Medical Identity Theft

DEFINITION of 'Medical Identity Theft'

Stealing another person’s health insurance information so that someone who is not the insured can fraudulently use the insured’s benefits to get discounted health care or prescription drugs. Medical identity theft also occurs when a health care provider uses someone’s health insurance information to seek fraudulent reimbursement from an insurer for health care services the practitioner never provided and the insured never received. Medical identity theft can be committed by hackers who access an insurance company’s or health care provider’s database, by insurance or health care workers who have access to patients’ insurance data, and even by “friends” or relatives who steal information from someone’s home.

BREAKING DOWN 'Medical Identity Theft'

Medical identity theft can have severe consequences for victims. Their credit can be ruined by thieves who rack up large medical bills in the victim’s name. Policyholders might find that a thief has maxed out the insurance benefits, leaving the victim unable to get coverage for necessary treatment. A thief who uses a victim’s information to obtain health care can even cause the victim’s medical records to be inaccurate, putting the victim’s life at risk if s/he receives a transfusion of the wrong blood type or a medication that s/he's allergic to based on the thief’s own medical information.

Consumers can limit their exposure to medical identity theft by not carrying their Social Security, Medicare or health insurance cards except when absolutely necessary. Leaving these cards at home in a safe place can minimize the risk of losing them or having them stolen. However, because consumers must give their health insurance and personal information to providers in order to receive health care, there is only so much consumers can do to protect this information, and medical identity theft is rarely the victim’s fault.

To minimize the impact of medical identity theft by catching it early, health insurance policyholders should carefully review all explanation of benefit statements from their health insurance company to make sure the statements don’t contain any treatments that the insured never received. Consumers should also review their credit reports regularly to make sure they don’t contain collections for unpaid medical bills for health care they never received. A consumer who has become a victim should report the crime to the police, the credit bureaus, their health insurance company and their health care providers.