The U.S. Department of Labor's Employee Benefits Security Administration is proposing two rules as part of the Affordable Care Act to protect small businesses and workers who have health benefits through multiple-employer welfare arrangements.
Often, MEWAs have been used by con artists and criminals to deceive consumers, making it difficult for them to pay medical claims. As MEWAs become bankrupt, consumers could be left with high unpaid medical bills. Employers or employee organizations that paid premiums or contributed to MEWAs could also be majorly impacted.
The proposed rules would require MEWAs to follow enhanced reporting requirements to ensure employers, workers and their dependents would not be unexpectedly cut off from health care services. The DOL's enforcement authority would also be increased, allowing it to protect participants in MEWAs and shut down MEWAs participating in fraud or other similar activities.
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"Too many MEWAs are taking advantage of good employers who want to make health insurance available to their workers, and too many hardworking Americans have suffered," says Secretary of Labor Hilda L. Solis. "These proposed rules under the Affordable Care Act will crack down on those who want to use MEWAs to defraud American families."
MEWAs have been known to exploit legal gaps to dodge state insurance regulations, including the requirement to sustain adequate funding and proper reserves to pay health care claims of workers and their dependents, the DOL maintains. To address these gaps, the Affordable Care Act includes provisions that state MEWAs must register with the DOL before operating in a state. This would help the DOL track MEWAs when they move between states and identify their principals, providing the DOL with information regarding possibly fraudulent MEWAs.
The rules would also give the secretary of labor the ability to issue a cease and desist order when fraud appears to be an issue or an arrangement is causing immediate danger to the public's safety or welfare. The secretary of labor could take control of assets from a MEWA when probable cause suggests the plan is financially hazardous.
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