According to the Coalition Against Insurance Fraud, bogus health plans are spreading rapidly around the U.S., defrauding consumers desperate for affordable health coverage in a downturned economy. The Coalition noted that as many as 50 million Americans currently have no health insurance. With health premiums rising and layoffs continuing, 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 and fastest-spreading insurance scam against consumers to emerge from the downturned economy. Most states have been forced to issue emergency cease-and-desist orders, lawsuits or other actions over the last two years… .”

Bogus plans typically offer low premiums and easy sign-up, and promise full health benefits. However, they deliver lesser products such as limited-benefit policies or medical discount cards that merely offer price breaks on medical services that the policyholders must pay out-of-pocket.

Individual consumers, families, small businesses, seniors, and recent immigrants all are being targeted. The Coalition estimates that over 12,000 victims have been defrauded nationally, in scams ranging 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 health coverage. The scams pitch consumers with telemarketing, blast faxes, insurance agents, TV ads, e-mails, and even crudely printed signs stapled to telephone poles. Web sites encourage easy online signup and enhance the appearance of legitimacy.

The Coalition recommends that consumers can avoid scams by:

Doing their homework before signing up, especially in a high pressure situation. They can contact their state insurance department to see if the plan is licensed and how many complaints have been filed against it.
Insisting on receiving the entire policy — not a summary or brochure — and making sure they understand it thoroughly before signing up.
Determining if the plan offers full health coverage, limited benefits, or a medical discount card.

Special Reports /

Bad Times Are Spurring Uptick in Bogus Insurance Plans

Related Stories

Recommended For You