Junk Health Insurance
It might seem to be health insurance, if you don’t look too closely, and most people don’t. The premiums are surprisingly affordable. Many unemployed people, service industry workers, and others are taken-in by fast-talking telemarketers to sign up.
Vague, generic-sounding names
Fixed-benefit indemnity and discount card plans are often sold under generic-sounding names like USHealth Group, Health Care One, and Allied Health Benefits. When in doubt, check with your state’s insurance department or the agency that regulates insurance companies in your state, such as the State Corporation Commission, Bureau of Insurance, in the state of Virginia.
A required membership in an association you’ve never heard of
Reputable associations, such as business associations or professional groups, can and do arrange for major medical insurance for their members. However, the “association” you’re asked to join as a condition of buying a junk plan may exist mainly to sell you insurance, not for any other reason, and a significant portion of your monthly payment may be going to the association, not toward your actual policy benefits.
Actual health insurance companies can continue to turn away people with pre-existing conditions for individual plans until 2014.
A bargain-basement premium
There are no bargains in health insurance. A plan generous enough to cover the policyholder’s medical needs has to collect enough money to do that. The only safe way to lower your premium is to get a plan with a higher deductible.
“Not major medical”
If you see that phrase, the policy is not comprehensive health insurance.
Discounts of “up to” a certain amount
An actual insurance coverage policy often pays a substantial percentage of your bill, often 80 percent. Marketers will toss around percentage terms to make you think that’s what you’re getting with a discount card. You’re not.
Junk marketers know consumers hate deductibles, so this promise goes up front. They don’t tell you that their maximum payout tops out at only a few thousand dollars.
It’s marketed as “Obamacare”
Many are still unsure about the provisions of the health reform law. Marketers take advantage of that by using pictures of the American flag or the White House to suggest their plans are the “affordable care” promised by the new law. Those come into effect in 2014.
Avoid pitfalls when buying insurance on your own
Don’t shop from a search engine
If you Google “affordable health insurance,” you’ll see sites that promise instant quotes. Stay away from them. It’s impossible to tell which ones are legitimate, and you run the risk of getting a call from a telemarketer pushing junk insurance.
Look up real plans at Healthcare.gov
On this federal website you can search for all legitimate licensed health plans sold to individuals in your state, but you can’t buy a plan directly from the site.
Consult a licensed independent broker
A broker can handle plans from multiple reputable carriers; walk you through the plan options and pricing, and may be able to find you coverage even if you have certain pre-existing conditions. Your auto and homeowners insurance broker might also offer health insurance, and ask friends and relatives for recommendations.
Check with your state insurance department
Most state insurance department websites have a guide that explains which major medical plans are licensed by the state, and 26 states now have federally funded consumer assistance programs. In Virginia, you can check licensees at the Department of Professional and Occupation Regulation or visit Healthcare.gov and search “consumer health.”.
Make sure everything’s covered
Before health reform goes into effect in 2014, insurers can sell plans that don’t cover some basic medical services. Many plans don’t cover prescription drugs, or cover only generics. (Generics are a great way to save money, but some costly drugs come only in branded versions).
Find out whether your group plan is a mini-med
The government requires all mini-meds with waivers to include a disclaimer. Example: “Your health coverage … does not meet the minimum standards required by the Affordable Care Act.”
Know your COBRA rights
If you leave your job and your workplace has 20 or more employees, the federal COBRA law entitles you and your dependents to stay on your group plan for up to 18 months (or more in certain situations) so long as you pay the full premium yourself, which can be costly. To learn more about COBRA’s provisions, which can be complex, go to the Department of Labor’s website, at www.dol.gov, and type “Cobra” into the search box. Many states have “mini-COBRA” laws protecting employees of smaller companies.