By Emily Miller
Shopping for insurance online has become remarkably popular throughout the past couple of years, especially for health insurance. With this being said, the Federal Trade Commission would like to advise consumers that going this route may leave them exposed to insurance scams.
One scam that is particularly common involves consumers being persuaded to purchase what they think is health insurance but actually turns out to be medical discount plans.
What is the difference between the two?
If you buy a health insurance plan, it generally covers a broad range of services. and pays you or your health care provider for a portion of your medical bills.
If you buy a medical discount plan, you are generally paying for a list of providers and sellers who may be willing to offer discounts on some on their services, products or procedures. They do not pay your health care costs.
The FTC recently banned IAB Marketing Associates, LP et al., a sham nonprofit trade association, from selling healthcare-related products to consumers, as they allegedly tricked consumers into buying phony health insurance.
With this scam, consumers submitted their contact information to websites purportedly offering quotes from health insurance companies. Consumers paid an initial fee ranging from $50 to several hundred dollars, and a monthly fee ranging from $40 to $1,000 apparently for comprehensive health insurance coverage, but instead they were enrolled in an IAB membership.
The program included purported discounts on services such as identity-theft protection, travel, and roadside assistance, as well as certain purported healthcare related benefits but was not actually health insurance.
Unfortunately, many consumers who suffered from an accident or recent illness purchased these plans in the hopes of securing an affordable health insurance policy that could help cover their medical expenses. They soon figured out that their IAB health plan covered very little, if any, medical expenses, leaving them with major medical bills.
In conjunction with the FTC’s decision with the IAB Marketing Associate claim, the federal agency released a series of tips geared towards protecting consumers from falling victim to similar scams.
Below is the following tips from the FTC to help protect yourself from a scam like this one:
· Be stingy when entering your personal information when using the internet
· Do your research before choosing to do with a specific company
· Use supplemental resource to determine exactly what you are buying (i.e., your state insurance commissioner’s office, NAIC or a licensed agent)
