Neb. DOI Says 30,000 Covered by Possibly Fraudulent Health Plans

Citing a report from Robert Wood Johnson Foundation, the Nebraska Department of Insurance stated that an estimated 30,145 Nebraskans were found to be covered by self-insured Multiple Employer Welfare Arrangements. As a percentage of Nebraska’s population, that number places the state among the top few states in terms of individuals enrolled in illegal plans, the department said.

There are many types of multiple employer arrangements, such as professional trade associations, chamber of commerce plans, health insurance purchasing groups and purchasing trusts. The arrangements are often sold to small businesses and self-employed people. The report, authored by Mila Kofman, Eliza Bangit, and Kevin Lucia, indicated that illegal entities selling coverage, primarily through MEWAs, left 200,000 policyholders with over $252 million in unpaid medical bills nationwide between 2000 and 2002.

MEWAs can be a legitimate health-care arrangement when they are either fully insured or properly registered with the respective state’s insurance department. All MEWAs are also required to register with the U.S. Department of Labor. The fact that a MEWA is registered with the U.S. Department of Labor, however, does not ensure that it will be fully insured since both insured and self-insured entities must register.

The Nebraska department said the report should be cause for concern to individuals covered by illegal plans. Among other things, the report, submitted to the National Association of Insurance Commissioners, indicates: “The safety net for consumers covered by self-insured MEWAs is not as strong as the one for consumers with traditional insurance … MEWAs have been used as a way to sell phony health insurance—collecting premiums and not paying claims.”

Topics Fraud