Are faxed health plans too good to be true?

The lure is cast through unsolicited faxes to New Hampshire businesses, and the bait is seductive. It offers extensive health-care benefits, with little or no restrictions, no exclusions for pre-existing conditions or age, often at a monthly cost of less than $100 per person.

The flyers are faxed to local small businesses and residents by out-of-state marketers who apparently view Granite State audiences – plagued by health insurance rates that are among the five highest in the nation – as a ripe target.

The New Hampshire Insurance Department has warned consumers in press releases, e-news bulletins and letters to chambers of commerce that they use extreme caution when dealing with the sellers of such low-cost health plans.

“It has come to our attention that scam operators may be soliciting small businesses, via fax and other means, to purchase what appear to be health insurance plans for employees,” Insurance Commissioner Roger Sevigny wrote in a September letter to New Hampshire chambers of commerce. “These scams market their ‘premiums’ with a price range from $49.95 to $129.99 per employee per month. Our investigations indicate that many of these offers are outright scams, and others are soliciting the purchase of discount cards for medical services. Frequently they do not deliver the level of discount or service that the purchaser thinks they will provide.”

According to Kathleen Belanger, director of the Insurance Department’s consumer services division, such offers are a prime case of “buyer beware.” If the products and prices seem too good to be true, Belanger said, they probably are. “Insurance companies have to be licensed to do business in New Hampshire by the Insurance Department,” Belanger said. “And every insurance policy offered here has to be approved by the department as well. If they say they’re ‘federally approved,’ that doesn’t mean a thing. They need state approval. Residents should always contact us before they give anyone any money, their Social Security numbers or information that can access bank or credit accounts.”

Belanger said some of the language used in the faxed advertising materials and by marketers is deceptive.

For instance, she said, the marketers use the term “health plan” instead of health insurance, she said, and really only offer discounts with health-care providers, such as doctors, pharmacies and hospitals. But, she said, when these providers are called, many say they’ve never heard of the health plan. At other times, what’s marketed as a 60 percent discount often turns out to be a much smaller discount.

Discount skepticism

Of the dozen or so offers being broadcast to New Hampshire businesses by fax, three were researched for this article, both directly and with the help of health insurance expert Ray White, president of Cornerstone Benefit and Retirement Group and chairman of the state’s chapter of the Association of Health Insurance Advisors.

Of the three plans – all of which are based in Texas — two are discount programs. One, PS Family Health Care, offers a cost of $59.93 per month for family coverage. The other, AAA Medical Care, offers family coverage for $89.95 a month.

According to the marketing information, the plans offer “up to 60 percent” discounts within the network of health-care providers for those who joined.

Another offer examined by White was one from CareStar Health Benefits, which quoted a $250 monthly premium for one individual over 50 years of age. It offered both a discount program and “a basic limited benefit medical insurance policy.” The limits included a daily hospital allowance of $1,000 per day for 365 days for covered sickness or accidents, $2,000 for intensive care unit stays up to 30 days per calendar year $75 per doctor’s visit up to five per year, and $7,000 for surgical procedures per calendar year.

“The obvious danger of scheduled plans is that every promised benefit has a cap on it,” said White. “Once people exceed the caps, they are on their own. For example, the simplest outpatient surgical procedure can exceed $7,000 these days.”

White visited the Web site of the two discount plans researched for the article and came away unimpressed.

He said the discount programs are “greatly overpriced.”

“Many discount programs are given away for free by joining such associations as AARP, AAA and certain credit card programs,” he said. “Even the ones people pay for, such as the Merck-Medco program I belong to, are only around $25 per year.”

In addition, White said, the discounts of up to 60 percent seem too high to be the standard. Discounts usually range more often in the 25 percent range, he said.

As for the plan offering both discounts and limited, or scheduled insurance, once again White expressed skepticism that it was worth its $250 monthly premium. White said this “scheduled” type of insurance plan is reminiscent of 1950s or 1960s insurance products. Today, he said, major medical policies are the norm in the industry, since they keep up with inflation.

In its warnings, the state Insurance Department suggested strongly that before obtaining insurance from a suspicious or questionable health plan, businesses and consumers confirm that the company is licensed to do business in the state. Questions about health plans can be directed to the New Hampshire Insurance Department at 271-2261.

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