BY Shulamit Shvartsman for Lawyers.comsm
The price of health care in the United States continues to increase. As a result, many Americans are either uninsured or are paying extremely high premiums. As usual, where there's desperation, a scam artist is ready to use the situation to take advantage of your fears.
Scam artists, aware of the situation, are selling cheaper "health insurance plans." In reality, these plans aren't regulated and provide little, if any, medical benefits. Senior citizens especially need to be aware of companies offering health discount plans, prescription drug discount plans, home health or long-term care plans and other products that sound more affordable than other insurance plans.
What typically happens:
- You get a phone call - sometimes after you search health insurance quotes; other times you may be targeted if you fit into a certain profile, for example recent college graduates or senior citizens
- The caller explains that he is an insurance salesman and offers you an affordable plan. In one instance, the salesman promised the customer that the company will pay 80% of her health expenses and she would pay the remaining 20%. The salesman may also use pressure tactics such as telling you that the company can only accept a limited number of new enrollees and that space is filling up fast, therefore you need to make a quick decision
- You agree to enroll and give the salesman your credit card information for the initial enrollment fee and the first month's premium payment
- A few weeks later when you get the written "policy" in the mail, you realize that the plan isn't at all that the salesman promised. The plan isn't even a health insurance plan, but rather a "health discount plan"
- When you call the company to complain, you can't reach anyone. You're unlikely to get your money back
Senior citizens are often the unfortunate target of these plans. Marguerite, a 93-year-old woman from Minnesota received a postcard that advertised affordable, long-term home care services. After she sent back the response card for more information, a salesman visited her at her home and convinced her to pay him $3,000 for a "policy" that purports to cover her home care services. Afterwards, the company wouldn't return her calls. She demanded a refund, but the company only returned a part of the money.
What Is a Health Discount Plan?
As a customer, be aware that health discount plans are not an insurance policy. They don't provide insurance coverage or protection, but certain discounts. Salespersons falsely promise that their plan is just like an insurance plan, that there is an extensive network of doctors or that it offers 80/20 percent coverage.
In actuality, these plans aren't licensed and not state regulated; they don't pay for your doctor or hospital visits.
Home Health and Long-Term Care Plans
Additional programs target senior citizens using scare tactics, telling them they can lose their homes or run out of money if they need home health care or nursing home care and aren't covered by any policy. The scam artists pressure the senior citizen into buying this "affordable protection," which in reality, offers them little benefit. These companies aren't licensed and can't legally insure their claims.
Prescription Drug Discount Plans
Similar to health discount plans, a prescription drug discount plan is not an insurance policy. It simply offers some discounts on the cost of prescription drugs. Often, these plans provide very little benefits in very limited networks and are not worth your money.
How to Protect Yourself
If you are in the market to purchase health insurance or have been approached by someone, research the following:
Is the company licensed? In most states, insurance policies can only be sold by companies licensed in the state. Also, the agent himself must be licensed. Call your state's department of commerce to check if the company and agent are listed
Read first, pay later. To avoid being a victim of "bait and switch" ask the agent to send you written materials describing the plan. Give your credit card information only after reading the terms. Never do any business with a company that won't send you the written materials to review before you pay
Be aware of sales techniques. If the agent is telling you that "time is running out" or that enrollment is limited and is filling up, understand that he is using sales pressure techniques and refuse to fall victim to them. Tell him you need to read the terms first; don't feel pressured to accept any plan on the spot
Lastly, use common sense, if something sounds too good to be true, most likely, it is. Shop around for plans to compare prices. If you are offered a plan with a much lower price than other health insurance policies, then it is most likely because under the plan, you won't get actual insurance coverage
If you have already purchased any type of these plans and are unsatisfied, file a customer complaint. Contact your state's attorney general or an attorney with consumer protection experience.
Questions for Your Attorney
- What types of laws protect consumers from insurance fraud, and is help readily available from a state attorney general's office?
- I'm considering buying a health insurance or long-term care insurance policy. Can you review the policy for me?
- Do telemarketing rules apply to those selling insurance products?