Spotting a Bad Group Health Plan:

The insurance industry is not exempt from fraud, particularly when it comes to group health insurance. It is important to be on the lookout for possible warning signs when you are selecting a group health plan to ensure that you are not falling for a scam.

Here are some warning signs that you can watch for:

Fake associations. Many fraudulent companies will attempt to make themselves appear legitimate by posing as an association. True association health plans are typically exempt from health insurance regulations, such as credit unions or labor unions. However, this is not the case for a fraudulent association.

It is important to completely research a company to ensure that they are a valid association. In the past, many companies have successfully posed as an association by selecting a name that sounded “real.” In truth, the association never existed and many business owners were taken in. Look up the name of an association in the phone book, on the Internet and with your local Better Business Bureau. If you can’t find any information on an association, it is possible that they are fraudulent.

Look for a rating. Insurance companies usually have a rating, called the AM Best Rating, that allows consumers to know how solid an insurance company is. These ratings will look like: AM Best Rating: A or something similar. If an insurance company does not offer their rating, or worse, if they do not have one, steer clear.

These ratings were instituted to prevent companies from selling group health insurance policies, collecting premiums and never paying on claims. Unfortunately, there have been many cases of this in the past.

It truly pays to do your research on an insurance company’s rating. If you or your employees need to file a claim, it is a really bad time to find out that your insurance company has folded or is unable to pay on the claim.

Check out the agent. If you are purchasing your group health insurance coverage through an agent, you will need to do all of the research you can on them before entrusting them to find you a policy. Again, make use of your local Better Business Bureau and the Internet to find out all that you can. Chances are, if an agent is not trustworthy, they will have a record of unhappy clients following them around.

Carefully read the policy. If something in the policy sounds just too good to be true, it usually is. If a company is offering you the sky in group health coverage, but not charging a rate that is comparable to other companies, there may be a problem. Do not wait until it is too late before finding out that a company is bogus. Take the time to find out all that you can now before you need to file a claim.

Check with the National Association of Insurance Commissioners. This step will allow you to find out more information on an insurance company. All legitimate insurance companies have a unique number that is assigned by the NAIC. If the NAIC has never heard of a company, or if the insurance company does not provide you with this information, it is time to find another group health provider. For this step, you will need the exact name of the insurance company.

By taking steps to protect yourself now, you can avoid an unpleasant situation later, and save money that would have literally disappeared if you hadn’t been careful.


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