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Self-insured plans seek PPACA protection

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The head of the Self-Insurance Institute of America went to Capitol Hill Wednesday to try to keep the Obama administration from applying new limits on medical stop-loss insurance.

SIIA President Michael Ferguson testified at a House Education & Workforce health subcommittee hearing on self-insurance in favor of H.R. 3462, the “Self-Insurance Protection Act” bill. 

The bill would exclude stop-loss insurance from the federal definition of “health insurance coverage” given in the Public Health Services Act, the Employee Retirement Income Security Act and the Internal Revenue Code, Ferguson said.

The bill “would, basically, set some guard rails around the self-insurance marketplace,” to protect it against new federal regulatory restrictions, Ferguson said.

The Patient Protection and Affordable Care Act exempts self-insured plans from some of the new insurance rules that apply to insured group health programs. 

Employers with self-insured plans can use stop-loss programs — insurance for insurance plans — to limit their losses. Some PPACA supporters have argued that very small employers that have not traditionally used stop-loss arrangements might use stop-loss coverage with unusually low “attachment points,” or stop-loss deductibles, as a substitute for fully insured coverage.

Critics argue small employers with the low-limit stop-loss arrangements would really be buying health insurance that’s free from many PPACA rules, not truly self-insuring, low-limit stop-loss.

Maura Calsyn, health policy director at the Center for American Progress, an organization that supports PPACA, cited a Commonwealth Fund analysis indicating that, if state regulators and others fail to tighten stop-loss rules, as many as 60 percent of small businesses could self-insure.

That could leave employers with older, more costly employees in the fully insured market and increase premiums in the small-group fully insured market by about 25 percent, Calsyn said. 

Ferguson argued that self-insurance has many advantages and disadvantages unrelated to PPACA, and that many of the PPACA insurance rules that are relevant to self-insured plans apply to them.

Self-insured plans need not comply with the same rating rules, because the assumption is that employers will naturally keep rates as low as possible, but they must provide the new PPACA summaries of benefits and coverage, provide many preventive services with no cost-sharing, meet external appeals standards, and eliminate annual and lifetime benefits limits, Ferguson said.

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