Spotting Health Insurance Scams:

Unfortunately, there are many sharks in the water when it comes to health insurance. Before giving your hard earned money to a fly-by-night operation, it is important to research the company completely to ensure that they are a reputable organization.

The health insurance industry is a frequent target of scam operations, simply because there is so much money that can be made. These fraudulent companies can collect millions of dollars worth of premiums, but will never provide coverage for any claims. Instead, they fade into the woodwork, taking the premiums with them and leaving consumers without a health insurance plan. This normally results in the consumer being forced to pay for health procedures out of their own pocket, when they thought they were covered.

Here are some helpful tips in spotting health insurance scams:

1. What is the health insurance company's AM Best Rating? This rating system is used to assist consumers in finding out how reputable a company is. Several factors are taken into consideration before issuing a rating. If your insurance company has a low AM Best rating, you may be better served finding a new insurance company.

2. Is the insurance company licensed to sell insurance? This may seem like a silly question, but between 2000 and 2002, the Department of Labor and several State Department of Insurance agencies found that 144 companies were selling insurance without being licensed. In the end, over $252 million in claims went unpaid, thanks to these fraudulent companies.

Many companies may try to claim that they are exempt from licensing requirements, but only legitimate labor unions and large corporations are exempt from this rule. If you are dealing with a small company who is claiming that they do not need to be licensed, be wary.

3. Is the company a legitimate health insurance company? Do a Dun and Bradstreet search, or check with your local better business bureau. Many scammers will attempt to make their company "sound" legitimate, any may even try to pass themselves off as a labor union, such as the Association of Automotive Dealers and Mechanics. Even though this name sounds very official, there is no such organization.

You can also utilize the Internet to perform a search on a company that you are unsure of. Chances are, if someone else has been burned by the company, you will be able to find more information before getting stuck with a fraudulent company. You can also research company names, addresses and other information, right from your own computer.

4. Is the offer too good to be true? It's an old cliché, but in this instance, it is very appropriate. If an offer sounds to good to be true, such as unbelievable low monthly premiums with an extremely comprehensive coverage plan, it most likely is. Don't get taken in by a smooth talker who will not be able to follow up on their promises.

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