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Some unauthorized MEWA promoters eventually pay benefits, but usually only for small claims--and only to lure more employers into doing business with them. More often, these phony operations often shut down without notice, often leaving millions of dollars in unpaid claims behind, a trail of uninsured employees and beneficiaries, and devastated small businesses with no recourse but bankruptcy.
This practice is unfair and deceptive—a third-degree felony or first-degree misdemeanor in Florida, for one—and carries serious penalties for anyone who is caught, tried and convicted.
Too Good to Pass Up?
In spite of all that, these plans can appear to be attractive alternatives to business owners who have given up on buying traditional health insurance. And
opportunity to sell such low-cost plans can be too enticing to pass up for otherwise honest, if unsuspecting insurance agents. But unless they keep their guard up, employers and agents have no way of knowing that these too-good-to-be-true sounding plans are, indeed, bogus.
Heed Warning Signs
Businesses having difficulty obtaining health insurance coverage need to look before leaping at offers that sound a bit too attractive. Legitimate MEWAs can be a cost-effective way to get health care, but to avoid being taken, business owners (and producers) are well advised to get references, get details, and talk to their legal advisors. Ask questions…
• Be skeptical if health insurance coverage that boast unusually low premium rates.
• Promotional materials that seem deliberately to avoid word “insurance” or any insurance terms; or offers to waive printed underwriting guidelines to enroll employers in plan.
• A promoter wants to set up a self-funded plan that is "reinsured" by an unlicensed insurance company; or an insurer has "Ltd." or "S.A." in its name. This usually indicates an offshore company that could spell trouble.
• A plan claims to be exempt from state regulation because of its religious orientation or some other constitutional protection; or plan accepts people without a medical exam and those with serious health conditions that most plans would reject.
• Participating employers have to join an "association" or "union" to obtain coverage; or health care providers complain that their bills have not been paid.
Look Before You Leap
Here’s how to make sure a health plan is being marketed by a licensed insurer:
• Ask for insurer’s name and check benefits booklet to see if it names a licensed insurers.
• Verify claims that a reputable insurance company is backing plan by contacting company.
• Contact insurance department to verify that insurance company backing MEWA is licensed in your state.
If you’ve been approached by someone selling what you suspect is fraudulent health care coverage by someone you think may be an unauthorized insurer--or know an SBO who bought one these plans--report it to state insurance department that has jurisdiction.
Want More? Send questions and comments to w.willard3@knology.net.
Bill Willard has been writing high-impact marketing and sales training for over 30 years—but as Will Rogers put it: "Even if you're on the right track, you'll get run over if you just sit there.” Through interactive, Web-based "Do-While-Learning™" programs, e-Newsletters and straight-talking articles, Bill helps small-business owners and independent professionals get the job done: profitably improving performance.
