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Consumers Need To Be Aware Of Bogus Health Insurance Plans

Originally Posted: April 14, 2010

New York City - Fake health insurance policies - peddled by scammers hoping to take advantage of public confusion over health care - are on the increase, the New York State Insurance Department warned today.

"There have been reports around the country about people being victimized into buying worthless insurance policies in the wake of the health care debate. We have seen a number reports like this in New York and we are looking into these cases. We want to make sure New Yorkers recognize the telltale signs of insurance fraud so they are not victimized," Insurance Superintendent James Wrynn said.

The federal Health and Human Services Department last week noted an increase in health care-related crime and urged states to pursue aggressive countermeasures. The bogus policies being marketed include those claiming that consumers have "only a limited open enrollment period" and falsely state that consumers will be left without affordable health care if they don't buy now. Other plans purport to offer substantial discounts on health care and prescription drug costs.

The Insurance Department urged consumers to keep in mind these red flags to recognize health insurance fraud:

 • High-pressure sales tactics: Be particularly wary if a salesperson tells you that you must buy an insurance policy now because of the new federal health law, or that a price or policy option is only good for a short time.

 • What seems too good to be true often is: Insurance can provide valuable protection for individuals and their families, but low-cost, heavily discounted plans that seem to promise comprehensive coverage often provide little, if any, practical coverage.

 • TV ads and internet pop-ups: During the past few weeks, advertisements have surfaced on cable program urging consumers to call toll-free 800 numbers to take advantage of coverage available "now that historic health care legislation has passed."

 • Door-to-door sales: There have been reports of sales people soliciting business by door-to-door selling, a practice few, if any, legitimate health insurance companies would use.

The Insurance Department urged consumers to use these common-sense guidelines whenever purchasing insurance:

 • Verify that the insurance company providing the policy is licensed to conduct business in New York State by accessing the Department's website, www.ins.state.ny.us.

 • Make sure all the blanks are filled in whenever signing any document and keep copies of anything you sign, as well as receipts. The name of the insurance agent or broker you pay should also be noted on the receipt.

 • Contact the insurance company if you don't receive an insurance identification card and a copy of the insurance policy in a timely manner. Failing to receive these could be an indication of insurance fraud.

 • Review the policy after you get a copy and confirm it is what you agreed to buy.

Consumers with questions or who suspect health insurance fraud are urged to contact the Insurance Department's Consumer Services Bureau from 9 a.m. to 4:30 p.m., Monday through Friday toll-free at 800-342-3736. Consumer complaints may be filed using the Department's website, www.ins.state.ny.us.

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