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A few weeks ago, I noticed that I was seeing an increasing number of commercials advertising inexpensive "easy to get" health insurance. The first thing that came to my mind was ... this has got to be some sort of scam. Otherwise, wouldn't everyone be getting cheap insurance? It's sad really, with over 46 million uninsured in America, there is no shortage of scammers lining up to exploit them.
It seems I was right. If it sounds too good to be true, it probably is.
These fake and deceptive health plans are spreading like wildfire across the country, taking advantage of our troubled economy and playing on people's fears. Victims of this insurance fraud have been saddled with tens of thousands of dollars in medical bills when their bogus insurers refuse to pay. And this isn't a problem that is going to go away any time soon, so consumers need to learn how to recognize these fraudulent policies and protect themselves.
Here's what AARP is saying about these scams ...
With the recession, rising unemployment and continued debate over health care reform, “there’s a perfect storm of circumstances that resulted in a new proliferation in fake and deceptive health insurance,” says Jim Quiggle of the Coalition Against Insurance Fraud, a Washington-based consumer watchdog group.
“Some of these policies are completely phony, delivering nothing but a piece of paper. Others promise full health benefits, but provide shriveled coverage and expensive hidden costs.
This is from the Coalition Against Insurance Fraud...
Typically, crooked plans aggressively market full health coverage but deliver no coverage at all, stripped-down policies that deliver little or medical discount cards (which require members to pay most expenses themselves). Blast faxes, invasive telemarketing, insurance agents and enticing Web sites are among the marketing tools. Regulators in most states have been forced to crack down over the last two years. But the plans are hard to shut down. Often they simply disappear and resurface under new names without required state licenses.
This is how the scams work, and here are nine warning signs to look for.
If you suspect fraud -- Here is a state by state list of fraud bureaus.
The CBS Early Show asked ... How can they protect themselves? What are the warning signs that a health plan might be fake?
According to Koeppen: aggressive sales -- such as unsolicited faxes, phone calls or e-mails offering great deals. Also, plans that sound too good to be true -- especially if the premiums are much lower. Another red flag -- if there’s little information about the insurance company or underwriter backing the plan.
Before you sign up, Koeppen advises, contact your state insurance commissioner to make sure the company is licensed to sell insurance.
There's no safety net for consumers who find themselves with unpaid medical bills. This is from MSN Money ...
If you do have to file claims and the insurance company doesn't pay, you'll be responsible for the charges. No governmental safety net exists, as it does for those covered under licensed plans. If a legitimate plan goes bankrupt, all states have "guaranty funds" that will pay individuals' claims, up to varying limits. These funds aren't available if you've purchased insurance from an unlicensed provider.
Having a health plan through your employer doesn't always mean you're safe from this type of insurance fraud.
This is from InsideARM ...
Small business operators also are being preyed upon, he said.
“Group health coverage is very hard to get if you’re a small operator and have only a handful of employees. Scammers know this and are descending on small businesses,” he said.
Quiggle added that even some legitimate insurers have knowingly or unknowingly partnered with fake insurance providers that offered limited or misleading plans.
Some of the most important warning signs of fraudulent health insurance, from an AARP list ...
- Coverage that promises full benefits but costs much less than
