Published: 2009-09-14 22:54:50
Author: Bob Graham | IFA Web News | August 17, 2009
New York officials are examining the marketing practices of companies selling limited benefit health insurance plans in the state, after fining one company $700,000 for violations of state insurance law.
Gov. David A. Patersonsaid the crackdown has begun because people buying these plans are often misled into believing the plans are comprehensive health plans.
The New York State Insurance Department plans to hold public hearings in September to determine if tighter regulations are needed or if the products should be banned in the state. The insurance department already directed insurance companies selling limited benefit plans in New York to provide information about those plans and sales.
The case against American Medical and Life Insurance Co. began after New York officials began receiving complaints about treatments going uncovered, they said.
In addition to paying a fine, AMLI was prohibited from selling its limited benefit products in New York. The insurer also was forced to pull its nationwide television commercial, which state officials said was its main marketing tool.
AMLI is licensed to sell limited benefit plans, along with life and health policies, in 38 states and the District of Columbia, New York officials said.
‘Taking advantage’
In at least one case, an insurance agent provided misleading information to a client about what AMLI’s limited benefit plan would cover, officials said. In another instance, officials said, the agent selling the policy was not licensed to sell policies in New York.
Paterson said the concern over limited benefit plans has increased as the number of state residents without health insurance – an estimated 2.5 million – rises as a result of employers eliminating the jobs of workers whose coverage they provided.
“Unfortunately, some businesses are taking advantage of that need to sell limited health insurance in ways that mislead consumers into believing they are getting full coverage,” Paterson said in a statement. “If they get seriously ill, consumers who buy this product can find themselves with huge bills they are unable to pay. New York will not allow disreputable businesses to take advantage of consumers.”