This is a great day in the health insurance industry! Rarely is an insurance company held liable for improper conduct. The majority of the time the "Big Guy" takes advantage of the "Little Guy" and sadly the "Little Guy" has no recourse. But this is not the case today! After many years of repeated violations of insurance conduct laws the NAIC- (National Association of Insurance Commissioners) has levied one of the largest market conduct fines in insurance history against Mega Life & Health insurance company, Midwest National Life insurance company, a.k.a. Health Markets, formerly known as U.I.C.I. a.ka. NASE - National Association for the Self Employed & Alliance for Affordable Services. The fine is 20 Million Dollars and in my informed opinion, it is not nearly enough and it has come much to late!
Health Markets has been slinging their garbage for many years across the country to many thousands of innocent consumers who had no idea the extreme limitations included with the so called insurance coverage provided by Mega & Midwest. They have consistently offered "schedule plans" which pay out an average of only $100,000 per illness (even though the policy is sold as a plan that covers you to One Million or Two Million lifetime). Their coverage traditionally also has no "stop loss number". This has lead to many innocent consumers suffering catastrophic financial losses.
The lack of a "stop loss number" is a very dangerous policy design. To further explain. The term 80/20 is often used when describing how a health insurance policy works. The typical major medical health insurance policy has an 80/20 of $10,000 "co-insurance" percentage split. This quite simply means that after you have satisfied your calendar year deductible the insurance company will pay 80% ($8,000) and the insured will pay 20% ($2,000) of the first $10,000 in medical bills that you incur. This first $10,000 is known as the "stop loss number". After this brief sharing arrangement is over the insurance company pays 100% up to $5 Million per insured for the rest of that calendar year for in network treatment. Everything starts over again on the first of each subsequent year. This greatly reduces the risk to the insured and it is a standard policy design feature included with most legitimate health insurance policies.
In stark contrast, in the case of the "schedule plans" offered through the two aforementioned companies, the terms "co-insurance" and "stop loss" are very rarely if ever discussed with a prospective insured. This is because they have a direct effect on how much the insured will pay in the event of a worse case scenario. Worse yet, Mega & Midwest have traditionally been offering their policies with No Stop Loss Number. This means that if the bill is One Million Dollars, the consumer would pay 20% of that amount ($200,000) before the insurance company would pay 100%. However, with the $100,000 maximum pay out per illness clause included with their insurance contract, Mega & Midwest would still only be responsible for $100,000 regardless of the size of the bill! What a sweet deal for Mega & Midwest. Arguably the worse part about the coverage they offer is the fact that it costs the same or more than a major medical policy without all of the dangerous limitations included with their schedule plans.
Would you buy a policy like that if it was fully explained to you? Most definitely not, and the NAIC apparently agrees. This is the primary reason why after a 3 year 29 state investigation, Health Markets has finally had to face up to all the fraud they have been responsible for. On May 29th, 2008 they were hit with a $20 Million fine.
0 comments:
Post a Comment