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NU Online News Service, Feb.18, 11:27 a.m. EST
The spreading epidemic of bogus health plans is hitting small businesses as well as consumers, a spokesman for the Coalition Against Insurance Fraud said.
“Though the examples that have surfaced tend to involve consumers, small businesses have been targeted and even referenced in state announcements of crackdowns. Small businesses and self-employeds are struggling to find affordable premiums for themselves and their employees, and thus are logical targets for sales pitches,” explained James Quiggle, Coalition director of communications.
According to the Coalition, which has lately been calling attention to health scams as the biggest insurance fraud problem, bogus plans are spreading rapidly around the nation, defrauding vulnerable consumers seeking affordable health coverage in a downturned economy.
Fraudulent health plans, one of the negative byproducts of the recession, “are the largest and fastest-spreading insurance scam,” according to the Coalition.
The organization noted “Most states have been forced to issue emergency cease-and-desist orders, lawsuits or other actions over the last two years…”
Some consumers have faced thousands of dollars in medical bills when their purported health plans wouldn’t pay up. Well over 12,000 victims have been defrauded nationally, the Coalition estimated, with damage ranging from stolen premiums to large, unpaid medical bills.
Bogus plans, it was explained, typically promise full health benefits but fraudulently deliver lesser products such as:
•Fake coverage that’s a worthless piece of paper.
•Limited-benefit policies that can be nearly useless.
• Medical discount cards that merely offer price breaks on medical services for which buyers pay from their own pockets.
The Coalition said as many as 50 million Americans have no health insurance and with health premiums rising and layoffs continuing, many are struggling to find — and afford — health coverage. Many people thus fall for sales pitches promising appealing insurance deals, it advised.
Small businesses, individual consumers, families, seniors and recent immigrants have all been seen as targets.
Typically, the Coalition said, bogus plans promise full health coverage, affordable premiums, and easy signup regardless of preexisting conditions. Victims often must join a fake trade association or union. This ploy, it was explained, reinforces the illusion of affordable and legitimate group health coverage.
The scams pitch consumers with insurance agents, telemarketing, blast faxes, TV ads, emails and even crudely printed signs stapled to telephone poles. Web sites encourage easy online signup and enhance the appearance of legitimacy, the Coalition related.
It advised consumers to do their homework before signing up, especially if being pressured and to check with their state insurance department whether the plan is licensed and if it has been the subject of complaints.
Buyers should also insist on receiving the entire policy — not a summary or brochure — and understand it thoroughly before signing up. They should also be certain the plan is exactly as advertised: full health coverage, limited-benefit or medical discount card.