To Avoid Becoming a Victim of Insurance Fraud - 10 "Warning Signs" to Watch Out For

In today's fast-paced world, business owners often don't have time to thoroughly consider the companies they rely on to provide their goods and services. In many cases, product/service quality determinations can be made at the time the goods are delivered or the service is provided. When a product or service fails to meet expectations, there is often a quick fix. For example, poor quality goods may be returned to the supplier, or payment for services may be withheld until the service has been satisfactorily performed.

Unfortunately, business owners don't always buy tangible goods in the sense that they can immediately see the quality of goods and services at the time of purchase. An example of such a purchase is health insurance. Because health insurance is typically not used immediately after purchase, quality of care and policy justification may not be demonstrated until an employer or family member actually needs treatment. This is one of the main reasons why many, often legitimate-looking, companies sell fake health insurance to unsuspecting business owners.

In most cases, fraudulent health insurance policies are sold to business owners by telemarketers or "agents" through bogus associations and unions. This requires the purchaser to join or be a member of a professional and/or trade association in order to qualify for health insurance. In fact, a 2004 US study published by the General Accountability Office (GAO) found that affiliated programs ranked as the top marketing technique, followed by fake health insurance companies. Between 2000 and 2002, the US Department of Labor and state insurance regulators identified 144 unlicensed companies illegally selling health insurance. These companies have defrauded him of $252 million from 15,000 employers and his more than 200,000 policyholders. "

However, it is worth noting that many individual and group health insurance products are endorsed by reputable associations such as the ARRP and the American Bar Association, as well as many respected unions such as his AFLCIO and Teamsters. It is important. These organizations have long been known to bring together a general class of professionals and citizens for other purposes that have little to do with health insurance.Membership usually includes discounts on health insurance. Plus many other perks included. Organizations typically have a governing body, a charter and by-laws, a set of officers, voting powers, regular membership meetings, and a professional code of conduct.

Unfortunately, most people don't realize they've made large monthly payments or insurance premiums to dishonest businesses or unions until they become seriously ill requiring medical attention. It is usually only after treatment that you receive notice from your health care provider that the claim filed with your insurance company has been denied and that you are responsible for all medical costs incurred.

This system often begins when a business owner is contacted by phone or approached by a particular official association or person claiming to represent the association. Business owners are then informed that becoming a member of the association or joining a union will qualify them for low-cost group or individual health insurance. Associations or unions are usually sponsored to represent the self-employed and small business owners. Low-cost health insurance is usually presented as one of the many "perks" a business owner can claim, in addition to many other "member" perks, such as: B. Discounts on other services such as dental care, eyeglasses, office supplies, hotels and car rentals.

These fake companies often involve licensed health insurance agents to sell fraudulent health insurance products. Sometimes the "agents" know the products are fraudulent, other times, the "agent" also falls prey to the scheme. Often, the schemes prey upon consumers who have been previously declined insurance coverage or suffer from a pre-existing condition. Since these consumers have very limited options to purchase private health insurance coverage, the benefits of an Association or Union membership that offers health insurance coverage for a "membership fee" or "union due" is enticing. To the unsuspecting consumer that has a pre-existing medical condition or is paying high premiums for coverage, the "membership fee" or "union due" is a small price to pay for what they believe will be a quality health plan that provides "guaranteed" coverage with no "pre-existing condition exclusions" and no "waiting periods."

In many circumstances, the print materials that are left with the consumer are very well designed, however, the majority of the time, the language in the "health plan brochure," if there is one, is very unclear. The literature may name the entity that is authorized to act as the health plan administrator of the plan, but neglect to name the actual insurance company that is providing the health insurance coverage. Unfortunately, it is often difficult for consumers to distinguish between legal and illegal companies selling official-sounding health insurance. Fraudulent medical insurance usually has a lot in common.

Below are 10 Warning Signs that may indicate health insurance fraud.

1. "Agent" is not a licensed insurance agent, but a "registration" or "member" coordinator.

2. Although the term "discount plan" appears in product descriptions, plan sponsors commonly use the terms healthcare plan, health insurance, or policy. Discount plans are often just discounts on medical services such as prescription drugs, eyeglasses, and dental care. These plans are not designed to provide bulk medical coverage.

3. The formal-sounding "club or association" is something you've never heard before.

4. This plan is called his ERISA plan. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that allows employers to establish employee benefit plans for their employees and their dependents. The ERISA plan is not subject to government regulation, nor is it regulated by the National Insurance Agency. ERISA plans are not usually sold as health insurance, but are set up by employers, unions, or groups acting on behalf of employers. As a result, unsuspecting buyers believe that these plans actually cover health insurance, when in reality they don't.

5. Buyers are told that “membership or union dues” includes health insurance premiums, but the word “insurance premiums” does not appear on any planning materials.

6. This plan provides “guaranteed” coverage with no “pre-existing condition” exclusions or “waiting periods”.

7. Prices are significantly lower than other health insurance companies.

8. The term reinsurance is used in connection with plans. Reinsurance buys insurance companies to cover their own risks. Insurance for insurance companies. Approved insurers rarely allow agents to mention reinsurance contracts in their pitches.

9. Associations or unions where they have members of all levels and/or require their members to declare, for example, that they belong to a particular industry, class or professional group to which they do not belong; are considered to be workers in the “restaurant industry,” but “florists” and “mechanics” are also allowed to register as members.

10. The association or association has special arrangements with health insurance companies, plan administrators, or other third parties that have designed plans using legal “loopholes” that allow members to purchase health insurance at a reduced rate. or take out individual or group health insurance.

So how can you avoid becoming a victim of fraudulent insurance fraud? Contact your state insurance department to find out if health insurance providers and third-party administrators are licensed in your state. Make sure that the "agent" selling the plan is a "licensed health insurance agent". Also, make sure your health insurance company is licensed to sell the policies they offer. It can be difficult to determine if fraud is involved, so always postpone purchasing an insurance policy until you have had the opportunity to do your own due diligence.  

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