Health Insurance - Solid Plan or a Scam?

September 27, 2013 Updated Jul 12, 2010 at 10:52 PM EDT

By WKBW Internet

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Credit: MGN Graphics

Health Insurance - Solid Plan or a Scam?

September 27, 2013 Updated Jul 12, 2010 at 10:52 PM EDT

*RELEASE FROM BETTER BUSINESS BUREAU*

BUFFALO, NY (WKBW/BBB) -- Soon school will be out and outdoor activities will hit their peak. Many consumers may consider this the time of year to become insured. The Better Business Bureau (BBB) says be wise about your decision.

Con artists in New York and other states are seizing the public’s financial struggles and confusion around the recent health care overhaul to take advantage of health insurance shoppers. With the tight economy and a new national healthcare reform bill, regulators are warning about a surge in healthcare-related scams. The BBB advises consumers to research first and sign up after they’ve asked the right questions and have answers they area confident with. Signing up for the wrong health insurance coverage can put their personal and financial health on the line.

According to an October 2009 survey conducted by the Coalition Against Insurance Fraud, 57 percent of state fraud bureaus reported a higher incidence of health insurance fraud in 2009 compared to the previous year. The increase was largely attributed to “unauthorized entities selling fake coverage” and “the rise of medical discount plans.”

Small businesses are often targets of swindlers who sell fake health plans. Many entrepreneurs don’t have enough information about group health insurance and the expenses can seem out of reach. “The healthcare system can be a tricky maze but you don’t want to be duped either,” said David Polino, Better Business Bureau President. “Crooks are using consumer confusion to take advantage of people. One of the first steps to finding healthcare services is to start with a provider you can trust. Ask questions first, sign up later.”

Companies such as HealthcareOne/Elite Healthcare, Consolidated Workers Association and Smart Data Solutions/American Trade Association, have all recently come under fire from state regulators for peddling worthless coverage or discount medical plans—instead of actual insurance—to thousands of consumers. National Health Care Anti-Fraud Association (NHCAA) estimates that $68 billion dollars are lost to health care fraud each year.

The new healthcare reform bill sparked new scams; shortly after it was signed into law, the US Department of Health and Human Services issued a warning to consumers to beware of health insurance offers claiming to be part of new federal regulations. BBB has heard reports of telemarketing, door-to-door solicitation, and fax blast activity with phony insurance claims and offers of discount prescription cards, or dental insurance to trap consumers. The Nevada Division of Insurance launched a public education campaign last month to help consumers spot a fake offer.

To avoid getting ripped off, the BBB recommends taking the following steps when shopping for health insurance coverage:

Research the company with BBB. Always check out the insurer’s BBB Reliability Report online at bbb.org. Reliability reports are available for free and will tell you how many complaints the business has received, whether there has been any government actions brought against the business, as well as BBB’s overall rating.

Confirm the company is licensed with the state insurance commissioner. Each state has a department devoted to regulating insurance companies. Make sure the insurer is licensed to operate in your state.

Read the fine print carefully. Make sure all verbal commitments are in the fine print. Don’t just take the company’s word for it. Also confirm with your pharmacist and doctor that they accept the plan you’re considering.

Recognize the difference between insurance and discount medical cards. Some consumers purchased what they thought was health insurance but was actually a discount medical card which could only be used to get reduced rates at limited doctor’s offices and pharmacies. Make sure you’re purchasing insurance coverage and not just a discount medical card.

Beware of copy cats. Some phony insurers will go by a name that is similar to a trusted company. Confirm that you’re really dealing with the right company that has a good reputation.

For more advice on finding healthcare companies and services you can trust, click here.