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What happens if your employer fails to pay health insurance premiums?

Workers say they lost insurance retroactively.
Posted at 10:12 PM, May 12, 2021

LAPEER, Mich. (WXYZ) — The Kaiser Family Foundation says half of Americans get their health insurance through their employer. It raises the question, if you get your insurance through work, what happens if your employer fails to pay the insurance bill?

Workers at one local company say there is a massive loophole in the law putting half of all Americans at risk of financial disaster.

People who used to work for Lapeer Industries, a defense contractor that went bankrupt in 2020, have filed a class-action lawsuit in Oakland County Court. Workers suing say they were told not only by the company that health insurance would be taken care of but they were told by their insurer McLaren Health that they had coverage.

“Employees spoke to McLaren and were told you are covered. Now people are having their benefits retroactively denied,” said Paul Matoaka, an attorney representing workers.

When McLaren didn’t receive expected payments from their employer it allegedly retroactively took away coverage. That left workers responsible for medical care they had already received.

“We have to fix this loophole,” said State Rep. Tyrone Carter, (D-District 6).

State Representative Carter says people should have the right to know whether they have health insurance. He is going to look into whether the law needs to be changed to ensure you can do just that.

“This is about protecting families from unnecessary burdens and hardships,” said State Rep. Carter.

7 Action News reached out to McLaren Health and the owners of Lapeer Industries for comment but did not hear back by deadline.

The Department of Labor says your employer is responsible for notifying you if your insurance coverage changes. The department has a team to help people who fear their employer is not providing coverage they are entitled to.

“Individuals who participate in private workplace benefits plans should contact our Benefits Advisors right away with any potential concerns, so that we may clarify further and assist or refer as appropriate,” said Scott Allen, U.S. Department of Labor Regional Director for Public Affairs and Media Relations.

You can contact Department of Labor Benefits Advisors at https://www.dol.gov/agencies/ebsa [dol.gov] or 1-866-444-3272. There is also information on your rights at askebsa.dol.gov.

The state also offers some resources for workers.

“If the employer is making a deduction from wages for health insurance and not sending it to the insurance company, the employee can file a wage claim with Wage and Hour at Michigan.gov/wageclaim. Wage and Hour can pursue the amount deducted but not any medical bills,” said Camara Lewis, Communications Manager for the Michigan Department of Labor and Economic Opportunity.

Lewis says if the employees are concerned about unpaid medical bills, they can contact their own attorney or the Michigan Department of Insurance and Financial Services at https://www.michigan.gov/difs/0,5269,7-303-12902_92612---,00.html.