FTC secures $100 million in refunds from predatory health insurance company

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The agency says the company misled consumers and charged them junk fees

Anyone who has ever looked for a health insurance provider knows that it’s anything but easy. The Federal Trade Commission (FTC) says some unprincipled companies may be feasting on that confusion by trying to convince consumers that they have an easy, clear-cut answer.

Officials say they have discovered a trick used by one insurer that involves deliberately misleading consumers into signing up for insurance or health products that don't deliver. To make matters worse, canceling those products and services was very difficult once a victim became ensnared. 

On Monday, the FTC announced that its investigation into Benefytt Technologies Inc. has resulted in $100 million in refunds for consumers who were tricked into sham health plans. Officials say the company also charged exorbitant junk fees that continued to plague victims after they requested cancellation. 

“Benefytt pocketed millions selling sham insurance to seniors and other consumers looking for health coverage,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “And we’re holding its executives accountable for this fraud.”

A valid cancellation policy is a must

The FTC says consumers need to beware of companies that conduct these kinds of schemes. It suggests taking the following steps to avoid becoming a victim:

Compare plans, coverage, and prices at a trusted source. Instead of doing a simple internet search, the FTC says consumers should go to something more objective and comprehensive. It suggests HealthCare.gov and state marketplaces as the first stop for information about comprehensive, ACA-compliant health insurance coverage.

Ask for info in writing. Is the plan really comprehensive health insurance? Before signing on the dotted line, ask these three questions: Does it offer the coverage you need? What’s the total cost? Are there caps or limitations to coverage?

Research any company offering health coverage or products. If a consumer finds an insurance provider that has an interesting pitch, take the time to search online for the name of that company plus “complaint,” “scam,” or “fraud.” Read reviews and see what others have to say. Check with your state insurance commissioner’s office to find out if there are complaints. 

Consumers can check out reviews on sites like ConsumerAffairs and the Better Business Bureau (BBB) to read specific reviews about companies. ConsumerAffairs also has an overview of health insurance companies for consumers who want to learn more.

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