The Self-Insurance Protection Act clarifies that stop-loss insurance for self-insured employer health plans is not health insurance and prevents states from unduly restricting employers' ability to obtain this coverage.
Robert Onder
Representative
MO-3
The Self-Insurance Protection Act clarifies that stop-loss insurance, purchased by self-insured employers to protect against large health claims, is not "health insurance coverage" under federal law. It ensures employers can continue to use stop-loss insurance to protect themselves against unexpected health plan claims losses. The bill also preempts state laws that hinder group health plans from insuring against excess or unexpected health plan claims losses.
New Bill Redefines Stop-Loss Insurance, Limits State Oversight for Self-Funded Health Plans
This legislation, the Self-Insurance Protection Act, makes a key change to how federal law views stop-loss insurance – the coverage employers buy when they fund their own employee health plans. Specifically, it amends the Employee Retirement Income Security Act (ERISA) to state that these stop-loss policies are not considered 'health insurance coverage'. The bill also steps in to prevent states from passing laws that would stop these self-funded plans from getting insurance against unexpectedly high claim costs.
Insurance for the Insurer?
So, what's the deal with stop-loss not being 'health insurance'? Think of it this way: regular health insurance pays doctor bills for employees. Stop-loss insurance, as defined here, reimburses the employer or the plan itself when total claims go over a certain, pre-set amount. Section 3 makes this distinction official under federal law. This might sound technical, but it matters because it could change how these policies are regulated, potentially removing them from some rules that apply to traditional health insurance.
States Take a Backseat
The bigger shift comes in Section 4. This part explicitly overrides, or preempts, state laws that try to block self-funded health plans from getting stop-loss insurance. While the bill's findings (Section 2) acknowledge states regulate stop-loss to keep it available, Section 4 limits their power to do so if their laws prevent plans from insuring against high claims. This means potentially less state control over things like minimum attachment points (the threshold where stop-loss kicks in), which some states use to protect smaller employers or ensure market stability. The practical effect could be more uniformity across state lines, but also potentially weaker protections depending on the state.
What This Means for Workplace Plans
If your employer offers a self-funded health plan (common in larger companies, but sometimes used by smaller ones too), this bill aims to protect their ability to manage financial risk using stop-loss insurance. It could offer employers more certainty and potentially lower administrative hurdles by reducing state-level regulatory differences. However, by limiting state authority, there's a potential downside. State regulations often include consumer protections or measures designed to keep stop-loss accessible for smaller employers. Preempting these laws could, in some cases, reduce that oversight, potentially impacting the kind of stop-loss products available or the protections surrounding them.