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HEALTH PLANS: Legal cons abound in health insurance

(Hat tip to Don McCanne). Apparently being a scummy insurance company and selling not-quite-fraudulent policies to dumb consumers is all fine and dandy—or at least legal. This is not the first or last we’ve head of this type of thing—a company called Mega Life and Health selling a cut rate policy via commission salesmen to unsuspecting punters. When something really bad happens the punter discovers that the policy is worth basically squat, and they owe $200K plus. The judge says this is America and you should have read the fine print. We all know that the best cons are the legal ones.

There’s a related category of insurers who pay out on small claims but dissapear completely when enough big ones come in. Jon Cohn’s soon to be published book will blow the lid of that bunch (I hope) so I won’t say much about them. But essentially these are all on a sliding scale from California Blue Cross cancelling coverage after the fact, to Golden Rule selling their underwritten products, to the con artists and outright fraudsters. And given the collapsing state of the employer insurance market, and the growth in desperation from people like the couple in this article, I guess it’s only a matter of time before these insurers become a bigger and bigger piece of the market and someone like United HealthGroup buys them.

And if Active Health Management is over on the Yin side of the health insurance world, these shysters are out there on the Yang end. There is a possible solution to the whole thing, but if the responsible heads in the insurer world won’t push for serious reform of their own industry, these kinds of stories will make a government run system much more likely. I suspect I’ll be saying “I told you so” in 2016 or thereabouts

CODA: I missed this at the time, but the (now fortunately dead) Shadegg bill would have aloowed the shysters at Mega and their ilk to do this everywhere, as PBS NOW reported. See the excellent transcript.

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Cheryl's OfficeEx Mega AgentHappy To SellHappy DogHonest Abe Recent comment authors
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Cheryl's Office
Guest

After many years of managing large organizations in the corporate world I started my own small business five years ago. I have struggled to offer a solid health care plan for my employees. We have had steady growth over the years, but not the cost of health care has grown even faster. Do you know of any states that offer a subsidized small business health care plan like Arkansas?

Cheryl's Office
Guest

After many years of managing large organizations in the corporate world I started my own small business five years ago. I have struggled to offer a solid health care plan for my employees. We have had steady growth over the years, but not the cost of health care has grown even faster. Do you know of any states that offer a subsidized small business health care plan like Arkansas?

Ex Mega Agent
Guest
Ex Mega Agent

I was a top producer for the NASE/Mega Life and Health for several years before the ether wore off. The trips were great–it was exciting being part of the team, and I made a six figure income. Like ALL Mega Agents, this was my first health insurance sales gig (shouldn’t that have been a red flag?). Over time, like all Mega Agents, I found that we were offering watered down, inferior health insurance policies that paid very little if any claims. Never a maximum out-of-pocket maximum (check your brochures for that specific terminology–you won’t find it), high deductibles, high co-insurance,… Read more »

Happy To Sell
Guest
Happy To Sell

I am a Mega agent and am happy that I am. So many times there are so many people that are driven by the negative news or just by anything that can be sensationalized by the media. How often do you hear about the good news? Rarely ever. I hear people bashing Mega and Health Markets about the plans they bought or what they think the company stands for. Why do you never hear anyone ever speak of the hundreds of thousands of dollars that Health Markets donates to charities and food pantries across the U.S.? Why do you never… Read more »

Happy Dog
Guest
Happy Dog

Honest Abe…you are somewhat correct. However, the client shouldn’t need to sit down and go through the schedule page, they should already understand it. Mega / Mid-West agents are trained to ‘not’ leave a benefits guide. Why? I’m sure you can come up with your trained answer. But, in truth, it’s because the people buying the policy might read it. That would severly hurt sales. Quick question for all of you Mega / Mid-West agents: If your company is so darn awesome, then how come there aren’t flocks of ‘licensed’ agents running out to sell your products? UGA only goes… Read more »

Honest Abe
Guest
Honest Abe

I also work for Mega and Midwest. These are affordable options for people who need some coverage for the over inflated health care costs here in the US. The policies do not promise to cover anything at 100% and the problem is people buy them and never sit down to read the book when they receive it. The schedule page which is the easiest part of the book to read, clearly lists the maximums that are paid for each type of service. People would not buy a car or house without looking at it or reading the financial terms so… Read more »

Chris
Guest
Chris

I am an independent agent who represents Mega and Midwest. I’m a fairly new insurance agent and got into the business because injuries have made it impossible to stay in my normal trade. I would hate for someone to sell me something under false pretenses and would not be able to live with myself doing it to someone else. I’ve researched the Mega and Midwest plans and honestly cannot find a lot of room for those companies to get out of paying what they say they will. The Mega plan for instance is a high or low deductible plan and… Read more »

Nic
Guest
Nic

I have a Mega Health sales person coming over to my house “again” to re-discuss a Mega Health Plan which I just cannot seem to understand. I’m no expert on healthcare insurance and do not find it easy to shop for self employed healthcare. Some things that were explained to me by this Mega sales person, again and again, just do not make sense! The more I think about it, in the back of my head, I do not trust the plan and feel uneasy about it. The basic book they use to inform about thier plans just reads weird.… Read more »

Florida Health Insurance
Guest

The PBS feature is really an eye opener. Folks, be careful out there. Buy from a broker/independent agent. They would NEVER put you with such a plan.

anne
Guest
anne

What about the signature plan basic medical surgical expense policy offerred by Mega? Is that any better? What are its limitations?

G. Leo DuMouchel
Guest
G. Leo DuMouchel

Mega Life sells mini med plans–indemnity policies which pay scheduled amounts for procedures and hospital stays. There are no networks. They sell the policies primarily through associations–some of which they have conceived. The sales people generally tell prospects that that the scheduled amounts are not too far off actual charges–say $350 a day for hospital stay, $400 for a specific surgical procedure. In actuality, the insurance covers only a small fraction of the charges, particularly in the absence of network discounts. Most prospects would be better off negotiating with the providers than paying premium with these policies. These mini med… Read more »

Jack E. Lohman
Guest

Wow. I’m reminded of the simplicity of a Medicare-for-all system, which of course is not perfect and must be contained.
But now we have thousands of for-profit health care plans and rip-offs that the public must also contend with. When are we going to wake up?

sbd
Guest
sbd

Watch the PBS’ NOW Show on Junk Health Care, “Payment Due,” Featuring Dana Christensen and FTCR Advocates “CHRISTENSEN: My husband needed a couple of surgeries and one surgery, his lung surgery, when we went to be admitted into the hospital, surgery was scheduled, the admittance office told us it was the worst policy they’d ever seen, that that policy was so poor, we had to come up with $8,000 just to be admitted into the hospital.” “BRANCACCIO: They paid that eight thousand dollars themselves, but other bills started piling up. It turns out, their insurance was not covering a major… Read more »

John Fembup
Guest
John Fembup

Matt, I think you’re right. I also think your “I told you so” will not be the last “I told you so.”