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