Insurance Scams/Red Flags To Watch For
Here are some of the most common signs that an insurance provider may be a phony:
The insurance company in question boasts low rates, or offers minimal or no underwriting.
The health plan will accept almost anyone, including those with pre-existing or serious illnesses.
The agent (or information they provide) claims that the plan is covered only by stop-loss.
The plan claims to be federal, not state regulated. (ERISA or Union plans, for example)
Be skeptical if the premiums seem low compared with other health insurance plans.
Beware of sales material and 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 product claims to be “fully funded,” “fully insured,” or “reinsured” but agents are not told the name of the carrier insuring or underwriting the product.
When it comes to buying insurance, your instincts might not always be correct. In an effort to save money, one’s judgement can become impaired, so don’t hesitate to check out each provider you deal with. It only takes a little time, but the effort could possibly save your business.
Tricks Of The Trade
The typical health insurance scam often moves quickly and with much purpose. “Agents” flood the market to help generate as many quick sales as they can. Payments can be requested up front to help ensure they get as much money as possible before they disappear.
After they have reached their goal, they simply sit back and watch the monthly payments roll in, continuing to do so until they become fearful of being caught, at which point they often disappear to re-emerge somewhere else.
Until that time, however, some business owners have been known to pay premiums for many years, never discovering that their insurance was bogus until they eventually filed a claim.
Tips For Choosing An Insurance Company
If you purchase an insurance policy through an unlicensed company, you are very likely to find that you have no coverage when a claim occurs. To avoid falling into these scams, you should:
Check to see if the company is licensed in Nevada by contacting the Nevada Division of Insurance. Even if the insurance company claims to be exempt from state regulation or is utilizing a licensed Third Party Administrator have your proposed plan reviewed by the Division of Insurance to determine if the company is really exempt. Companies that are licensed by the state are required to provide annual statements, which allow the Insurance Division to assess a company’s continued ability to pay claims, and to take corrective action in advance of potentially devastating problems.
Check to see who is on the insurance company’s provider list.
Ask your medical provider and pharmacist what, if any, experience they have had with the insurance company.
Ask other employers what, if any, experience they have had with the insurance company.
Confirm that your insurance agent is selling you a state licensed insurance product. If you suspect an insurance agent is trying to sell you a fraudulent product, contact the Insurance Division.
Ensure you are dealing with a reputable insurance agent. If the person trying to sell you the coverage says he or she doesn’t need a license because the coverage isn’t insurance or is exempt from regulation, be wary.
Ask your agent for the name of the insurer and check the paperwork you receive to see whether it names a licensed insurer that is fully insuring the coverage.
Make sure the agent and company are legitimate before you pay for insurance.
Never pay cash.
Get a receipt for all payments.
Be sure the receipt shows your policy number, date of payment, period of coverage, and name of insurance company providing the coverage.
Read the policy when you get it. The worst time to discover what isn’t covered is after you have a loss.
Check the National Consumer Information list of State Enforcement Activities Against Unlicensed Insurers.
If you suspect you have been the victim of an insurance scam, contact the Division of Insurance immediately.
Don’t Just Trust Your Agent
Even insurance agents get fooled. Businesses are bilked out of thousands of dollars each year by scam artists who misrepresent themselves as insurance agents
But did you know you run the risk of purchasing a phony policy even if you work with a legitimate agent?
At times, even experienced agents can unknowingly sell insurance from an illegal provider. Though honest agents will do their level best to avoid such circumstances, it can happen.
Worst of all, you as the business owner may discover you’re on the hook for a wide range of costs and expenses that you thought your insurance was covering.
Discount Health Plans Can Have Pitfalls
Discount Health Plans do not qualify as “creditable health insurance coverage.” This means that if you drop your health insurance after purchasing a Discount Health Plan and later decide to purchase health insurance again, your new insurance may not cover pre-existing conditions.
Review your plan carefully.
Companies selling Discount Health Plans may not guarantee advertised services. Some Discount Health Plan provider lists may not be current. Contact providers to make sure they honour the Plan. Some Discount Health Plans may not be discounted as advertised. Hidden fees, such as administrative fees for each use of the card, may reduce or effectively erase the advertised discount.
Make sure the discounts available exceed the cost of membership.
Be aware that certain consumer protections afforded to buyers of insurance are not provided to people buying Discount Health Plans. For example, Discount Health Plan members are not covered by the State Guaranty Fund Law that protects consumers in the event an insurance company fails. Some lines of insurance, such as managed care plans, also require insurance companies to guarantee access to health care providers, a guarantee not given to buyers of Discount Health Plans.
14 Things To Do Before Purchasing A Health Plan
1. Read all promotional material carefully. If it seems too good to be true, it probably is.
2. Understand the discounts being offered.
3. Savings should exceed membership costs.
4. Understand which providers contract with the Plan and determine that they are in convenient locations for your use.
5. Ask what happens if you move or if you need services while you are traveling.
6. Know what you are buying before you sign any forms. Do not give out bank or credit card information until you decide to make a purchase.
7. Ask if the Discount Health Plan has contracts in effect with all the health care providers it has identified.
8. Verify with the health care providers you plan to use that they are participating in the Discount Health Plan.
9. Inquire about payment rules. With some Plans the consumer is required to pay for discounted services at the time of service and sometimes in cash.
10. Seniors should be especially cautious when considering one of these Plans. Some providers may not honor advertised discounts below scheduled Medicare rates.
11. Be wary of Discount Health Plans offering “long-term care” discount options. These Plans are not a substitute for long-term care insurance.
12. Ask about additional costs, such as administrative fees, that may be associated with the Discount Health Plan.
13. Ask about the Plan’s cancellation and refund policies.
14. Always keep the telephone number and address for the Discount Health Plan, along with copies of all documents that you have submitted to the Plan.