EDITOR’S NOTE: IS STOP LOSS COVER HEALTH INSURANCE? OR IS IT AN INDEMNITY POLICY THAT COVERS THE PLAN SPONSOR? DO BOTH L&H AND CASUALTY CARRIERS WRITE STOP LOSS?
A bill was amended this week in the California State Legislature in way that would effectively take away the ability
of smaller employers in that state to operate self-insured group health plans by restricting access to stop-loss insurance.
Sponsored by Senator Kevin De
Leon, SB 1431 now prohibits the sale of stop-loss policies to
employers with fewer than 50 employees that does any of the following:
- Contains a specific attachment point that is lower than $95,000;
- Contains an aggregate attachment point that is lower than the greater of
one of the following:- $19,000 times the total number of covered employees and dependents;
- 125% of expected claims;
- $95,000
In addition to the attachment point restriction, the legislation contains
language that erroneously refers to stop-loss carriers providing “coverage” to
individual employees and dependents.
Earlier this week, Tom Gilroy, BNA Report, wrote,
- “The Self-Insurance Institute of America Inc. April 13 announced that it has
begun a grassroots lobbying campaign to defeat proposed California legislation
(SB 1431) that would prohibit the sale of certain stop-loss self-insurance
policies to employers with fewer than 50 employees.” - “This would reduce the ability of smaller employers to provide sound,
valuable health plans for their employees under federal [Employee Retirement
Income Security Act] protection,” Mike Ferguson, SIIA’s chief
operating officer said in a statement. “Unnecessarily high attachment points of
stop-loss insurance would reduce the economic benefits of self-insuring and
throw employers back into the expensive traditional insurance marketplace,” he
added. - SIIA believes the $95,000 attachment point is unrealistically high for many
small employers, but the nonprofit trade association also disagrees with the
premise of the state setting a threshold figure, Ferguson told BNA in a phone
interview. It should be a decision made by employers, he said. - “But clearly, $95,000 is impractical for many employers with less than 50
employees,” Ferguson said, adding that it effectively takes the self-insurance
option “off the table” for many such employers.
On April 13, Joanne Wojcik reported in Business
Insurance,
- “This would reduce the ability of smaller employers to provide sound,
valuable health plans for their employees under federal ERISA protection,” said
Mike Ferguson, SIIA’s chief operating officer, in a statement. - In addition to the restrictions on stop-loss attachment points, the
legislation contains language that “erroneously refers to stop-loss insurance
carriers providing ‘coverage’ to individual employees and dependents,” according
to SIIA. “Stop-loss insurance is not health insurance covering individuals, but
reimburses the employee plan for losses above defined levels,” SIIA’s statement
said.
This is the latest development in an increasingly high profile regulatory
initiative prompted by the National Association of Insurance Commissioners,
major health insurance carriers and academics to deter smaller employers from
self-insuring, citing adverse selection concerns.
The Self-Insurance
Institute of America, Inc. (SIIA) continues to effectively rebut such concerns
and educate policy-makers and the media about how self-insured health plans
operate and why such regulatory action is misguided. Consistent with this
ongoing effort, the association has initiated a grassroots lobbying campaign to
defeat the California legislation.
Should you wish to get involved with
this initiative, please contact SIIA Government Relations Director Jay
Fahrer at jfahrer@siia.org, or by phone at
202/463-8161.
About SIIA
The Self-Insurance Institute of America,
Inc. (SIIA) is a dynamic, member-based association dedicated to protecting and
promoting the business interests of companies involved in the
self-insurance/alternative risk transfer (ART) industry, both domestically and
internationally. It is a single association that meets all the information,
educational, networking and legislative/regulatory representation that a company
needs. Call 800/851-7789 and visit www.SIIA.org
California Would Restrict the Ability of Smaller Employers to Self-Insure
MyHealthGuide
Source: Self-Insurance Institute of American (SIIA), 4/12/2012, www.SIIA.org
