Consumers Concerned About Junk Insurance

January 12, 2014, 8:00AM. By Heidi Turner

Anaheim, CAWhen patients undergo important medical treatment, they assume that their insurance policy will cover them. So those who undergo lifesaving treatment just to have their California insurance claim denied are usually surprised by the denial. They are also often surprised by the high fees associated with medical care, fees they thought their denied disability insurance would have covered. In some cases, the insurance claim denial is a tactic on the insurance company’s part, but in other cases, the policyholder may have bought a junk insurance policy.

According to Consumer Reports (3/12), junk insurance is insurance with low premiums that often covers very little medical care for the policyholder. In the case of Judith Goss, whose story was covered in the Consumer Reports article, her insurance plan covered only $1,000 a year for outpatient treatment and $2,000 for hospitalization - a problem when she was diagnosed with breast cancer and faced a $30,000 bill.

Such junk insurance has reportedly been sold in California, with regulators shutting down HeathcareOne, a program that offered discount cards for health care. Unfortunately for consumers, when they tried to use the healthcare discount cards, they could not find a provider who would offer the discounts.

Meanwhile, an article in Anchorage Daily News (from McClatchy News Service; 12/19/13) shares the story of Mike Adams, from California, who was about to have quadruple heart bypass surgery when his wife was informed her insurance would not cover the procedure. Of $240,000 in medical bills, Mike and his wife were on the hook for approximately $193,000. Adams told the reporter that he was told his insurance had comprehensive catastrophic coverage, but his “miscellaneous” inpatient charges had a maximum of $18,000 and almost all of his hospital charges were included in that category.

Adams has reportedly filed a lawsuit to cover his unpaid medical costs. His lawsuit alleges improper benefit denial and deceptive marketing. Lawsuits have been filed against other companies selling so-called junk insurance across the US, as well, with plaintiffs alleging they were misled into believing the insurance was comprehensive medical insurance when in fact the coverage was severely limited and left consumers with high medical bills and debt.