| Insurance fraud costs consumers-businesses | | | | claiming to be insurance companies, and the |
| included--an additional $1,500 per year in | | | | long-term affect this has on public |
| increased premiums. In fact, it can inflate | | | | confidence in state regulation of the |
| premiums by as much as 30 percent -- National | | | | insurance business. |
| Insurance Crime Bureau | | | | |
| | | | Some unauthorized MEWA promoters eventually |
| Small-business owners often have trouble | | | | pay benefits, but usually only for small |
| obtaining affordable health insurance | | | | claims--and only to lure more employers into |
| coverage for themselves and their employees. | | | | doing business with them. More often, these |
| Where SBOs are in need, dishonest predators | | | | phony operations often shut down without |
| will invariably come out of the woodwork to | | | | notice, often leaving millions of dollars in |
| take unfair advantage, which is one reason | | | | unpaid claims behind, a trail of uninsured |
| why health insurance fraud is a growing | | | | employees and beneficiaries, and devastated |
| problem in this country. | | | | small businesses with no recourse but |
| | | | bankruptcy. |
| Illegal Health Insurance Schemes | | | | |
| | | | This practice is unfair and deceptive-a |
| Health insurance fraud usually involves group | | | | third-degree felony or first-degree |
| health plans sold to employers for their | | | | misdemeanor in Florida, for one-and carries |
| employees. | | | | serious penalties for anyone who is caught, |
| | | | tried and convicted. |
| Posing as legitimate-sounding but phony | | | | |
| unions or trade groups, or falsely claiming | | | | Too Good to Pass Up? |
| the backing of big insurers, fraudulent | | | | |
| insurers prey on employers who are badly in | | | | In spite of all that, these plans can appear |
| need of health insurance by, for example, | | | | to be attractive alternatives to business |
| offering low-cost health care coverage-as | | | | owners who have given up on buying |
| much as 50% or more below the going rate. | | | | traditional health insurance. And the |
| Some even say they'll issue coverage | | | | opportunity to sell such low-cost plans can |
| regardless of health conditions, and with | | | | be too enticing to pass up for otherwise |
| little or no underwriting. | | | | honest, if unsuspecting insurance agents. But |
| | | | unless they keep their guard up, employers |
| Companies and individuals behind these | | | | and agents have no way of knowing that these |
| schemes are seldom licensed in the states in | | | | too-good-to-be-true sounding plans are, |
| which they do business, and they operate by | | | | indeed, bogus. |
| recruiting unwary local agents to sell these | | | | |
| fraudulent products to trusting clients. By | | | | Heed the Warning Signs |
| putting out false information, undercutting | | | | |
| rates and competing unfairly with licensed | | | | Businesses having difficulty obtaining health |
| carriers, unauthorized insurance scams are | | | | insurance coverage need to look before |
| bilking their customers, and constitute a | | | | leaping at offers that sound a bit too |
| serious financial hazard to the general | | | | attractive. Legitimate MEWAs can be a |
| public. | | | | cost-effective way to get health care, but to |
| | | | avoid being taken, business owners (and |
| Here's the set up... | | | | producers) are well advised to get |
| | | | references, get details, and talk to their |
| Legitimate v. Illegitimate "MEWAs" | | | | legal advisors. Ask questions... |
| | | | |
| Under federal law, self-insured or fully | | | | - Be skeptical if health insurance coverage |
| insured "Multiple Employer Welfare | | | | that boast unusually low premium rates. |
| Arrangements"--MEWAs-are plans created by two | | | | |
| or more employers to furnish employee | | | | - Promotional materials that seem |
| benefits, such as health insurance. However, | | | | deliberately to avoid the word "insurance" or |
| unscrupulous entrepreneurs have found MEWAs | | | | any insurance terms; or offers to waive |
| to be a handy way to market worthless health | | | | printed underwriting guidelines to enroll |
| care benefits to employers for their | | | | employers in the plan. |
| employees. Here's how... | | | | |
| | | | - A promoter wants to set up a self-funded |
| While legitimate MEWAs permit individual | | | | plan that is "reinsured" by an unlicensed |
| employers to self-insure health coverage for | | | | insurance company; or an insurer has "Ltd." |
| their own employees, any plan providing | | | | or "S.A." in its name. This usually indicates |
| coverage to more than one unrelated employer, | | | | an offshore company that could spell trouble. |
| must be licensed by the state. Yet dishonest | | | | |
| promoters present MEWAs to employers as | | | | - A plan claims to be exempt from state |
| employee benefit plans covered by the | | | | regulation because of its religious |
| Employee Retirement Income Security Act | | | | orientation or some other constitutional |
| (ERISA), which (they say) exempts them from | | | | protection; or the plan accepts people |
| expensive state licensure, reserve, and other | | | | without a medical exam and those with serious |
| regulatory requirements and allows them to | | | | health conditions that most plans would |
| offer health care and other coverage at such | | | | reject. |
| low rates. | | | | |
| | | | - Participating employers have to join an |
| It just ain't so, and states cannot allow | | | | "association" or "union" to obtain coverage; |
| health care coverage to become a con game | | | | or health care providers complain that their |
| played on the unsuspecting by the | | | | bills have not been paid. |
| unscrupulous. Yet many of these phony | | | | |
| insurers are domiciled outside the United | | | | Look Before You Leap |
| States, further complicating the false | | | | |
| information illegitimate MEWA promoters give | | | | Here's how to make sure a health plan is |
| employers, and their almost inevitable | | | | being marketed by a licensed insurer: |
| failure to pay claims. | | | | |
| | | | - Ask for the insurer's name and check the |
| Other Causes for Concern | | | | benefits booklet to see if it names a |
| | | | licensed insurers. |
| The primary legal issue involving | | | | |
| unauthorized insurers is the erroneous claim | | | | - Verify claims that a reputable insurance |
| that they're free from state insurance | | | | company is backing the plan by contacting the |
| regulation, but other issues are cause for | | | | company. |
| concern. These include: | | | | |
| | | | - Contact the insurance department to verify |
| - Inadequate financial backing, and the lack | | | | that the insurance company backing the MEWA |
| of a federal guaranty fund covering unpaid | | | | is licensed in your state. |
| claims. | | | | |
| | | | If you've been approached by someone selling |
| - Financial impact on the businesses that | | | | what you suspect is fraudulent health care |
| have fallen for this fraudulent scheme, and | | | | coverage by someone you think may be an |
| the future insurability of MEWA-covered | | | | unauthorized insurer--or know an SBO who |
| employee. | | | | bought one these plans--report it to the |
| | | | state insurance department that has |
| - Widespread illegal activity by promoters | | | | jurisdiction. |