According to the Coalition Against Insurance Fraud, bogus healthplans are spreading rapidly around the U.S., defrauding consumersdesperate for affordable health coverage in a downturned economy.The Coalition noted that as many as 50 million Americans currentlyhave no health insurance. With health premiums rising and layoffscontinuing, many consumers are struggling to obtain — and afford —coverage for themselves or their families.

A recent media alert from the Coalition reported that,“fraudulent health plans likely are the largest andfastest-spreading insurance scam against consumers to emerge fromthe downturned economy. Most states have been forced to issueemergency cease-and-desist orders, lawsuits or other actions overthe last two years… .”

Bogus plans typically offer low premiums and easy sign-up, andpromise full health benefits. However, they deliver lesser productssuch as limited-benefit policies or medical discount cards thatmerely offer price breaks on medical services that thepolicyholders must pay out-of-pocket.

Individual consumers, families, small businesses, seniors, andrecent immigrants all are being targeted. The Coalition estimatesthat over 12,000 victims have been defrauded nationally, in scamsranging from stolen premiums to large, unpaid medical bills.

Victims often must join a fake trade association or union,reinforcing the illusion of affordable and legitimate group healthcoverage. The scams pitch consumers with telemarketing, blastfaxes, insurance agents, TV ads, e-mails, and even crudely printedsigns stapled to telephone poles. Web sites encourage easy onlinesignup and enhance the appearance of legitimacy.

The Coalition recommends that consumers can avoid scams by:

• Doing their homework before signing up, especially in a highpressure situation. They can contact their state insurancedepartment to see if the plan is licensed and how many complaintshave been filed against it.
• Insisting on receiving the entire policy — not a summary orbrochure — and making sure they understand it thoroughly beforesigning up.
• Determining if the plan offers full health coverage, limitedbenefits, or a medical discount card.