There’s a big difference between comprehensive health insurance and medical discount or limited benefit plans. Consumers who bought health coverage through Simple Health Plans LLC and five related companies found that out too late. The FTC has obtained a $195 million judgment against the company in a case it brought in 2018.

Simple Health operated lead generation websites that claimed to provide information about comprehensive health insurance. They portrayed themselves as expert providers of Medicare and Affordable Care Act (ACA) policies. Some sites featured the logos of AARP or carriers such as Blue Cross Blue Shield even though Simple Health had no affiliation with those organizations.

The plans supposedly would cover preexisting medical conditions, prescription drugs, primary and secondary specialty care, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing. One website touted “Health Insurance for Smart People” from “the Nation’s Leading Carriers” at “Low Affordable Premiums” with “Prescription Drug Coverage.”

Company telemarketers often claimed to be licensed insurance agents and said the consumers would be enrolled in a comprehensive “PPO” health insurance plan with no copays and deductibles that was widely accepted by doctors in the consumers’ geographic areas. Enrollment fees were $60 to $175 and monthly payments ranged from $40 to $500.

Tens of thousands of consumers ended up being stuck with substantial medical bills after finding out they had bought a medical discount or limited benefit plan rather than comprehensive medical insurance. A typical Simple Health plan:

• Provided no coverage for preexisting conditions or prescriptions.
• Paid only $50 toward physician visits, which were capped at three per year.
• Covered a maximum of $100 per day for hospitalization.
• Paid a maximum benefit per person, per year, of $3200, and only then if the person was hospitalized for 30 days.

Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, said, “Simple Health preyed on consumers by selling them bogus health care insurance that cost them thousands of dollars for ‘benefits’ that in fact left consumers unprotected. We are pleased the court recognized this blatant bait and switch and ordered the company and its CEO to turn over the money they bilked from consumers.”

The court ordered the companies and the CEO to turn over all of their assets for the FTC to liquidate and provide refunds to consumers, although it’s unlikely anything close to the amount the defendants fraudulently collected will be recouped. They’re banned from marketing, promoting, selling, or offering any healthcare products; and from making misrepresentations in the sale of any product or service. The owner of Simple Health was subsequently sentenced to a long prison term.

This is not the only case the FTC has brought against purveyors of sham health insurance plans. The FTC and BBB offer this advice to consumers shopping for health insurance:

• Compare plans, coverage, and prices at a trusted source. HealthCare.gov and state marketplaces are the first stop for information about ACA-compliant health insurance coverage.
• Research any company offering health coverage or products. Search online using the name of the company plus “complaint,” “scam,” or “fraud.” Read reviews and check with your state insurance commissioner’s office to find out if there are any complaints. Check them out with the BBB.
• Ask for information in writing. Is the plan really comprehensive health insurance?