name online alongside words like “scam,” “fraud,” or “complaint,” and verify the company’s licensing status through their state insurance department

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Article by Julie Gunstanson, Certified Medical Billing Advocate, and Lauren R. Jahnke, MPAff, author of Decoding Health Insurance and the Alternatives: Options, Issues, and Tips for Saving Money.
Last update: 10-9-2026

Disclosures: AI tools were used to assist in researching this article; however, human subject matter experts always extensively revise, fact-check, edit, and approve our content. This article provides general health insurance literacy information. For guidance specific to your situation, consult a licensed broker or insurance agent, health insurance navigator, or assister in your area. Decoding Health Care provides independent and educational information and does not endorse any specific insurance plans or other health coverage products.