A proposal to raise specific attachment points in a stop-loss model act to a level that proponents of self-funding say would restrict smaller firms’ ability to self-insure health benefits was delayed after an Aug. 11 debate hosted by the National Association of Insurance Commissioner’s ERISA working group. The working group cited the need to study the proposal further.
The Self-Insurance Institute of America believes the proposal — which would triple specific stop-loss attachment points from $20,000 to $60,000 — is designed to discourage self-funding, and create an environment that will funnel more workers working for small employers into the insurance exchanges created under the health reform law.
After the proposed revisions to the model stop-loss act were drafted in early July, the NAIC received public comments decrying the proposal from SIIA, America’s Health Insurance Plans, BCBS, Illinois Chamber of Commerce, Heartland Actuarial Consulting, CIGNA, HCC Life Insurance Co., the American Insurance Association and consumer representatives including Families USA, Consumers Union and the Service Employees International Union.
NAIC models are not laws, so they are not binding on plans or jurisdictions. However, states do base their own laws and regulations on NAIC models.
The proposed revisions to the model would triple the minimum specific attachment point to $60,000. The minimum aggregate attachment point would: (1) nearly quadruple to $15,000 times the number of group members; (2) increase 10 percentage points to 130 percent of expected claims; or (3) triple to $60,000 (whichever is higher).
NAIC working group members tried to reassure the self-insured community by saying that the revision is not designed to prevent firms from self-insuring, and it is not intended to treat stop-loss as direct health insurance. Rather, they said the proposed change was a response to medical inflation and changes in plan designs since 1995.
SIIA argues that NAIC’s reasoning presupposed that the original limit of $20,000 made sense, which it probably did not, given the fact that most states never put the original limit in place.
For additional information about stop-loss insurance, see Thompson’s employee benefits library, including the Employer’s Guide to Self-Insuring Health Benefits.