crack down on insurance 'discount plans'

By TIMOTHY INKLEBARGER

The Associated Press



Published: June 17th, 2005

Last Modified: June 17th, 2005 at 04:39 AM





JUNEAU -- As the cost of health insurance increases across the nation, businesses and individuals in Alaska and the Lower 48 are more vulnerable to companies offering bogus discount plans, the state Division of Insurance said Wednesday.





The division has issued cease-and-desist orders for two companies not authorized to sell insurance or insurance discounts to Alaskans, and it is advising residents to be wary of such offers.



Insurance Division Director Linda Hall said questionable companies frequently use terminology from legitimate insurance providers to deceive customers into believing they will receive inexpensive insurance coverage or discounts for medicine or doctor visits.



Some of the companies are not licensed to do business in the state and the discounts often aren't accepted at pharmacies or doctors' offices, Hall said.



"Health insurance has become very expensive and people are searching for a lower-cost alternative," she said. "But when they actually buy this coverage, those providers are not in the network."



She said the bogus deals are often advertised on the Internet, late-night television commercials or by direct mail. "We see them in a variety of ways," she said.



Insurance Division Deputy Director Jeffery Troutt said some Alaskans have been taken advantage of.



"We've had instances of Alaskans' bank accounts being billed even after the consumer said he or she did not want to continue the plan," Troutt said.



Hall recently returned from a meeting of the National Association of Insurance Commissioners in Boston and said the "discount plans" were a major topic of conversation. She said the scams are a bigger problem in states with large populations. She said there are legitimate discount plans underwritten by agencies licensed to sell insurance in the state, but bogus plans are becoming more common.



A study by the U.S. General Accounting Office released in 2004 says 144 phony health insurers sold more than 200,000 policies in the United States between 2000 and 2002. The report states that the policies resulted in approximately $252 million in unpaid claims and it estimates that the numbers have doubled since 2002.



The Insurance Division has issued two cease-and-desist orders since April, requiring the International Association of Benefits of Arlington, Texas, and a Florida-based company called Signature Health Group to stop selling insurance or discount plans to Alaskans.



The orders allege that both companies use language on their Web sites that is often used to describe insurance plans.



Both orders state: "These terms would lead the average consumer to believe that the product being offered is insurance."



Neither company had anyone immediately available for comment after regular business hours.



Hall said confidentiality clauses concerning the orders prevent her from discussing conversations between the state and the companies.



She said their is no timeline for resolution with the two companies, but once the issue is resolved, the cases will be made public.



Hall said consumers should watch out for deals that seem too good to be true, plans that promise to insure anyone, regardless of individual circumstances and supposed agents who become evasive or resist showing a copy of the plan.