State insurance regulators want to keep small, self-insured employers from using stop-loss plans with very low attachment points to escape from many Patient Protection and Affordable Care Act (PPACA) requirements.
See also: Stop-loss draft warns of coverage twists
The 4th U.S. Circuit Court of Appeals ruled in 1997 that the Employee Retirement Income Security Act (ERISA) prevents states from using stop-loss rules to impose mandates on group health plans protected by ERISA.
Now the Employee Benefits Security Administration (EBSA), an arm of the U.S. Labor Department, is trying to keep backers of stop-loss plans with very low attachment points from using the 1997 decision, American Medical Security Inc. vs. Bartlett, to ward off state efforts to impose new limits on use of stop-loss arrangements.
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EBSA officials explain why the Labor Department believes that states can set and increase minimum attachment points for stop-loss plans in a new batch of guidance, Technical Release Number 2014-01.
In theory, if the backers of the low-attachment-point stop-loss plans could use American Medical Security vs. Bartlett to ward off new stop-loss rules, maybe they could use similar arguments to ward off other state regulator efforts to reconcile PPACA implementation with ERISA.
For more about the EBSA officials’ arguments, read on.
1. The 4th Circuit looked the interaction of ERISA and state stop-loss rules long before PPACA came to life.
Self-insured employers use stop-loss arrangements to protect themselves against catastrophic losses. Stop-loss benefits kick in when an employee’s covered claims exceed a specific attachment point, or deductible.
Regulators normally assume that a self-insured group health plan is governed by ERISA. The drafters of ERISA have tried to help large employers and multi-state employers minimize the hassles of dealing with differences in state health insurance rules by exempting self-insured group health plans from state health insurance mandates.