Fraudulent plans continue to grow in size and scope. ” There’s no end in sight, ” said James Quiggle, communications director for the Coalition Against Insurance Fraud.

A common scam involves plans that promise full health care coverage but deliver worthless policies or lesser products designed to look like comprehensive coverage, said Quiggle, who has studied the issue for years. Consumers may purchase ” limited benefit ” plans or medical discount cards that often present themselves as providing full insurance coverage — until the bills come, he said.

Companies that sell these plans tend to operate under many different names, adding or changing new ones frequently, said Oklahoma Insurance Commissioner Kim Holland. The secretary-treasurer of the National Association of Insurance Commissioners has kept tabs on these companies through NAIC entities including an anti-fraud task force and attorneys round table.

Oklahoma is one of many states to take action against American Trade Association of Springfield, Tenn., related entities and their executives. In November 2009, it issued a raft of cease and desist orders that carry civil penalties of $25,000 for each violation. Last month, Florida took similar action against American Trade Association Inc., Beema-Pakistan Co. Ltd., Serve America Assurance Ltd., Real Benefits Association, Affinity Group Benefits Association Inc., Smart Data Solutions LLC., SDS Management Group (BestWire, Feb. 19, 2010). Kansas cited many of the same companies and individuals the same month.

Regulators said the companies were delivering unsolicited blast faxes, e-mails and other communications that advertised inexpensive health insurance coverage. However, they said, the issued policies were for unauthorized limited benefit plans.

Holland said ATA has received at least $14 million in policies from 12,000 members. “It’s just a front for taking people’s money and not paying claims,” she said.

source: http://insurancenewsnet.com/article.aspx?id=174043&type=lifehealth

Red flags
Here are some warning signs that a supposed health care plan won’t be around to actually cover you when you need it:

Low, low premiums. If the plan offers premiums much lower than what other firms are charging — say, less than half the going rate — watch out, says Dave Evans, vice president of the Independent Insurance Agents and Brokers of America in Alexandria, Va. “Ask if their benefits are less generous, or what’s going on,” says Evans.

Easy, easy applications. Your antennae should shoot up if the application for coverage contains only a few questions. “A legitimate individual plan is going to ask sometimes extensive medical questions in order to properly price the product based on a person’s medical condition,” says the NAIC’s Miller.

Union or no union. Be skeptical of an agent trying to sell you a union plan when you’re not in the union.

Unlicensed agents. Watch out if an agent tells you he doesn’t need a license because the insurance is exempt from regulation.