Cents and Sensibility

Some getting nasty surprise on insurance

Staff WriterFebruary 28, 2010 

As if having to pay higher health insurance premiums each year isn't bad enough, now workers have another worry: companies that drop their health insurance coverage and don't bother to tell employees.

It's a practice that's on the rise, says Kristin Milam with the state Department of Insurance. State law requires that companies give their workers 45 days notice if they're going to drop coverage. Milam says that employees of businesses that don't follow the law often find out their coverage has lapsed when they go to the doctor's office.

A lot of small business owners are hurting right now, and those that have managed to keep group coverage for their workers even as health costs have escalated should be commended. But I can also understand that some businesses can no longer afford to do so. I can even buy that some business owners might not understand the law, but there is such a thing as common decency. Can you imagine having a chronic illness or being pregnant, handing over your insurance card, only to have the receptionist hand it back and tell you your policy has been terminated?

Milam says that when the department gets such a complaint, investigators give the employer a chance to reinstate the insurance and cover the back premiums so there's no gap in coverage. If they don't, the state pursues a case against the business. One high-profile example came last fall when the CEO of Pace Airlines, Charles Rodgers, was charged with terminating health insurance premiums for his 337 employees without warning.

The department also will work with employees, walking them through their options.

Milam says that in many cases, the insurance company that offered the group insurance will set up employees with an individual plan. Employees also can shop for an individual plan. Those with a pre-existing or chronic condition can turn to the state's high-risk insurance pool.

I imagine quite a few employees also will be shopping for a new employer.

Careful what you believe

Unfortunately, there are other ways people are being hurt when it comes to health costs.

Every disaster - hurricanes, earthquakes, tsunamis - brings out scammers who either prey on the victims or take advantage of those who are trying to help.

For the past 18 months or so, the disaster known as the economy has brought out its fair share of louts, cads and downright jerks who promise jobs, quick fixes to debt, and ways to save your home or lower your health care costs.

These scoundrels aren't new, but people are more vulnerable now. Noelle Talley, with the Attorney General's Office, said it best: "People are being less skeptical. They want to believe." Of course, that makes them easy targets.

Two scams to watch out for: discount health cards or plans and nonexistent health plans, which the Department of Insurance also calls unauthorized insurance.

Some insurance carriers, as well as associations and some employers, offer discount cards as a service to their members. These offer discounts on services at various health care providers that have agreed to honor the plans.

That there are legit ones, unfortunately, just makes it easier for people to be scammed.

Discount cards are not the same as insurance, are not licensed by the state and come with fewer protections. Let me repeat that: A discount card is not insurance. Even if the card is legit, you should not drop your insurance coverage, and whatever you do, don't get one unless you're sure your doctor or pharmacy accepts it.

The Department of Insurance's consumer services division has on its Web site a check list of warning signs. These include: high-pressure marketing of "one-time offers," asking for large upfront fees, claims of extravagant savings. Bogus health insurance companies use the same strategies. They promise greatly reduced rates, take your premiums and then close up shop.

You'd think it wouldn't need to be said, but I'll say it: Don't buy insurance from a company that sends you spam e-mail or advertises on a poster stuck to a telephone poll.

The state can help

If you've been a victim or if you've been subject to come-ons but haven't succumbed, let the Department of Insurance know. The Attorney General's Office also wants to know and can refer a case to the Insurance Department if it thinks it's better suited to DOI's investigators, Talley said. Last year, the AG's office received 25 complaints about discount health plans.

Call the Department of Insurance help line or go to its Web site to fill out a complaint form (800-546-5664 or www.ncdoi.com).

You can also use the site - or the helpful agents on the other end of the line - to find out if a company is licensed by the state. Those same folks can also help you understand your health insurance coverage.

mary.cornatzer@newsobserver.com or 919-829-4755

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