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MEWA Page

As we all know by the growing number of uninsured, health insurance is becoming more expensive and more difficult to obtain. Many entities, some legal and some not, are stepping forward to try to fill the gap. Unauthorized health insurance has been a big problem in Arkansas in recent years. Hundreds of Arkansas consumers have purchased insurance from companies they thought were legitimate, only to be left with thousands of dollars in unpaid medical claims. One type of entity is called a multiple employer welfare arrangement, or MEWA.

MEWAs are created by federal law, namely ERISA, and they are regulated by the Pension and Welfare Benefits Administration, an arm of the DOL. MEWAs are not insurance – premium monies are paid into a fund, and the claims are paid out of that fund. The problem with MEWAs is maintaining their solvency. If a MEWA goes under, there is no guaranty fund protection to pay claims.

Some MEWAs claim that the state insurance departments have no regulatory over them – they say they are under federal jurisdiction, not state. This is not exactly true. Congress has given the states authority over MEWAs, and the amount of authority we have depends upon the degree to which they are self-funded. In Arkansas, we require MEWAs to register with the Department.

Keep in mind that if something looks too good to be true, it probably is! Always call the Arkansas Insurance Department if you are unsure about an insurance product you are offered. We can check to make sure that both the insurance carrier and producer offering it are properly licensed. Below are some simple warning signs to heed.

WARNING SIGNS!!!

· Claims to be set up pursuant to ERISA and exempt from state regulation

· No obvious joining requirements

· Sold by agents

· Rates that are too good to be true (really)

· Little to no underwriting