Fake health plans

Fake and deceptive health plans are spreading rapidly. They’re operating in most states, and exploiting a perfect storm of vulnerability: Millions of Americans without health insurance...mounting job layoffs...and rising heath premiums.

Victims have faced thousands of dollars in medical bills when their bogus plans refused to pay up.

Crooked plans promise full health coverage but deliver worthless pieces of paper, stripped-down policies, or medical discount cards that require members to pay most medical bills themselves.

Special health-reform alert...Crooks are exploiting confusion over health-care reform. Door-to-door pitchmen are lying they’re from the federal government. They’re selling fake “special” or “limited open enrollment” policies, lying that the coverage is “required” by health-care reform. TV ads with 800 lines selling bogus coverage also have been spotted. Watch out for blast faxes and emails as well. Seniors often are targeted.

You could be next. Here’s what you should know...

How the scams work

Watch out for aggressive sales pitches and false marketing hype. Health cons typically promise you full health insurance, but only deliver lesser products such as:

Fake coverage that’s a worthless piece of paper;

Stripped-down coverage that can be nearly useless; or

Medical discount cards that merely offer price breaks on medical services you pay from your own pocket; or

Combinations of these deceptive products.

The price you pay

You foot the bills. You’re forced to pay most or all medical bills yourself—often tens of thousands of dollars that can wipe out your life savings and damage your financial future.

Your health is endangered. Finding new health coverage after discovering you’ve been scammed can delay urgent medical treatment. This can jeopardize your health and wellbeing.

Help crooks get rich. Guess what happens to your premium money? The conmen buy mansions, expensive cars and vacations, and pay themselves large salaries.

Ten warning signs

Invasive sales pitches. You’re harassed by aggressive telemarketers, faxes or emails promising unusually good insurance deals. The faxes may have no company name, address or contact name—only a tollfree number.

Hint: Crudely printed signs stapled to telephone poles are another warning sign. Even licensed insurance agents are hired to sell bogus plans, so be careful.

Pushy pitchman. The sales rep pushes you to sign up fast. This “special deal” is available only if you buy today, the rep might lie.

Hint: The rep also may push to obtain your bank account and credit card information before you sign up or receive plan details.

Health-care reform. In the newest scam, con artists sell fake health insurance that they lie is “required” by health-care reform. The pitchmen may say this is a “limited-time” deal, or “limited open-enrollment” for signing up. Some pitchmen use the term “Obamacare,” and even lie that they’re from the U.S. government. Pitchmen are going door-to-door and airing TV ads. Watch for blast faxes and emails. Seniors often are targeted.

The deal seems too good. Premiums often are unusually low. Signup also can be too easy. Just fill out a form, and no medical exam or detailed medical questionnaire. Even serious pre-existing conditions are ok.

Evasive answers. The sales rep is vague about coverage details...doesn’t clearly answer your questions...seems ill-informed...or evasively says “everything you need to know is in the brochure”...and is unwilling to show you the actual insurance policy.

Join association or union. You have to join an “association” or “union” to buy the coverage. Typically these groups are fake—they may not even relate to your occupation or interests. They help create an illusion that the bogus plan is real group health insurance.

Slick Internet sites. Bogus plans may have professional-looking websites that encourage you to buy “coverage” online. But the sites are small and vague about details. They may request your credit card or bank account numbers but don’t let you see the policy beforehand.

Slow response. You don’t receive your insurance card or policy promptly after signing up.

Suspicious payment delays. The hospital complains that your plan hasn’t paid your medical bills. The plan then keeps putting you off when you call—the payment delays are merely “accounting glitches” or “processing errors.”

The “federal oversight” con. Some plans lie that they don’t require state licenses because the plan is regulated by ERISA or another federal law.

Fight back

Back off and go slow. Avoid signing up if you’re pressured to buy quickly—no matter how good the deal seems. Know what you’re buying before signing up.

Hint: Don’t give your credit card and bank account number to a telemarketer or Internet site of an unfamiliar health plan.

Read the policy. Insist on receiving a complete insurance policy before signing up. Read it line by line, or have a qualified expert read it. Does the policy deliver what the sales pitch promises?

Hint: Never rely solely on marketing literature...and don’t believe a telemarketer who promises you have “full health coverage.” Do your homework.

Is the plan licensed? Call your state insurance department to make sure the plan is licensed in your state. Does the plan also have a history of complaints?

Hint: Some dishonest plans are licensed, but lie about what they’re selling. They promise full health coverage. But...you receive a nearly useless limited policy that’s loaded with limits and exclusions. Or...you receive a medical discount card, which is NOT insurance.

Check out the “association” or “union.” If you’re required to join, check out that group’s website. Does it list a street address or merely a P.O. box? Is the website suspiciously brief and vague about its activities? Does it seems designed mostly to hype health coverage as the primary product?

Hint: Be wary if the association or union doesn’t even have a website.

Contact the insurer. Some health plans lie that they offer coverage through a legitimate, well-known insurance company. Contact the company to verify.

Don’t believe the “ERISA” lies. Almost all private health insurance is licensed by states, not the federal government.

Contact your insurance department. If you think you’re dealing with a crooked health plan, contact your state insurance department immediately.

Hint: Provide as much specific documentation as possible to help the department investigate the plan.