Ill. AG Warns of Fraud Targeting Uninsured

April 12, 2004

Following reported complaints from Illinois consumers, Attorney General Lisa Madigan announced her office is reviewing allegations that some discount health care plans are targeting uninsured Illinoisans by aggressively advertising plans that at best don’t include all the services promoted and at worst simply do not exist.

Reported problems range from providers no longer participating in a plan, to providers being difficult to access, to plans that literally do not exist beyond the advertisement.

While legitimate plans do exist, other plans reportedly entice customers to sign up by promising discounted fees on doctors, hospitals, prescriptions and other medical services. In fact, the plans may offer none of these.

Madigan said some plans lure consumers and businesses into believing they are purchasing health insurance by using promotional materials with familiar terms such as “benefits” and “pre-existing conditions.” Some advertisements create a sense of urgency by claiming their low monthly rates – ranging from $49 to $89 – are available “for a limited time only.”

“My office has heard from a number of Illinoisans who thought they were insuring themselves as best as they could afford,” Madigan said. “Instead they lost hard-earned dollars on companies that at times were little more than shells. Before signing, consumers should do as much homework as possible to learn what terms they are agreeing to and what they actually will receive.”

In March 2004, a Spanish-speaking Aurora couple reported to Madigan’s office they had purchased, in June 2002, what they thought was health insurance for a monthly fee of $54. The couple subsequently learned that what they purchased was actually a discount health plan that would not pay for health care services. In April 2003, they cancelled the plan only to reportedly learn in October 2003 the plan was still deducting a monthly fee from their bank account.

Madigan’s office received another complaint alleging that a consumer purchased two discount health plans only to find out the cards provided to obtain the advertised reduced rates were not honored. Repeated attempts by the consumer to contact the company have reportedly been unsuccessful.

Madigan’s office has received nine specific complaints regarding discount health plans and has identified approximately 18 questionable plans soliciting consumers in Illinois.

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