Protecting Yourself and Your Employees from Insurance Fraud

How can something that is meant to give you peace of mind bring on such headache and heartache? Health insurance, and the high costs associated with it, has been and will always be a major business expense. Whether it's individual health insurance, group health insurance, HMO's or Private Health Insurance, it's very hard to figure out what will be best for your company financially and give your employees the best coverage.

Health care costs are on the rise. Some insurance scams will try to take advantage of those in search of lower health care costs. Posing as legitimate insurance agents, they collect millions of dollars in insurance premiums only to vanish when claims are filed. And they often take advantage of small businesses.

There are ways to prevent this insurance fraud.

• Make sure your insurer and agent are licensed
• Check an insurers rating with A.M. Best or Moody's
• Ask for referrals or references
• Contact your industry trade association for information

Assistance is out there. The U.S. Department of Labor Employee Benefits Security Administration offers the following tips on how to protect your employees when purchasing health insurance:

• Compare insurance coverage and costs. Always compare the benefits and costs of multiple insurance products. If one product appears to offer similar benefits at a dramatically lower cost, ask questions.
• Confirm that the person offering the product is a licensed insurance agent with a proven record of reliability. Promoters of insurance scams often get unlicensed insurance agents to market their product as a cheaper alternative to traditional insurance. Check out unknown agents with your state insurance department.
• Verify that any unfamiliar company, organization or product is approved by your state insurance department.
• Examine the policy to determine the actual coverage and whether the promised benefits are fully insured by a licensed insurance company. Do not confuse representations about stop-loss coverage with a guarantee of group health benefits. Stop-loss coverage often protects only the issuer, not the insured individuals.
• Request references of employers enrolled with the provider and get information from employers about benefit payment history and claim turn around time.
• Ask about the allocation of premiums charged for commissions, fees and administration expenses. Allocation of a high percentage of the premiums to commissions, fees and administrative expenses may indicate a problem with the product or insurer.
• Contact your Regional Office of the Employee Benefits Security Administration (US Department of Labor) through its toll-free number at 1.866.444.EBSA (3272) to report problems.