Health Insurance Fraud and the Self-Employed

What to do if your insurance provider doesn't honor your policy

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The Kristy Law Firm

Seal Beach, CA

One of the biggest difficulties for the self-employed and budding entrepreneurs is securing reliable and affordable health insurance coverage. Paying the inflated premiums for being a single policy holder is taxing but a financially responsible sacrifice – but what if you've faithfully paid your premiums only to file a claim and then find that treatment is now being denied? The self-employed are routinely one of the biggest victims of health insurance fraud.

When shopping for health insurance most consumers look for the most competitive bargains which, can now be easily found online. Others find their health insurance through non-profit groups geared towards the self-employed. But complaints have recently risen surrounding the practices of two major health insurance companies who specialize in single policy plans. Lured in by seductive premiums and aggressive sales reps, consumers are wrongly assured that they'll be covered in the event of an emergency or long-term hospitalization, like those associated with cancer.

Chris, an insurance broker in Colorado looked in to the chemotherapy benefits of a $400/month family plan at a leading Insurance Company- one of the nation's largest individual policy insurance providers. What he found was the chemotherapy benefit (which came at an additional cost) only covered up to $7,500 of treatment- millions less than other major health insurance companies despite having only a marginal $40 discount in monthly premiums. Industry trends show that a single year of chemo can cost up to $111,000, blowing through the meager policy limits. The health insurance plan didn't even cover injuries sustained during an accident, which came at an additional cost. Costs for chemotherapy and accident coverage were included in the plans offered by major providers, with limits millions of dollars higher than the single-plan insurer offered through their policy add-ons.

James Kristy, a Los Angeles attorney that specializes in bad faith insurance practices, cautions consumers when purchasing individual plans. Many of his clients opt to have a sales representative fill out the patient intake form- only to be told when they go to file a claim that they are denied. The insurer then claims the client had misrepresented their health despite having not filled out their own application. This practice is known as post-claim underwriting, and is illegal in many states. Be weary if the sales representatives tries to promise things like "adequate" coverage with their bare bones policy. It could leave you with tens of thousands in unexpected hospital bills.

If you're buying insurance on your own, keep these things in mind:

  • Ask for the written version of your policy limits, and be sure to ask about any questions you may have

  • Ask for the maximum you can be charged for out-of-pocket expenses

  • Ask about their rates for expensive treatments like chemo and hospitalization. What will be covered and to what amount?

  • Are prescription drug costs covered? Many policies do NOT automatically include the costs of pharmaceuticals

  • Compare coverage to other, major carriers to see if you're getting a good deal

If you were told that you would be covered for a serious illness and were not- you may have the ability to sue the company for bad faith insurance practices. The same applies if you were given a loosely worded policy or were encouraged to take an insufficient policy by the sales representative. If there is any ambiguity in your contract or verbal agreement, the case usually defaults to the policy holder's favor and your insurer will be forced to honor your claim. Even if you can't afford a lawyer at this time most insurance lawyers will waive all fees unless they win your case. If you believe your insurance company is wrongfully denying your claim or misled you in any way, take advantages of free consultations in your area to see if you have a case.

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