There are thousands of options when it comes to health care coverage. As Paul Gaznick of Methuen found out, it’s important to choose wisely. A single father, Paul fell on hard times when the economy soured. His welding and fabricating business wasn’t bringing enough in to support him and his 17-year-old son, Justin.
“I wasn’t worried about me, maybe I should have been. He was my main concern. I have had him since he’s been born,” Paul Gaznick said.
Paul was looking for ways to save, so when a fax arrived from a New Jersey-based company called National Alliance, he signed up. It offered a family plan for $300 instead of the $900 he was paying.
He thought it was a great deal, until he actually needed it when his son suffered serious burns.
“They were third degree and the most painful I have experienced in my life, pretty bad,” said Justin Gaznick, who had burns on his hands that required emergency treatment and hospitalization.
The bill came to more than $3,000. The hospital submitted a claim, but Paul says National Alliance refused to pay.
“Of course nobody ever answered half the time, so I would call back and they would give me another number, and this went on and on and on,” Paul Gaznick said.
It turns out the insurance Paul thought he had, wasn’t insurance at all. It was only a medical discount plan, where customers pay a fee to get a list of health care providers who are supposed to offer lower rates.
“The action we brought against them was for unfair and deceptive advertising practices,” says Massachusetts Attorney General Martha Coakley, who is suing National Alliance.
Coakley is charging that National Alliance mislead hundreds of customers like Paul Gaznick. She also enacted new regulations requiring businesses to clearly indicate that medical discount plans are not a substitute for traditional health insurance, and do not qualify under the state’s mandatory insurance law.
“Certainly anyone from outside Massachusetts who is trying to make a quick buck as a result from our healthcare has been deterred from doing that here,” said Coakley.
Coakley is also targeting another growing insurance product: limited health benefit plans or mini-meds. These plans cost less but may provide as little as $1,000 of coverage a year, and there’s no out of pocket maximum.
David Shore is on the board of directors of the Massachusetts Association of Health Underwriters, and cautions consumers to read the fine print.
“I would sit down and identify what it is I am buying, what it is I am getting and making sure what I am paying in premium, in the event that I have some claims, I will get out,” said Shore.
Paul Gaznick has finally paid all of his son’s medical bills and once again has a traditional health insurance policy.
“It’s depressing to tell the truth,” he said.
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When universal health care coverage became law in Massachusetts back in 2006 the state was flooded with new insurance products. After all it's the law and everyone has to have it. Unfortunately, not all the plans appear to have the best interest of the consumer at heart.
According to Massachusetts Attorney General Martha Coakley some "Medical Discount Plans" made consumers think they were buying traditional health insurance when in reality they were only buying a list of providers who agreed to give subscribers discounted rates.
This type of plan may work for certain people who know what they are getting into but it's no substitution for the real coverage. Medical discount plans also do not meet minimum creditable coverage requirements in Massachusetts.
Coakley has also raised questions about certain limited benefit plans that have no out of pocket maximum. If a plan only covers five thousand dollars in medical bills a year and someone racks up fifty thousand they are left with balance.
I fully believe in "buyer beware" but when deceptive tactics are used it's easy to pull one over on someone in the confusing world of health insurance.
Now that universal health care is law on a national scale (mandatory insurance takes place in 2014) what happened in Massachusetts is expected to happen all over the country as people scramble to get insured.
It looks like the new regulations adopted here to crack down on deceptive practices may be needed in 49 other states.
What do you think?