Scams when purchasing health insurance online

Beware of scams when buying health insurance online. Read how to protect yourself against scams. Learn the difference between a health insurance plan and a health discount plan.

Open enrollment for health insurance runs from Nov. 15, 2014 through Feb. 14, 2015. A person can go online to review and purchase a health insurance plan, but consumers are now seeing many different companies offering to help pick out health insurance plans. How does a consumer know if a health insurance company is actually going to guide them or take them for their money? In today’s economy and online environment, this is often the question consumers need to ask themselves. There are many scams abound on the internet and it is often the “Buyer Beware” motto.

The Federal Trade Commission reports one scam where a marketing association created a sham non-profit trade association offering a comprehensive medical plan if a person agreed to join the association by buying a membership. People shopping online for health insurance would come across websites that asked for personal information before a price quote would be given. The website asked for a person’s name, address, phone number, age, occupation, marital status and whether they had any existing medical conditions. Once the company collected this information, they would have a sales representative call the person and use aggressive pressure sales tactics to try and sell a membership to the association for anywhere between $40-$100 per month. They promised a comprehensive medical plan to go along with it.

What consumers discovered is the medical plan was not comprehensive. In fact, the medical plan was actually a medical discount plan that did not cover medical procedures. The medical discount plan only offered limited discounts and reimbursements on visits to certain doctors and hospitals leaving the person with large medical bills. In some instances, the person did not receive medical discounts either.

How does one protect themselves from these types of scams when they are buying health insurance plans online? Here are a few suggestions from the Federal Trade Commission:

  • Provide as little personal information when you are on the web. Remember when you are entering information onto a website, it could end up in the wrong hands. Criminals create websites to try to collect your personal information to use for their own purpose.
  • Research a company before you enter data on a website. Enter the company’s name, along with the word “‘complaints” into an online search engine and see what comes up. Ask the company for details in writing of what you are buying before you agree to purchase it. Don’t fall for pressure selling techniques of the company.
  • Check to make sure the plan you are buying is really an insurance plan. Go to your state insurance commissioner’s website to see if the plan is an insurance plan and whether the company selling it is licensed. The Michigan Insurance Commissioner’s website is www.michigan.gov/difs. The State Insurance Commissioner’s Office can also alert you to scams, so check before you buy. If you believe you have been scammed, report it to your State Insurance Commissioner’s office and the Federal Trade Commission.

For more information on purchasing health insurance or on personal financial management, go to the Michigan State University Extension website or visit www.mimoneyhealth.org.

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