Insurance Fraud in Colorado
When you have a concern about an insurance company, the Colorado Department of Regulatory Agencies (DORA) Division of Insurance is your source for consumer protection. If you have a problem with an insurer, a would-be insurer (see Discount Health Plans below), or other instance of fraud, you can report your issue to the Division. They conduct investigations on the company or entity who has potentially violated the law upon receiving fraud complaints from insurers, agents, employers, workers, and policyholders. If the investigation returns evidence that a violation may have occurred, the Attorney General’s Office will take the case and determine the outcomes.
Scams and Fraud
In addition to many qualified professionals who provide good service to their customers, the insurance industry also attracts its share of scam artists. There have been individuals who collect insurance premiums but never provide benefits, people who steal their customers’ identities, people who are not licensed for the type of insurance they pretend to sell, and people who sell policies that are not appropriate for the individual’s situation.
Check out these helpful tips to be sure you are getting what you pay for, and not exposing yourself to unnecessary risks.
Protect your identity to protect your financial health!
Keep all personal information secure.
Discount Health Insurance and Discount Cards
Health insurance costs what is does for a reason: a legitimate, established insurance plan is worth trusting. If you run into the discount health plan option, be wary of what you’re about to purchase. These plans are not health insurance, they limit your coverage, and are often the easiest way for a company to get you paying a monthly fee for services that don’t live up to your expectations. A discount health plan will in no way substitute a private health plan, and the savings is rarely significant when you receive your medical claims.
Buying a discount plan can also damage your history of creditable coverage. If you have a pre-existing condition, this is important to keep in mind. Discount plans are not simply cheaper alternative to a major medical plan, they do not provide coverage and will cost you more than it’s worth in the long run. They also are not regulated by the Division of Insurance, therefore filing a complaint with the state will have little effect.
What To Consider Before Buying a Discount Plan
Though the price of membership to a limited-benefit plan is far less than a comprehensive plan’s premium, there are several reasons to avoid this seemingly good deal. Read the benefits, terms, and conditions of the plan before you sign anything. The fine print will indicate what they cover, how it works, and how it is unlike a regular health insurance policy. Compare their benefits and contract to that of a Colorado insurer, and weigh out which one is worth trusting with your health. The truth is, by choosing a discount plan, you are technically uninsured. In addition, you will still have to pay everything out-of-pocket despite paying slightly less than that provider’s going rate.
What is a Discount Health Plan?
Discount health plans have a misleading name, as they act more like a frequent buyer card for medical care, specializing in lower cost healthcare. Rather than getting insured and paying a premium for coverage and a provider network, you pay for a list of providers who will discount their rates for certain services for plan members. Also called indemnity or limited-benefit health plans, these programs connect you with a fixed number of select services at a reduced rate (for instance, four physician visits per year at $50 per visit). They typically include physician care, some hospital services, and may discount prescriptions, as well.
How Discount Health Plans Work
The company selling discount health plans contracts with providers who agree to discount rates for certain services to people who buy these plans. This requires you to use specified doctors and facilities who will not serve as a network, but are the only providers with whom your discount will be effective.
How much they charge depends on the provider’s individual fees and the particular service performed, and you are often required to pay in full at the time of service.
Will that be cash… or cash?
Ask about the terms surrounding payment, as certain providers only agree to contract with a discount plan if they can be compensated immediately, before you leave the office after receiving care. Other plans require discount plan members pay for their care on the spot and with cash only.
Really scan the fine print, as there may be more costs involved with your membership than you anticipated. There may be hidden fees, including administrative expenses for each time you use your discount care, and therefore provide little if any discount at all. Always check to see the discounts offered are higher than the cost of membership.
Also, if you have any doctors you prefer to use, note whether or not they participate in the program by referring to the list of approved providers. To make sure, verify with your preferred providers that your discount plan will be effective, as some lists can be outdated. Call your doctors to ensure they will accept your discount, and don’t trust the discount plan’s list without having checked for yourself.
Pre-Existing Conditions & Possible Complications
Though they may be marketed as low-cost health insurance, these plans are not considered creditable coverage. If you have been using a discount plan for a year after being insured, then apply for a health insurance plan, the new plan will most likely not provide a credit for prior coverage. Applicants with pre-existing conditions need to be aware of this concern, as they will be subject to longer exclusion periods without creditable coverage in Colorado.
State Insurance Regulations & Discount Plans
As these plans are not administered by health insurance companies, they are not subject to the laws of Colorado regarding insurance. Certain consumer protections are not available for members of discount plans, such as the state guaranty fund law which offers protection if an insurance company fails, and laws ensuring you get access to medical care through qualified providers.
Discount health plans are also exempt from providing state and federally mandated benefits, therefore not covering certain services a major medical plan will offer according to law.
- Read all documents in detail and ask questions.
If it seems too good to be true, it probably is.
- Review the terms of the discount plan cautiously.
While some services may be advertised, the company may not guarantee you access to them. Clear up any confusion in writing and read the fine print before you sign up.
- Inquire about relocating or traveling and how it will affect your plan if you need to seek care.
- Keep the company’s contact information available and save all of your documents received and submitted to the plan for future reference.
Discount Plans and the Elderly
Older Coloradans who qualify for Medicare or require long-term care should be particularly skeptical of these plans, due to the insufficient services offered and lack of coverage. Remember, this isn’t health insurance. Certain medical providers may not follow advertised discounts below established Medicare rates. If a discount plan offers long-term care discounts, this can be very dangerous, as long-term care is costly and complex. Discount plans are in no way equivalent to long-term care insurance.
Ecommerce Scams and Discount Health Plans
- You can purchase a discount health plan over the internet or by fax.
- Until you have researched the company (Google: “[company name] scam” is one way, in addition to reading their site information), do not provide any bank account information. Once you determine the company’s legitimacy and site security, you have enough information to go forward or search elsewhere. Also ask about the cancellation process and if any termination fees apply before you sign up.
What to Ask Prior to Buying a Discount Health Plan
- What services and products are guaranteed to me as a member? Is there guaranteed access to providers or a minimum discount for services?
- Is the plan’s discount higher than the discount for paying cash? Am I required to pay for care in advance or at the time of service?
- Does my discount apply to emergency care or services received out-of-state? Do health care services require preauthorization?
- Can I pay the membership fee each month rather than one payment per year? Does the company send out regular statements?
- Can I get refunded for the whole membership cost if I cancel? What does the cancellation process entail?
- Is there 24-hour member services support I can call? If not, what are the hours of customer service?
If not, during which hours can I call for assistance?
- How protected is my personal information? What are the privacy practices of the company?
- Is my personal information sold or given to other companies when I enroll?
Potential Outcomes of Buying a Discount Plan
Discount plans may work out for some healthy people by reducing costs on a few medical services via a frequent buyer card for prescriptions, eyewear, and office visits. However, some of the same discounts exist simply when you offer to pay in cash, regardless of what discount plan or insurance you may have.
It is important to remember these plans are NOT health insurance, but a discount program who give you a list of providers and health-related products accepting their contracted discount – which may not be much.
If it doesn’t work out, you risk:
- Not receiving credit for prior coverage with an individual health plan for pre-existing conditions.
- Responsibility for paying most care out-of-pocket.
- Realizing discounted services are less discounted than you expected, or are nonexistent.
- Not getting the care you need and losing your health if necessary forms of care are not listed by the discount plan.
- Losing money, and being a victim of fraud or identity theft. Many companies are unethical and may acquire your personal and billing information to steal your identity, money, or information.
How Coloradans Are Protected From Discount Plan Scams
- When companies are marketing their products, they are required to indicate that they are not selling insurance plans.
- Contact information for the administrator (name, phone, email, physical address) are required.
- Each company’s list of providers must be updated several times per year and made available upon request through a toll-free number.
- If a member cancels within 30 days of buying the plan, the company is required to refund the entire amount.