GAO Warns against
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 . 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 . 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:
- The coverage costs 25% or more below the norm, yet promises generous benefits and a large provider network.
- The plan readily accepts people with serious illnesses and other medical conditions that other plans normally reject.
- The insurance has few or no underwriting guidelines—the agent or rep appears almost too eager to sign you up.
- You're approached by an insurance agent, phone or direct mail. Honest group plans normally are sponsored by your employer—and aren't sold directly to individuals.
- The plan isn't licensed in your state, and the agent (falsely) assures you the federal ERISA law exempts the plan from state licensing.
- The plan seems like insurance, but the agent or rep avoids calling "insurance," and instead uses evasive terms such as "benefits."
- The agent or rep doesn't have clear answers to your questions, seems ill-informed, or avoids sharing information.
- You've never heard of that health insurance company—and nobody else has, either.
- You have to join an "association" or "union" to obtain the health coverage. But you get no voting rights, receive no bylaws or other material, and aren't involved in the group's activities.
- Your hospital keeps calling you to complain that your health plan isn't paying your medical bills. Often the plan's reps keep making flimsy excuses, or stop returning phone calls altogether .
- Private health insurance: Employers and individuals are vulnerable to unauthorized or bogus entities selling coverage. #GAO-04-312, Feb 2004.
- Private health insurance: Unauthorized or bogus entities have exploited employers and individuals seeking affordable coverage. #GAO-04-512T, March 3, 2004.
- Scam alerts: Phony health coverage. Coalition Against Insurance Fraud Web site, accessed Jan 20, 2008.
This article was posted on August 6, 2009.