The U.S. Department of Labor (DOL) is taking steps to crack down on fraud, particularly among multiple-employer welfare arrangements (MEWA), according to the Society for Human Resource Management (SHRM).
The source reports that MEWAs have been used to defraud consumers by scam artists and criminals who manipulate fee structures or simply embezzle the money. As a result, employers and employees seeking coverage have found themselves with unpaid claims. Some MEWAs, while not abused in the same fashion, have failed to acquire and retain the resources needed to cover medical expenses.
The programs are often used by small businesses seeking coverage at a lower cost than traditional healthcare plans. Given the risks, they may be better off using employee benefit consulting services to provide outside expertise.
To deal with the problem, DOL is proposing new rules that increase reporting requirements for MEWAs to better identify the legitimate plans and scams, as well as increasing the agency's enforcement authority so it can shut down fraudulent MEWAs and recover their assets. The programs would need to register with the department before operating in a state, and the Secretary of Labor would be granted the authority to issue cease-and-desist orders or seize assets from a MEWA if the evidence indicates it is fraudulent.
