The Department of Labor asks the small business owners to be wary of health insurance scams, and take measures to protect themselves and their employees from being victims of health insurance fraud.
With small business group health insurance premiums rising at double-digit rates, business owners are looking for alternatives to traditional insurance coverage.
Unfortunately, there have been an increasing number of promoters of health insurance scams who are aggressively targeting small businesses and their
employees.
These scam artists often masquerade as federally regulated employer trust, labor union, or religious organization. They claim to offer low premiums because they are exempt from state insurance regulation.
Promoters of these health insurance scams are also inducing insurance agents to promote their products to small businesses.
Before buying health insurance, take the time to thoroughly research your options.
Here are some tips on how to protect yourself and your employees when purchasing health insurance.
Compare insurance coverage and costs. Always compare the benefits and costs of multiple insurance products. If one product appears to offer similar benefits at a dramatically lower cost, ask questions.
Confirm that the person offering the product is a licensed insurance agent with a proven record of reliability.
Promoters of insurance scams often engage unlicensed insurance agents to market their product as a cheaper alternative to traditional insurance.
Check out unknown agents with your state insurance department.
Verify that any unfamiliar company, organization or product is approved by your state insurance department.
Examine the policy to determine the actual coverage and whether the promised benefits are fully insured by a licensed insurance company. Do not confuse representations about stop-loss coverage with a guarantee of group health benefits.
Stop-loss coverage is a major medical policy under which the insurance company will begin to pay 100% of accrued medical expenses, after you have reached a specified amount of out-of-pocket expense in deductible and coinsurance payments.
Stop-loss coverage often protects only the issuer, not the insured individuals.
Request references of employers enrolled with the provider and get information from employers about benefit payment history and claim turn around time.
Ask about the allocation of premiums charged for commissions, fees and administrative expenses. Allocation of a high percentage of the premiums to commissions, fees and administrative expenses may indicate a problem with the product or insurer.
Where to get help
There are several organizations that can help:
National Association of Insurance Commissioners
www.naic.org
2301 McGee Street, Suite 800
Kansas City, Missouri 64108
Phone: (816) 842-3600
Coalition Against Insurance Fraud
www.insurancefraud.org
1012 14th Street, NW, Suite 200
Washington, D.C. 20005
U.S. Department of Labor
Regional Office of the Employee Benefits Security Administration
www.askebsa.dol.gov
Toll free number: 1.866.444.EBSA (3272)
You can also contact your state insurance department or state attorney general’s office.
