You may be one of the thousands of people in New Jersey without health insurance or without enough coverage for your health needs. Perhaps your employer does not provide health insurance for you, you are self-employed, you have Medicare but it does not cover your medications or other necessary benefits, or you have been dropped from NJ FamilyCare because of changes that were made over the past year. Health insurance is necessary, but it is expensive to buy on your own. You may find yourself in need of healthcare that you simply cannot afford.
Con artists know that there are many people who are desperate for affordable health insurance. They offer phony health plans that say that they will provide you with low-cost, comprehensive coverage. Some even say they will accept people who have been uninsured for a long time without a waiting period before they will cover their pre-existing conditions.
But beware: these companies may be selling you empty promises! “If it looks too good to be true, it probably is,” said Lee Barry, Assistant Commissioner of the Enforcement and Consumer Protection Unit of the New Jersey Department of Banking and Insurance. Please note that, in New Jersey, you cannot be refused health insurance by a licensed insurance company. But an insurer can require you to wait for a period of time (up to 12 months in some circumstances) before it will pay for a pre-existing condition that was diagnosed or treated within six months of your applying for insurance.
Every state requires that an insurance company be licensed. Because these scam companies are not licensed by New Jersey, they don’t have to obey the state’s rules and regulations that apply to licensed health insurance companies. They don’t have to make sure that they have enough money available to back up healthcare claims. They may pay only your small claims for a while, but if you have a large claim, they won’t pay it at all, and you are then responsible for the bill.
You won’t know that you bought a phony health insurance plan right away. You’ll pay your monthly premiums to keep the policy in effect. Then, when you actually need healthcare, the bills won’t be paid by the phony company. By that time, you may have already paid the company hundreds or thousands of dollars in premiums.
Beware of “Discount Health Plans”
You should also beware of companies that advertise “discount health plans.” These plans do not pay your healthcare claims. Instead, they charge you a monthly fee with the promise that they will negotiate discounts with healthcare providers on your behalf. If the insurer does not negotiate these discounts, you are the victim of a scam, and you will be responsible for the bills as charged.
There is yet another scam to be aware of. Some companies will offer you cheap health insurance for which you will pay premiums, as you would with a legitimate company. But, when it comes time to pay your healthcare bills, they will do so only as a “loan” to you that you must then pay back to them. When you submit the bills for payment, the company informs you that they have accepted your “loan application.” Or they may decide to “reject your loan application,” and you are then responsible for your bills. The premiums you paid to the company will have bought you no protection whatsoever.
Often these companies operate on the Internet and, in reality, they do not have an office, only a post office box. When they get caught, they change the company’s name and move on to another town, city, or state. The problem is nationwide.
Protect Yourself
How can you protect yourself from these health insurance scams? Some key things to watch out for are:
- A premium rate that is much lower than what you have been quoted by other companies. For instance, if one or more companies quote you a price of around $425 per month for coverage, and another quotes you $200 per month, you should suspect that the lower price is a scam. You should always shop around and compare prices.
- Most companies ask about your past or present health. If not, beware.
- Most important, to be sure that the company is legitimate and licensed by the State of New Jersey, the Department of Banking and Insurance would like you to call either Thomas Ripardi or Judy Suarez, the two investigators assigned to this growing problem. They can be reached at 609-292-5316, or you can access the Department of Banking and Insurance online (link follows article). This Web site provides a buyer’s guide and a list of legitimate health insurers and premiums.
- You can also go online for a description of the Individual Health Coverage Program (link follows article). This program was created by law to provide health insurance for people in New Jersey who can’t find health insurance, and for people with pre-existing medical conditions. This site provides several links.
Before you sign on and pay premiums, take the time to verify that an insurance company is legitimate and licensed by the State of New Jersey. Doing so may save you hundreds or even thousands of dollars in unpaid healthcare bills.
This article originally appeared in the March 2004 issue of Looking Out for Your Legal Rights®.
Last legal review 3/1/04. |
