PPACA: Producers Defend Current Stop-Loss Rules

Defenders of the current stop-loss rules contend that low-deductible stop-loss arrangements have helped small employers offer the same kinds of flexible, high-quality, relatively affordable health plans that much larger employers offer.

Christina Goe, the Montana insurance regulator who serves as the chair of the ERISA Working Group, says in a memo that the working group is thinking about updating the stop-loss model, even though few states have adopted it, because many states have used the NAIC minimum stop-loss deductible levels without necessarily adopting the whole model as a law. In some cases, she says, states have used the recommended minimum deductibles in bulletins or in the stop-loss policy form review process.

The working group and others supporting model changes are not trying to put stop-loss insurance out of reach for small employers, Goe says.

"The attachment points in the Stop Loss Insurance Model Act have not been revised since the model was adopted in 1994," Goe says. "The charge before the ERISA Working Group is to revise the attachment points so that they are in keeping with medical inflation and changes in the typical underlying health plan design. This issue has been around since before 1995 and continues to exist today, even if the [PPACA] had not been enacted. The Working Group believes that, as a threshold matter, it is reasonable to update dollar amounts that are over 17 years old."

About 15 benefits brokers and "third party administrators" (TPAs) — benefit plan administrators — have written to the NAIC to ask regulators to leave the stop-loss minimum rules unchanged.

The brokers and TPAs say changing the rules would hurt small employers who are doing their best to offer high-quality health benefits.

"These changes are not in the best interest of the American people," according David O'Shea, a regional sales director in the Alexandria, Va., office of Significa Benefit Services Inc.

Felcia Wilhelm, president of Prairie States Enterprises Inc., Chicago — a TPA — wrote in her capacity as an employer.

"I am a woman employer with 70 employees," Wilhelm says. "We have been self-insured for over 20 years. We did this so that we could offer better benefits at lower cost to our employees than what was available in the fully insured market. There are many stop loss carriers to choose from, allowing us to obtain stop loss insurance and good rates with affordable deductibles. Why would anyone want to change this and force me to fully insure an inferior health plan for my employees? … Please come out in favor of preserving self-funding as a great option for even modestly sized employers."