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5 Things Health Insurance Companies Don’t Want You to Know

Health insurance companies aren’t in the business of keeping secrets, but some aspects of health coverage aren’t always as clear as consumers would like even for the top life insurance companies. Here are five things health insurance companies may not want you to know:

#1: Out-of-Network Expenses Are Often Denied

Health insurance companies will usually only cover out-of-network costs under special circumstances, such as:

  • An in-network specialist isn’t available locally
  • You receive emergency care from an out-of-network hospital
  • The insurer has given you permission, in writing, to use an out-of-network provider

#2: Some Health Insurance Companies Won’t Cover Therapy

Many health care plans exclude or limit access to mental health services. Depression and bipolar disorder don’t get the same treatment as, say, cancer and heart disease.

You can read this Zander insurance review article explaining how alternative care services like homeopathy, acupuncture and massage therapy are also iffy.

#3: Denied a Claim? Challenge It—You Just Might Win

If you contest a denied claim—and if you fight hard enough—you’ve got a good chance of winning. A 2003 study by the Journal of the American Medical Association found that roughly 50 percent of medical necessity disputes are overturned.

Remember to always send correspondence by mail so there’s a clear paper trail.

#4: Generics Are Often Just as Good

Generic drugs usually work just as well as brand-name drugs, but the price is astronomically different. For a generic drug, the average co-pay is $11; the average for a “fourth-tier” brand-name drug is $89. Always ask your doctor if a generic drug is available.

#5: Individual Health Insurance Is Often Cheaper Than Group Health Insurance

If you’re relatively healthy, individual health insurance probably costs less than group health insurance. Employer-based plans cover employees regardless of health. This, in effect, means you are paying higher premiums due to the unhealthy habits of others.

Health insurance companies offer widely varying premiums. In fact, rates can vary by as much as 50% for similar plans, so it pays to shop around.

Insurance fraud on the rise: How does it affect you?

In hard times, even law-abiding people can be tempted to cheat the insurance system. That’s why it comes as little surprise to industry experts that a record number of potentially fraudulent insurance claims were filed in 2011. “Most people don’t try to cheat the insurance system, but some people can get desperate if they don’t have a job and don’t have money,” says Robert Hunter, director of insurance at the nonprofit Consumer Federation of America.

Questionable claims

The number of questionable insurance claims hit a record level in 2011, rising 9 percent to 100,450 from 91,797 in 2010, according to the National Insurance Crime Bureau. Questionable claims are those that insurance companies, such as those that sell auto and home insurance policies, refer to the nonprofit bureau for closer review based on indicators of possible fraud.

“Insurance fraud adds to the costs people pay for insurance,” bureau spokesman Frank Scafidi says. “It is believed that roughly $30 billion in insurance fraud occurs each year, just in the property and casualty lines. That doesn’t include health and life insurance fraud or any of the burial insurance plans. At some point, that $30 billion gets underwritten by insurance consumers all across America through higher premiums and fees.”

Is fraud overplayed?

Amy Bach, executive director of United Policyholders, a nonprofit consumer advocacy group, contends the insurance industry likes to overplay the significance of insurance fraud as a way of distracting people from a bigger issue – the underpayment of what policyholders expect to be covered in insurance claims.

“While insurance fraud is a bad thing, I don’t think an uptick like this should have a significant impact on consumers,” Bach says.

Mike Barry, a spokesman for the industry-backed Insurance Information Institute, disagrees. He says the National Insurance Crime Bureau report is unfortunate news not only for consumers but insurers.

“Insurers are left with no choice but to pass along these higher costs to consumers in the form of higher premiums,” Barry says. “Insurance fraud is a major concern for insurers, and increasingly for policyholders as well.” Fraud may be committed by various parties involved in insurance transactions. This includes those who those who apply for insurance, hold policies and file claims. The most common types of fraud include:

  • “Padding,” or inflating, actual claims.
  • Misrepresenting facts on an insurance application.
  • Submitting claims for injuries or damages that never occurred, services never provided or equipment never delivered.
  • “Staging” auto accidents.

Fighting fraud

To fight insurance fraud, 42 states and the District of Columbia have set up anti-fraud agencies. In recent years, these agencies have reported increases in fraud referrals, cases opened, convictions and court-ordered restitution. Health, workers’ compensation and auto insurance are the types of insurance most vulnerable to fraud.

The National Insurance Crime Bureau report also highlighted questionable claims regarding faked and exaggerated injuries and “excessive” treatment, noting these categories posted the highest number of referrals in 2017 with 17,581 and 8,485, respectively. The number of faked and exaggerated injuries was up 19 percent from 14,815 in 2017, while “excessive” treatment cases were up 24 percent from 6,870 in 2016.

Other types of fraud also saw large increases from 2010 to 2016, including an 8 percent jump in workers’ comp fraud and a 113 percent increase in inflated medical billing.

Keeping it in perspective

Hunter, the Consumer Federation of America official, says the increase in questionable insurance claims last year is “bad for consumers, but you have to keep that in perspective.”

“The total number of questionable claims is well under 1 percent of all claims,” Hunter says. “Some people will try to pull stuff in a tough economy. You might expect a little bit more. But it’s still not everybody. The insurance companies will use this as one of the list of reasons why they increase rates. They like to create a picture where they are not to blame for rate increases.”