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