NAII Says Mass. Welfare Lien Proposal Would Disrupt Insurers

The National Association of Independent Insurers announced that a Massachusetts legislative budget proposal, which would require insurers to help the government capture welfare payments to recipients who also receive liability payments, “would have serious implications for insurers doing business in the state.”

Gerald L. Zimmerman, NAII senior counsel, indicated: “Although the industry currently assists the government on collecting child support payments, adding this requirement would create an administrative nightmare,” and adding that “we find the current proposal to be poor public policy.”

The NAII outlined its opposition to Amendment No. 236, in a letter to the Massachusetts House Ways and Means Committee. “Currently, insurers are required to check with state agencies before paying any liability or life insurance claims to determine whether the claimant is required to return public assistance benefits,” Zimmerman wrote. “We are concerned this proposal will cause claim payment delays for claimants affected by this statute and would also add administrative costs.”

He pointed out that in its current form the amendment provides no guidance on the obligation of an insurer if the check determines the claimant owes money to the state. “If an insurer pays a claim and subsequently learns the state was owed money, we are concerned the insurer will still be forced to pay the state.” He added that, “resolving these disputes and making expensive adjustments to administrative systems will add expense to the process and slow down payments to claimants affected by the statute.”

Zimmerman said that the NAII recognized that “Massachusetts is facing severe budgetary shortfalls and legislators may hope that recovering welfare payments will help balance the budget,” but feels that the possibility of obtaining some proceeds from insurers “doesn’t justify the expense and inconvenience involved in setting up this system, and it seems a bit unseemly to put a ‘lien’ on payments due to the poorest of the poor.”