Feds Are Sending $700,000 to Victims of Insurance Scheme

More than 400 consumers will soon get a check from the government, but it’s not a tax refund.

It’s money from a government settlement with a company accused of marketing medical discount plans as health insurance, the Federal Trade Commission says.

Consumers were promised no-deductible insurance when they signed up, sometimes for hundreds of dollars a month, but instead got “membership in a ‘benefits association’ consisting of health care-related discounts with little or no value,” the FTC said. According to the agency, people who complained couldn’t get refunds.

The company, United States Benefits LLC, charged its customers enrollment fees of up to $500 and monthly fees ranging from $300 to $1,300, the FTC said.

If disbursed evenly, the more than $700,000 in refund checks being sent out would be for about $1,700 each.

U.S. Benefits was also charged with calling consumers on the Do-Not-Call Registry and making illegal robocalls. It is no longer allowed to sell health care-related goods or services.

The FTC has a lot of advice on avoiding such programs. Here are a few pointers:

• Health insurance generally covers a wide range of services and pays you or your provider for a portion of the bill. Discount programs don’t pay costs, but claim to lower them for certain services at certain providers.
• Marketing that suggests discounts “up to” a certain percentage should rouse suspicion. How often will you usually save that much? After costs related to the plan are factored in, what are you really saving?
• Check with the providers you use to see if they’ve heard of the discount plan and whether it would save you money. Don’t take the word of the people selling it that your providers participate.
• Don’t be pressured into taking a “limited-time offer” or special deal — that’s a classic sales tactic to get your signature (and money) before you get the details.

“Although some medical discount plans provide legitimate discounts, others take people’s money and offer very little in return,” the FTC says. If you’re going to consider one, make sure you research the business first, through your state insurance department, attorney general or local Better Business Bureau, and try your favorite search engine.