Liability And Avoiding Plans/Companies That Put You At Risk

Agents, as we move closer to the AEP and OEP seasons, we want to remind you of your liability.  Texas Department of Insurance is reminding all insurance agents and third party administrators (TPAs) that their licenses may be at risk and that they may be held responsible for assisting a company that is engaging in the unauthorized business of insurance. Recently, many insurance-like products are being promoted to consumers by those who are unlicensed and unauthorized to sell. Whether it be self-funded health plans under ERISA or health share ministries, promoting these items as legitimate insurance plans can be dangerous. If caught selling these types of plans, you can be held responsible.

What Do These Unauthorized Plans Look Like?

To avoid mistaking these companies as legitimate health insurance, TDI advises agents and TPAs to carefully evaluate all new products and companies. These companies gained popularity when Obamacare was first enacted. Although these plans are a cheaper alternative they also come with risk. For instance,  Healthshare Ministries are not required by law to pay claims. Paying monthly to them does not guarantee that your medical bills will be covered. Moreover, several of them sell their membership through insurance agents and use terms similar to insurance terms. This can cause confusion for clients due to the difficulty distinguishing them from true insurance.

Risk Of Selling Unauthorized Plans

If you participate in selling these types of insurance, you might face legal action brought upon by TDI. Whether you knew it was authorized, you could face civil penalties of up to $10,000 for each act of violation. You also have a chance of having your license suspended or even revoked.

Liability Under Chapter 101:

Acts for which TDI may bring an action against an agent or TPA under Chapter 101 include:

  • Taking or receiving an application for the unauthorized insurance product.
  • Receiving or collecting any consideration for the product, including premiums, commissions, membership fees, assessments, or dues.
  • Issuing or delivering a contract for the product.
  • Directly or indirectly acting as an agent for or otherwise representing or assisting in.
  • Soliciting, negotiating, procuring, or effectuating the product or renewal of the product.
  • Disseminating information relating to the product’s coverage or rates.
  • Forwarding an application for the product.
  • Delivering the product policy or contract.
  • Inspecting a risk.
  • Setting a rate.
  • Investigating or adjusting a claim or loss.
  • Transacting a matter after the effectuation of the product that arises out of the product.
  • Representing or assisting the company in any other matter relating to the product.
  • Contracting to provide indemnification or expense reimbursement for medical expenses by direct payment, reimbursement, or otherwise.