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***CONSUMER ALERT***
TEXAS * FLORIDA * LOUISIANA * COLORADO * ARKANSAS
(and consumers in 43 other states)

April 8, 2002

DO YOU HAVE HEALTH INSURANCE THROUGH AMERICAN BENEFIT PLANS, NATIONAL ASSOCIATION FOR/OF WORKING AMERICANS (NAWA), OR UNITED EMPLOYERS VOLUNTARY EMPLOYEE BENEFICIARY ASSOCIATION (UEVEBA)?

You may also be affected if you are covered by one of the following associations:

• American Association of Agriculture, Forestry, and Fishing Workers
• American Association of Transportation, Communication, Electrical, Gas, and Sanitary Workers
• American Association of Wholesale Trade Workers
• American Association of Manufacturer Workers
• American Association of Service Workers
• American Association of Construction Workers
• American Association of Professional Workers

*******

American Benefit Plans (a.k.a. NAWA and UEVEBA) is an unlicensed Multiple Employer Welfare Arrangement (MEWA) selling health insurance coverage in 48 states, often through professional associations.  MEWAs are sometimes (not always) unlicensed, illegal entities that sell coverage to small businesses and self-employed individuals.

The government has recently shut down this company for selling unlicensed insurance coverage, collecting premiums and not paying medical claims. A state court in Texas has authorized the  Insurance Commissioner of the State of Texas to take over American Benefit Plans' operations.  A Special Deputy Receiver appointed by the Insurance Department is overseeing the liquidation.

American Benefit Plans covered over 31,000 people in the United States, including nearly 9,000 people in Texas, over 13,000 people in Florida, around 2,000 people in Colorado, and thousands more in 45 other states. 

WHO WILL PAY MEDICAL CLAIMS THAT SHOULD HAVE BEEN PAID BY AMERICAN BENEFIT PLANS?

The Special Deputy Receiver is seizing assets such as bank accounts and other property of American Benefit Plans both in Texas and in other states.  After all assets are collected, the Receiver will use these funds to pay outstanding medical bills owed by American Benefit Plans to providers and patients.  Currently, there are millions of dollars of unpaid medical bills for covered benefits that should have been paid by American Benefit Plans.  Until assets are collected, it is difficult to project how much of the outstanding medical claims will be paid.  However, in the past with similar entities, there were not enough assets to pay claims fully.

CAN MY DOCTOR GO AFTER ME TO PAY UNPAID MEDICAL BILLS?

The court did not prohibit providers from seeking to collect money from patients covered by American Benefit Plans.  However, the Special Deputy Receiver is asking providers to wait until all assets are found and applied toward outstanding claims.  The Receiver expects to find enough assets to pay at least a portion of outstanding medical bills.  However, there will not be enough assets to cover medical bills fully.  

WILL I BE TREATED FAIRLY EVEN THOUGH I DO NOT LIVE IN TEXAS AND IT'S A TEXAS STATE COURT AND A TEXAS RECEIVER HANDLING THE LIQUIDATION OF AMERICAN BENEFIT PLANS? 

Yes. The Texas Insurance Department and the Special Deputy Receiver will treat all individuals covered by American Benefit Plans equally, without regard to state of residency. Texas residents will not be given preference.  Available assets will be divided equally to pay millions of dollars of unpaid medical bills.

HAS AMERICAN BENEFIT PLANS COVERAGE BEEN TERMINATED?

According to the Special Deputy Receiver, American Benefit Plans ceased operations on March 6, 2002.  However, the termination date of your coverage may be later than March 6^th .  If you paid your March premium, then your last day of coverage may be March 31, 2002.  A state or federal court will determine the termination date.  As of April 8, 2002 this determination has not been made.  You need not wait to receive the official notice of termination of coverage to look for other coverage, and probably should seek to find other coverage as soon as possible.  In the past with entities similar to American Benefit Plans, medical claims were not paid.

In addition to the Texas Insurance Commissioner and the State of Texas, other states including Colorado, Arkansas, and Louisiana have also taken action against American Benefit Plans.

If you live in Colorado, contact the Colorado Division of Insurance at 303-894-7490 or 800-930-3745 for information about termination of coverage.   The Colorado Division of Insurance ordered this illegal entity to stop selling policies effective February 13, 2002. 

If you live in Arkansas, the Insurance Department ordered this entity to stop operating illegally.  American Benefit Plans coverage ceased on March 31, 2002.  For more information, contact the Insurance Department at 800-852-5494 and ask for Tim Sanders or Mark Lippiatt.

If you live in Louisiana, the Department of Insurance ordered American Benefit Plans to stop selling coverage effective February 25, 2002.  For more information call the Insurance Department at 225-342-2480.

If you live in Florida, contact the Department of Insurance at 800-342-2762 for information about recent administrative actions by the Commissioner against American Benefit Plans.

WHAT OPTIONS DO I HAVE AFTER LOSING COVERAGE THROUGH AMERICAN BENEFIT PLANS?

Federal eligibility/HIPAA eligibility

You may have several options depending on your individual circumstance. Federal and state law guarantee access to health insurance coverage to people who lost their group health plan coverage and meet specific criteria. This is called "federal eligibility" or being "federally-eligible."

If you are federally-eligible, then regardless of your health and without any medical underwriting, you are entitled to buy an individual health insurance policy from an insurance company selling individual health insurance policies or to enroll in a state HIPAA program.

To qualify as a federally eligible individual:

• you must have 18 months of prior creditable coverage without a significant break of 63 or more continuous days;
• your last coverage must have been under a group health plan;
• you cannot be eligible for Medicaid or Medicare; and
• you have exhausted COBRA or similar state continuation requirement.

In the case of American Benefit Plans, the requirement to exhaust COBRA would not apply to you if your employer stopped offering group coverage when American Benefit Plans was shut down.

So if you meet these requirements, to exercise your federal and state rights you must apply for new coverage within 63 days of losing the coverage you had with American Benefit Plans.

30-day special enrollment rights under a spouse's group health plan

If you are married and your spouse's employer offers health coverage, then you and your spouse may have a right to enroll in your spouse's health plan regardless of your health status. If you and your spouse initially declined to enroll in your spouse's plan because both of you had American Benefit Plans coverage, your spouse's employer must give your spouse an opportunity to enroll. Also, if your spouse's employer offers coverage for dependents, then you (and your children) must be allowed to enroll as a dependent.

To enroll you must notify your spouse's employer within 30 days of losing your American Benefit Plans health insurance coverage.

Additionally, if your spouse was previously enrolled but you were not because you had coverage through American Benefit Plans, your spouse's employer must give you an opportunity to enroll as long as coverage for dependents is available and you notify the employer within 30 days of losing your other coverage.

When you enroll through this special enrollment period, you are not considered a late enrollee. Late enrollees may have to wait until the next open enrollment and could be subject to an 18-months preexisting condition exclusion period.

In addition to federal eligibility and special enrollment rights, you may have other options depending on the rules in the state where you live. For more information about HIPAA federal eligibility and specific rules in your state, see "A Consumer's Guide to Getting and Keeping Health Insurance" for your state at www.healthinsuranceinfo.net (on this web site).

I APPLIED FOR HIPAA COVERAGE AND WAS TOLD THAT I DO NOT QUALIFY BECAUSE AMERICAN BENEFIT PLANS COVERAGE IS NOT CONSIDERED CREDITABLE COVERAGE. IS AMERICAN BENEFIT PLANS COVERAGE CREDITABLE COVERAGE?

Yes. "Creditable coverage" under federal law includes group health plan coverage and other health insurance coverage. If your employer offered health benefits through American Benefit Plans, such job-based coverage is considered coverage through a group health plan and therefore creditable coverage.

Furthermore, if you were covered by American Benefit Plans but the coverage was not through your employer, e.g., through a professional association, your coverage is considered creditable coverage (but not necessarily group coverage). The federal government has defined creditable coverage to include health insurance coverage offered by a company "that is required to be licensed to engage in the business of insurance…." (29 C.F.R. § 2590.701-2 (2001); 26 C.F.R. §54.9801-2T (2001); 45 C.F.R. § 144.103 (2001)) American Benefit Plans should have obtained a license from a state to engage in the business of insurance.  Therefore, the coverage you had through American Benefit Plans counts as creditable coverage because it is coverage offered by a company that is required to be licensed.

The fact that American Benefit Plans health insurance qualifies as creditable coverage helps you in several ways.

If your policy with American Benefit Plans was through your employer, then the type of coverage you had is considered group health plan coverage. That means that your most recent coverage is group health plan coverage and if you meet federal eligibility requirements (discussed above), you will have a right to buy an individual health insurance policy or to access health coverage through a state HIPAA program.

Even if your policy with American Benefit Plans was not through your employer, having creditable coverage helps you if you join a new group health plan that does not cover preexisting health conditions. As long as you do not have a significant break in coverage, 63 or more days without health insurance coverage, you will be given credit for the coverage you had through American Benefit Plans to reduce a preexisting condition exclusion period under your new group health plan.

HOW DO I PROVE THAT I HAD HEALTH INSURANCE THROUGH AMERICAN BENEFIT PLANS?

Insurers and employers are required to issue certificates of creditable coverage so you can prove your coverage history and protect your rights. Whether you are joining a new group health plan, buying coverage on your own, or applying to your state's high-risk pool, it helps to have a certificate of creditable coverage.

The Receiver for American Benefit Plans is seeking legal approval to issue HIPAA certificates.  Once approval is granted, a certificate will be sent to individuals covered by American Benefit Plans. The certificate of creditable coverage will show the type of creditable coverage you had (group or non-group) and the length of time you were covered (including the termination date of your coverage with American Benefit Plans).  As of April 8, 2002, the Receiver has not yet issued any certificates.

You can also ask your employer for a certificate of creditable coverage if the coverage you had through American Benefit Plans was job-based.

Remember that you do not need a certificate of creditable coverage to demonstrate that you had prior coverage. If you have old medical cards, pay stubs that show withholdings for health coverage, medical bills that have been paid by American Benefit Plans, or other evidence that you were covered by American Benefit Plans, your new group health plan, individual health insurance policy, or a state HIPAA program must accept evidence of prior coverage if a certificate is not available. If you do not have this documentation, you can also write a letter attesting to having coverage through American Benefit Plans.

MY EMPLOYER IS LOOKING TO BUY NEW HEALTH INSURANCE FOR OUR EMPLOYEES AND THEIR FAMILIES BUT IT'S TAKING A WHILE TO FIND NEW COVERAGE. WHAT SHOULD I DO?

Many employers are trying to buy new health insurance coverage for their employees. If it takes your employer 63 or more days to buy a new health insurance policy from another company, you will have a significant break in coverage, which among other repercussions affects your federal eligibility (see above discussion) in the future. To avoid experiencing a significant break in coverage and to avoid being uninsured while waiting for your employer to buy another policy, you may want to exercise your rights as a "HIPAA eligible individual" now. If you are not federally eligible, you may still have rights under your state law. If you are healthy, you could try to buy an individual health insurance policy but be prepared to answer detailed questions about your past medical history or to undergo a physical exam.

For more information about your state's laws see "A Consumer's Guide to Getting and Keeping Health Insurance" for your state at www.healthinsuranceinfo.net (on this website) or contact your state insurance department.

I AM A SMALL BUSINESS OWNER TRYING TO FIND NEW HEALTH INSURANCE FOR MY EMPLOYEES. SOME OF MY EMPLOYEES HAVE HEALTH PROBLEMS. ARE INSURANCE COMPANIES REQUIRED TO SELL COVERAGE TO MY GROUP?

Yes. If you employ at least 2 but not more than 50 people, federal and state law require insurance companies to sell you any small group health policy they sell to other small businesses in your state. You cannot be turned down because some of your employees or their dependents are sick. In some states, the law applies to self-employed individuals also.

For more information about your state's laws on small group health insurance see Chapter 4 of "A Consumer's Guide to Getting and Keeping Health Insurance" for your state at www.healthinsuranceinfo.net (on this website) or contact your state insurance department.

AN INSURANCE AGENT OFFERED TO ENROLL ME IN A NEW PLAN.  SHOULD I ENROLL?

Before you enroll in a new health plan, contact your state insurance department. Ask the insurance department if the health insurance policy you are offered is backed by an insurance company or a MEWA licensed to do business in your state.

Some agents who sold coverage through American Benefit Plans also sold other illegal MEWA coverage.  In fact, many small employers and individuals before enrolling with American Benefit Plans were covered by other unlicensed MEWAs including Employers Mutual LLC.  Employers Mutual LLC collected $15 million in premiums, paid themselves $6 million, and left 22,000 people with millions of dollars in unpaid medical bills and without health insurance.   It was shut down by the federal government (see Consumer Alert on Employers Mutual LLC on this website).  For more information contact the independent fiduciary for Employers Mutual LLC Thomas Dillon at 650-558-8384. 

As premiums for small businesses and self-employed individuals continue to rise, many are looking for alternatives to conventional insurance policies including health insurance through MEWAs.  The first step in protecting yourself against illegal insurance scams is to check with your state insurance department to make sure that the coverage you are buying is offered through a licensed insurance company or a licensed MEWA.

WHERE CAN I GO FOR MORE INFORMATION?