Worthless Medical Coverage—

Lawmakers Reacting To Surge In Health Care Scams

WALLINGFORD — Connecticut Better Business Bureau is advising consumers to be extremely careful when considering offers to purchase health care insurance and discount medical plans.

As consumers struggle to understand the complexities of the new national health care reform bill, state and federal regulators are warning about a surge in health care-related scams from companies that are peddling worthless health care coverage products.

According to a 2009 survey conducted by the Coalition Against Insurance Fraud, 57 percent of state fraud bureaus reported a higher prevalence of health care insurance fraud last year, compared to 2008. The increase is largely attributed to “unauthorized entities selling fake coverage,” and “the rise of medical discount plans.”

Critical consumer protection provisions already are in effect, however most of the legislation’s provisions will not come into effect for several years.

Connecticut Better Business Bureau President Paulette Scarpetti says there can be grave consequences if consumers do not do their homework.

“Medical insurance and prescription coverage are not the kind of areas to be cutting corners, certainly not when the safety of the family is concerned,” she said. “Consumers do not want to learn that they are not covered by their plan when it is time to use it.”

According to a statement on the Connecticut attorney general’s website, the reforms will make health care more affordable for 80,000 Connecticut businesses, including 37,600 small businesses that will receive tax credits to purchase health insurance.

But several companies have come under fire by legislators for selling worthless coverage and medical discount packages: HealthcareOne/Elite Healthcare, Consolidated Workers Association, and Smart Data Solutions/American Trade Association. All but Consolidated Workers Association have an “F” in their Reliability Reports, the lowest possible BBB rating.

Reasons for the low ratings range from the volume of complaints to government actions, lack of information on these companies, lack of licensing, and overall complaint history with BBB.

Consumers can avoid getting scammed when shopping for health insurance coverage by taking a few precautions:

*Understand the difference between insurance and discount medical cards. A medical discount card is not health insurance coverage, but instead, a plan that may only be used to obtain reduced rates at physicians’ offices and pharmacies. This will depend on whether they accept the cards. Make sure the product you are buying is medical insurance and not just a discount card.

*Carefully read fine print. Do not take the company’s word for it. Be certain all verbal commitments are contained in the fine print. Also check with your medical providers and pharmacist to confirm whether they accept the health care discount plan you are considering.

*Beware of copycats. Phony insurance companies may use a name similar to trusted companies, so confirm that you are in fact dealing with the right company with a good reputation.

*Research the company. Before committing to purchase any health care insurance products, check out companies’ Reliability Reports, which will provide their BBB rating, which tell you if there have been any complaints reported to BBB and whether any government actions have been brought against the businesses.

Confirm the company is licensed with the state insurance commissioner. This information is available from the Connecticut Licensing Info Center at www.catalog.state.ct.us/cid/License/licweb1.asp.