Prevent fraud and avoid being scammed


Don't Be Taken In By Unauthorized Insurance Entities!

Insurance fraud costs consumers-businessesclaiming to be insurance companies, and the
included--an additional $1,500 per year inlong-term affect this has on public
increased premiums. In fact, it can inflateconfidence in state regulation of the
premiums by as much as 30 percent -- Nationalinsurance  business.
Insurance  Crime  Bureau
Some unauthorized MEWA promoters eventually
Small-business owners often have troublepay benefits, but usually only for small
obtaining affordable health insuranceclaims--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 predatorsphony operations often shut down without
will invariably come out of the woodwork tonotice, often leaving millions of dollars in
take unfair advantage, which is one reasonunpaid claims behind, a trail of uninsured
why health insurance fraud is a growingemployees 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 groupthird-degree felony or first-degree
health plans sold to employers for theirmisdemeanor 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 claimingToo  Good  to  Pass  Up?
the backing of big insurers, fraudulent
insurers prey on employers who are badly inIn 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-asowners 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 coverageopportunity to sell such low-cost plans can
regardless of health conditions, and withbe 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 theseand agents have no way of knowing that these
schemes are seldom licensed in the states intoo-good-to-be-true sounding plans are,
which they do business, and they operate byindeed,  bogus.
recruiting unwary local agents to sell these
fraudulent products to trusting clients. ByHeed  the  Warning  Signs
putting out false information, undercutting
rates and competing unfairly with licensedBusinesses having difficulty obtaining health
carriers, unauthorized insurance scams areinsurance coverage need to look before
bilking their customers, and constitute aleaping at offers that sound a bit too
serious financial hazard to the generalattractive. 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 Welfarethat  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 MEWAsany insurance terms; or offers to waive
to be a handy way to market worthless healthprinted underwriting guidelines to enroll
care benefits to employers for theiremployers  in  the  plan.
employees.  Here's  how...
- A promoter wants to set up a self-funded
While legitimate MEWAs permit individualplan that is "reinsured" by an unlicensed
employers to self-insure health coverage forinsurance company; or an insurer has "Ltd."
their own employees, any plan providingor "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 theregulation because of its religious
Employee Retirement Income Security Actorientation or some other constitutional
(ERISA), which (they say) exempts them fromprotection; or the plan accepts people
expensive state licensure, reserve, and otherwithout a medical exam and those with serious
regulatory requirements and allows them tohealth conditions that most plans would
offer health care and other coverage at suchreject.
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 gameor health care providers complain that their
played on the unsuspecting by thebills  have  not  been  paid.
unscrupulous. Yet many of these phony
insurers are domiciled outside the UnitedLook  Before  You  Leap
States, further complicating the false
information illegitimate MEWA promoters giveHere's how to make sure a health plan is
employers, and their almost inevitablebeing  marketed  by  a  licensed  insurer:
failure  to  pay  claims.
- Ask for the insurer's name and check the
Other  Causes  for  Concernbenefits 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 insurancecompany is backing the plan by contacting the
regulation, but other issues are cause forcompany.
concern.  These  include:
- Contact the insurance department to verify
- Inadequate financial backing, and the lackthat the insurance company backing the MEWA
of a federal guaranty fund covering unpaidis  licensed  in  your  state.
claims.
If you've been approached by someone selling
- Financial impact on the businesses thatwhat you suspect is fraudulent health care
have fallen for this fraudulent scheme, andcoverage by someone you think may be an
the future insurability of MEWA-coveredunauthorized insurer--or know an SBO who
employee.bought one these plans--report it to the
state insurance department that has
- Widespread illegal activity by promotersjurisdiction.



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