State insurance regulators and others are still thinking about whether states, federal agencies, someone else, or no one should put new limits on small employers’ use of stop-loss arrangements.
The Health Actuarial Task Force at the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., has included a copy of a report on the topic by actuaries in the Chicago office of Milliman Inc. in a packet of materials prepared for an upcoming task force meeting.
Frank Horn, chair of one arm of the task force, the Self-Insurance Subgroup, says in a memo that the Milliman stop-loss analysis may support the idea increasing the minimum levels of risk that small employers must keep when using stop-loss coverage.
Employers that self-insure often buy stop-loss insurance — insurance for group health plans — to limit their losses. A stop-loss program might include a “specific attachment point,” or per-employee deductible, and it might also include an “aggregate attachment point,” or whole-plan deductible.
Individual states regulate use of stop-loss insurance within their borders. The NAIC has no control over states’ stop-loss rules, but it has indirect influence over the rules through a Stop-Loss Insurance Model Act that was approved in 1995. Only 3 states — Minnesota, New Hampshire and Vermont — have adopted the Stop-Loss Insurance Model as a whole, and 18 other states have implemented related laws or regulations, according to the Milliman actuaries.
For an employer group with 50 or fewer people in it, the Self-Insurance Subgroup thinks the minimum recommended per-employee deductible should increase to $60,000, from $20,000 today, Horn says.
The subgroup thinks the recommended minimum whole-plan deductible should increase to $15,000 times the number of people in the plan, from $4,000 times the number of people in the plan today, Horn says.
The Employee Retirement Income Security Act (ERISA) has exempted self-insured plans from the state benefits requirements that apply to fully insured group health plans. The Patient Protection and Affordable Care Act of 2010 (PPACA) now exempts self-insured plans from having to meet many of the new PPACA requirements.
Some PPACA watchers have suggested that small employers may try to use self-insured plans and stop-loss programs with low attachment points to avoid having to comply with PPACA.