Ways to Avoid Being a Victim of Phony Insurance Scams

 

The best protection is prevention!  You wouldn't choose a nursing home or hire a builder without doing some homework, the same applies to insurance!!

 

Verify before you buy!  Check the validity of the insurance company and agent by contacting the Department of Insurance: www.id.state.az.us

 

WARNING SIGNS!

"If it sounds too good to be true, it probably is!"

Proceed cautiously if:

• You get a quote that is noticeably lower than ones you've previously received.

 

• You're told there is no underwriting or they take all applicants, or if they do not ask you any questions about your current health status or prior claims experience.

 

• You're told "This insurance is not regulated by the State" or "This is not insurance" or "this plan is federally regulated".

 

• Sales pitches that avoid the word "insurance" or the use of certain insurance terminology even though it operates like insurance. For instance, it pays "consultant fees" instead of commissions, or refers to premiums as "contributions".

 

• The alleged insurer's name is very similar to that of another well-known insurance company.

 

• Documents look "doctored" or suspicious.

 

• No physical address nor any names of company officers on website or literature.

 

• Even some "reputable" companies will walk the line just above scams, call us for details.

 

Make sure you don't fall for the "insurance agent underwriting" scam. Most reputable insurance companies require you to fill out the application and send in the first month's premium before they will even consider you. If needed, they may require an APS report from your doctor. They will then either issue the policy (with any possible rate-ups) or decline the application and send you your money back. Check here for other agent scams.

When the cost of health care coverage rises steeply, as it has recently, unauthorized insurers multiply. Their sales pitches of lower rates for full coverage are hard to resist.

Eventually, however, unlicensed health insurers stop paying claims, as several thousand members of two plans prosecuted by Texas Department of Insurance learned in 2001. One plan's members and their doctors are having to deal with the plan's bankruptcy trustee in the hope of getting pennies on their claim dollars. TDI issued an emergency cease-and-desist order to halt sales by the other plan after learning it was not paying claims.

Many other states have similar situations so beware.

DISCOUNT CARDS

Although not necessarily scams, beware of discount cards.

Consumers and small employers often contact the Arizona Department of Insurance to ask about health care discount programs. Their questions indicate that some people confuse these programs - sometimes called "referral plans" -- with true health insurance policies, which they are not.

Typically, the attraction of a discount plan is a very low price compared to the premium for a major medical insurance policy.

One plan's Web site, for example, advertised a benefit card for the entire family, including pets, for $15.95 a month and promised savings of 10 percent to 40 percent. Another plan's Web site offered a range of prices and benefits, with the monthly fee topping out at $64.95 for a deluxe plan that included discounts on hospital bills.

Here are some things to consider before signing up for a health care discount plan:

Remember that true discount plans are not insurance. They offer only cards that are supposed to entitle you to discounts from participating physicians and providers. You are responsible for most of the bill for a medical procedure or hospitalization even if you receive the promised discount. Getting a 20 percent discount on a $50,000 operation still leaves you owing $40,000. Some doctors and providers might not treat an expensive condition without payment up front or proof of ability to pay.

Some discount card sellers are very candid about the fact that their plans are not insurance, saying so in large letters on their Web sites or printed materials. With some others, however, you might need to search hard before finding such a disclaimer, if you find one at all. Some programs appear intentionally to leave an impression that they are offering benefits usually associated with true insurance.

There have been many instances in which physicians and providers were unaware they were listed by discount card sellers. There also have been cases in which physicians and providers continued to be listed long after they had ceased participating.

Before signing up for a discount card, ask for the list of physicians and providers who accept it. It does you little good if you have to drive 4 hours to find a doctor that will accept the card. Montana couldn't find any doctors in the entire state that actually took one card and only one dentist who was on probation for unlawful activities so they banned the sale of the card and fined the company. If your doctor is on the list, verify that he or she indeed grants discounts to patients who have this particular card. If you're considering joining a discount program, ask your doctors to tell you their usual fee for uninsured individuals and the fee they charge people who present the program's card.

Follow this link for more information about discount card scams.