Avoid discount health plan scams like, well, the plague! Or a really bad flu. Learn more about del employed health insurance scams to avoid online now.
When I struck out on my own a couple of years ago, I worried about finding good health insurance for the self employed.I was still paying a bundle for my monthly Cobra insurance coverage, so I used one of the online insurance quote systems to get a quote on health insurance. I ended up with Big Blue, and I’m happy with the insurance they provide self employed people. However.
During the quote process, I had a number of potential offers returned to me that were for a relatively new phenomenon in the health insurance industry- discount health plans. Because I’d entered my contact information in the online insurance quote system,I received a flood of phone calls and e-mails from discount health plan companies. The phone calls kept coming for months after I told them I wasn’t interested. What a pain.
But out of curiosity and knowing it was some kind of health insurance scam, I kept a couple of sales reps on the phone long enough to hear their sales pitch. Typical conversation with a sales agent from a discount health plan company:
Me: “Is this health insurance?”
Sales rep: “It’s better than health insurance. And less expensive!”
Me: “But is it health insurance?”
Sales rep: “Do you have health insurance? If you can’t get health insurance you need to have something. Do you understand that?”
It was pretty close to this point in the phone call that I would terminate the conversation.
The implication, of course, was that if I was too much of a halfwit to fall for their aggressive sales pitch, they could at least appeal to me as an uninsurable deadbeat. Nice. At this point, I was paying several hundred dollars a month to maintain my Cobra insurance coverage so I wasn’t uninsured. But I can only imagine the worry I might have if I didn’t have health insurance coverage. Those kind of high-pressure tactics play on those fears.
Discount health plans are marketed as an alternative to health insurance, for the uninsurable (pre-existing conditions) or the hard-to-insure (the self employed). Discount health plans claim that they are less expensive than other health insurance options, providing customers with all kinds of medical and prescription services at a deep discount.
Unfortunately, many of these companies are shell companies set up to scam an unknowing public. With this scam, the discount health plan company attempts to get your financial information in order to clean out your bank accounts. If you think you're dealing with a real insurance company, you’d willingly give them your personal information. So there’s the rub.
According to the state of Connecticut Web site, more than 200,000 people bought fake health insurance policies between 2000 and 2002. Unpaid claims for these folk were more than $250 million, and the amount of “health insurance” premiums and fees is not known.
In addition, the discount health plans that are not an out-and-out rip-off are still on shaky ground. Health insurance companies must have approval from the state department of insurance in order to sell insurance. The discount health plans aren’t selling insurance, but their ads and their phone reps sound suspiciously as if they’re pretending to sell health insurance.
Be wary of a company that says they offer something better than insurance, that’s cheaper than “traditional” insurance, or that isn’t licensed to sell insurance in your state. These companies are not regulated by state departments of insurance. If it sounds too good to be true, it probably is.
Learn more about self employed health insurance in the news on the insurance blog.
