Benefytt Technologies, a Tampa-based company, will distribute approximately $100 million in refunds to customers who were sold deceptive health insurance plans. The refunds are a result of a settlement reached with the Federal Trade Commission (FTC) following allegations of deceptive practices.
Benefytt Technologies to Issue $100 Million in Refunds for Deceptive Health Insurance Plans
Benefytt Technologies, a Tampa-based company, is set to distribute approximately $100 million in refunds to customers who were sold deceptive health insurance plans. The refunds are a result of a settlement reached with the Federal Trade Commission (FTC) following allegations of deceptive practices.
( Credit to: Tampabay )
The refunds are a significant step towards rectifying the harm caused by Benefytt Technologies’ misleading practices. This article explores the details of the case, the impact on consumers, and the consequences faced by the company.
Deceptive Marketing Tactics
The Federal Trade Commission (FTC) accused Benefytt Technologies and its partners of utilizing deceptive websites, such as ‘Obamacareplans.com,’ to target consumers seeking health insurance plans that complied with the Affordable Care Act (ACA) requirements. The company’s sales agents coerced and misled customers into purchasing subpar plans, despite promising coverage for preexisting conditions and prescription drugs. As a result, policyholders faced significant medical bills for services they believed were covered.
Benefytt Technologies’ deceptive marketing tactics took advantage of consumers’ trust and left them vulnerable to financial hardships. The FTC’s investigation shed light on these practices and led to the issuance of refunds to affected customers.
Undisclosed Additional Products
In addition to deceptive marketing, Benefytt Technologies frequently bundled additional products, such as life and accident insurance and fitness programs, into their health plans. These extra services incurred separate monthly fees that were not adequately disclosed to consumers. Many policyholders were unaware of these additional products and continued to be billed for them even after canceling their health plans.
The trade commission estimated that the company defrauded consumers of hundreds of millions of dollars through these undisclosed additional products. This deceptive practice further exacerbated the financial burden on policyholders.
Settlement and Refunds
Benefytt Technologies, previously known as Health Insurance Innovations, settled the case with the FTC in 2022 without admitting or denying the allegations. As part of the settlement, the company agreed to pay $100 million to facilitate the issuance of refunds to affected customers.
Over 463,000 individuals who paid $1,000 or more to the company between 2017 and 2022 will receive checks. The median refund amount is $141, and recipients are advised to cash their checks within 90 days.
Company Consequences
Aside from the monetary settlement, Benefytt Technologies faced other repercussions. The former CEO, Gavin Southwell, and former vice president of sales, Amy Brady, were banned from marketing and selling healthcare products. Brady was also prohibited from engaging in telemarketing activities.
Furthermore, the company declared bankruptcy, reorganized, and rebranded as Blue Lantern Health in 2021 following the FTC case. This marked a significant downfall for a company that once boasted over $381 million in revenue in 2019.
Conclusion
The deceptive marketing tactics and sale of ‘sham’ health insurance plans by Benefytt Technologies have had severe consequences for both the company and its customers. The issuance of approximately $100 million in refunds is a step towards addressing the harm caused by the company’s misleading practices.
Consumers should exercise caution when purchasing health insurance plans and thoroughly review the terms and conditions to ensure adequate coverage. The case serves as a reminder of the importance of transparency and honesty in the insurance industry.
