Feb 19 2010
Bogus health plans are spreading rapidly around the U.S., defrauding vulnerable consumers anxious for affordable health coverage in a downturned economy, according to the Coalition Against Insurance Fraud.
Bogus health plans likely are the largest and fastest-spreading insurance fraud against consumers to emerge from the troubled economy. Most states have been forced to issue emergency cease-and-desist orders, lawsuits or other actions.
Some consumers have faced tens of thousands of dollars in medical bills when their fraudulent health plans wouldn’t pay up. At least 12,000 consumers have been victimized nationally. The damage ranges from stolen premiums to large, unpaid medical bills.
Typically, bogus health plans promise full health benefits but deliver lesser products such as:
- Fake coverage that’s worthless;
- Limited-benefit policies that can be nearly useless;
- Medical discount cards that merely offer price breaks on medical services for which buyers pay themselves.
Fraudulent plans exploit a perfect storm of consumer vulnerability: As many as 50 million Americans have no health insurance, and unemployment runs at least 10 percent. With health premiums rising and layoffs continuing, many consumers and small businesses are struggling to find affordable health coverage. Many people thus believe scam sales pitches promising appealing insurance deals, the Coalition warns.
Individual consumers, families, small businesses, seniors and recent immigrants are targeted.
Typically, bogus plans promise full health coverage, affordable premiums, and easy signup despite preexisting conditions.
Victims often must join a fake trade association or union, which reinforces the illusion of affordable and legitimate group health coverage.
The scams pitch with telemarketing, blast faxes, insurance agents, TV ads, emails and event crudely printed signs stapled to telephone poles. Websites encourage easy online signup and enhance the appearance of legitimacy.
Consumers can take action to avoid being scammed:
Back off and do your homework before signing up, especially when pressured;
- Contact your state insurance department to see if the plan is licensed and how many complaints may have been filed against it;
- Insist on receiving the entire policy, not a summary, and understand it thoroughly before signing up;
- Be certain the plan is exactly as advertised: Full health coverage, limited-benefit or medical discount card.
http://www.insurancefraud.org./