Did you know that millions of people are scammed out of their life savings every year on account of fraud and that one of the most rapidly-increasing fraud rings exists in insurance? In a world where fraud leaves people with nowhere to turn and no money to live on, it is increasingly important to learn the difference between a fraud and the real thing. Let’s take a look at 5 tips that will help you recognize the tell-tale signs of insurance fraud.
The Uninsurable Are Insurable
If you have a serious pre-existing condition, such as cancer or liver failure, a family history of Hodgkin’s Disease or other neurodegenerative conditions, or a are heavy smoker, use illegal drugs or are an alcoholic, most reputable health insurance agencies with either show you the door or offer you premiums even Donald Trump couldn’t afford. So, if an insurance company suddenly offers you insurance at a rate you can afford, red flags should go up all over the place.
It’s a Discount Plan
Although some legitimate health insurance discount plans do exist, most offers for this type of service should be treated as fraudulent. But just how do you tell the difference? There are two ways:
- Call the state insurance department and ask them. Although, they will probably tell you to stay away from anything that isn’t a bona fide insurance plan.
- Look for the defining characteristics of health insurance—You pay a premium in return for a benefit and your benefits exceed your premiums. If these two characteristics do not exist, it isn’t insurance and it’s probably a fraud.
It’s ERISA—ERISA stands for Employee Retirement Security Act. ERISA allows employers to set up benefit plans for their employees and the dependents of their employees. ERISA is established by unions and employers and cannot be sold directly to individuals. If someone offers to sell you an ERISA plan, report it to the state insurance department immediately.
Your Plan is Reinsured
Exactly what does that mean, anyway? In truth, reinsurance has nothing to do with your policy at all. Reinsurance is insurance for insurance companies. It’s how they protect themselves and their policyholders in the event of a potentially devastating lawsuit. Not to mention, a real insurance agent or company would never mention this practice to you.
Note: If you happen to find out that your insurance company doesn’t have a reinsurance plan, this should also raise red flags and you may want to consider finding benefits elsewhere.
Freebies for Signing
What freebies for signing means are that you should be suspicious of anyone who wants to give you free medical equipment or prescriptions. This type of fraud most often affects those with Medicare, who are elicited to hand over their Medicare member numbers in exchange for free medical products.
Remember, although free and cheap health insurance is extremely tempting, fraud rings typically target those who can’t afford health insurance costs, let alone the costs of being scammed.