GAO Warns against
Unlicensed Health Insurance Plans

Stephen Barrett, M.D.

The General Accounting Office has issued two reports about the sale of health insurance plans that lack legal authorization. These plans place the buyer at risk for financial disaster if serious illness strikes. One report focuses on consumer vulnerability [1]. The other notes that from 2000 to 2002, 144 unauthorized entities enrolled at least 15,000 employers and more than 200,000 policyholders who got stuck for over $200 million in unpaid claims [2]. The investigators found that many of the entities bore names similar to those of legitimate companies

In response to the report, the Health Insurance Institute of America again the National Association of Insurance Commissioners to create an on-line database of licensed health insurance companies so that anyone can easily check the legitimacy of companies offering health insurance products. Meanwhile, the Coalition Against Insurance Fraud offers ten warning signs of a possible swindle:

References

  1. Private health insurance: Employers and individuals are vulnerable to unauthorized or bogus entities selling coverage. #GAO-04-312, Feb 2004.
  2. Private health insurance: Unauthorized or bogus entities have exploited employers and individuals seeking affordable coverage. #GAO-04-512T, March 3, 2004.
  3. Scam alerts: Phony health coverage. Coalition Against Insurance Fraud Web site, accessed Jan 20, 2008.

This article was posted on August 6, 2009.

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