NASE insurance alternatives

January 1, 2010

What's wrong with NACE and Mega Life?

Higher Customer Complaints

The National Association of Self Employed (NASE) has a relationship with The MEGA Life and Health Insurance Company to market health insurance to its members. Unfortunately NACE/Mega Life insurance has a poor consumer reputation and gets more complaints than other insurance companies. In fact, in the years that OnlineAdviser service compiled statistics on consumer complaints received about insurance companies Mega Life tallied more complaints than all other health insurance companies combined. Mega Life's attorney threatened the advisor who first published this observation in 2003, but abandoned the action after the data was independently validated.

Nothing is actually "wrong" with NACE or the Mega Life Insurance Company per se. Rather, we believe that it is primarily a problem of the sales and marketing techniques of these products led to the high number of customer complaints. 

The National Association of Insurance Commissioners (www.NAIC.org) calculates the complaint ratio for Mega Health as being higher than the other comparable insurance companies listed at MedSave.com. The complaint ratio is calculated as a company's U.S. Market Share of complaints compared to the company's U.S. Market Share of premiums. Higher ratio scores can be interpreted as an indication of a problem. For example, the NAIC calculates the median complaint ratio for companies issuing individual health insurance in 2007 as 1.2. Any number larger than 1.2 could be considered "worse than average".  United States Fire Insurance Company has a complaint ratio of .08, Golden Rule is 2.67 and Celtic Insurance is 3.5. Mega Life is 5.18. The 2007 complaint ratio was not unusual for this company. In 2006 Mega Life was 6.56 and in 2005 their complaint ratio was 7.63.

Comments published online

A less scientific but perhaps more understandable measure of consumer dissatisfaction is to do a quick online search. Google "NASE complaints" to find that there are plenty of unhappy customers voicing their opinions and even a Website named "www.NACEsucks.com". Google a few other insurance companies ("Celtic complaints" or "Golden Rule complaints") for comparison to see that there are fewer angry customers venting their complaints in this manner.

Of course ever health insurance company has some customer complaints; this is an inevitable result of the nature of the insurance business. The only significant issue in this context is that Mega Life gets too many customer complaints.

Sales Techniques

Most people who came to NACE for insurance initially responded to an advertisement of "affordable health insurance" and then were assigned to an individual sales agent who was paid by commission only if they sold a policy. Many NACE agents seemed to be part-timers who sold insurance for extra cash rather than established health benefit professionals. We believe this sales system tends to contribute to overzealous representation by the agent and unrealistic expectations of customers.

It is reasonable to note that today's experienced and reliable health insurance professionals do not visit your home to sell insurance across the kitchen table. Nor do they place classified advertisements or mount roadside posters on telephone poles. For one thing, the compensation offered to agents by any of the nation's most reputable health insurance plans would not warrant the cost of a personal sales visit or these creative marketing techniques. This is actually a good thing since more of your premiums are allocated to benefits and less to agent commissions. Secondly, it does not make sense to shop from an agent who offers only one primary health insurance carrier. The best insurance plans come from a wide variety of insurance companies and vary from person to person based on demographics, personal preferences and medical history.

NACE customers tend to have a low level of working knowledge about insurance and health care finances. NACE has fewer customers who would be characterized as insurance-savvy and financially astute. Insurance regulators and business media have used terms like "preying on the unwary" to describe the sales techniques used by these companies.

Since health insurance premium prices are fixed by law, the buyer does not need to price-shop the same product from different vendors or agents - all of the same policies are priced the same regardless of how they are purchased. This means that a smart insurance shopper will focus on the range of policies offered rather than the advertisements of any specific policy. The only thing the buyer needs to learn in the buying process is the differences in benefits between policies that directly control the differences in premium pricing between different policies. This is where the Internet shines; all of the information about cost, benefits, limitations and exclusions is available online. Services like MedSave.com and OnlineAdviser make the comparison on a side-by-side basis even easier.   

Limited Benefit Insurance vs. Major Medical Insurance

Consumer satisfaction ratings for major medical insurance tend to be higher (and complaint ratios lower) for major medical insurance than for limited benefit health insurance. Not surprisingly, the greatest number of complaints are triggered over medical charges that the consumer expected to be covered under the policy but were not covered due to the limitations of the insurance policy.

When there is an option between major medical insurance and limited benefit insurance, it would always make sense to choose the major medical insurance. For most people a major medical insurance with a high deductible is a better value over the long term than a limited benefit policy with attractive "up front" benefits for the same price.  Even a series of short term medical insurance policies provides better protection and ultimately better value than a limited benefit policy over a duration of a few years.

In today's market there are situations where major medical insurance is not an option due to the price or availability. (Major medical insurance is now available by law to all Americans, there is no assurance that each person can find the available insurance nor any assurance that the coverage will be affordable). In those cases limited benefit insurance is better than no health insurance at all. Compare the consumer satisfaction indicators of various policies before enrolling. MedSave.com users have reported highest levels of satisfaction with Core Health Insurance, Basic Health Insurance and Value Benefits. Each of these limited benefit insurance plans has its advantages and disadvantages. Every effort should be made by the insurance company to plainly communicate the limitations of the insurance to minimize the chance of errant expectations of policyholders.  

Reputable Alternatives

Most NACE customers are self-employed, over age 30 and relatively healthy. For this demographic group the best value in reputable health insurance may be Golden Rule Insurance. Like Mega Life, Golden Rule has historically focused on low priced policies and has faced the same issues of consumer complaints from policyholders who did not understand the limitations of their insurance. We suspect that Golden Rule shared some of the same difficulties with questionable sales procedures as discussed with NACE above. In recent years Golden Rule turned that consumer trend around and now boasts impressive customer service results and sharply lower NAIC complaint ratios. The  key to satisfaction and value with Golden Rule is to pick the best plan from among the wide range of health plan choices offered by this insurer. Extensive online resources are available, including a program that helps match the best policy based on preferences entered in a short automated online interview. Golden Rule has been a market leader in Health Savings Accounts and an innovator in consumer-driven health plans over the past decade. Golden Rule Insurance is a UnitedHealthcare company, one of the largest health care providers covering a total of almost 100 million people worldwide.

Another alternative is Celtic Insurance, generally regarded as a coverage for the "rich and famous", this company has some surprisingly affordable policies available throughout the United States. Celtic Insurance focuses exclusively on coverage for individuals and families and does not offer group coverage at all. One major draw is that this insurer uses the well-regarded Private Healthcare Systems Inc. (PHCS) PPO network to negotiate provider discounts. PHCS is considered to be America's premier PPO network by many people.

OnlineAdviser e-mail support can offer independent unbiased help on specific health insurance questions. The independent advisers are not employees or agents of any specific insurance company but rather are experienced benefits professionals compensated on the overall enrollments of many Web sites' users and online enrollment systems regardless of the specific insurance or other benefit plans selected.

Unresolved Complaints

If you feel "stuck" with a NACE policy or are having difficulty settling a dispute, your state insurance department can probably help. Check the listing of state insurance departments for useful consumer information and dispute resolution services.

Based on our experiences and observations, if you have concerns about you insurance then it is better to take action immediately rather than wait and hope that things get better over time. MedSave.com users who report dissatisfaction with insurance rarely become satisfied; rather the level of dissatisfaction almost always increases over time.

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