Stop-loss war flares in New York state

Stop-loss insurance is to a self-insured plan what reinsurance is to an insurance company. Many sponsors of self-insured plans use stop-loss insurance, or insurance that caps plan benefits obligations, to manage risk. 

Promoters of self-insured health plans say many plan sponsors go that route because they like to take an active role in managing health benefits. Critics of the self-insured plan industry say some sponsors use that approach to avoid some of the rules that apply to fully insured plans.

The Patient Protection and Affordable Care Act (PPACA) exempts self-insured plans from some PPACA benefits mandates, such as a requirement that PPACA-compliant insured major medical plans cover a standard essential health benefits package.

Some state regulators, federal regulators and other policymakers have questioned whether small-employer access to self-insurance could weaken PPACA rules that apply to insured group health plans, by encouraging employers with younger, healthy enrollees to abandon insured plans and flee to self-funding.

See also: Stop-loss draft warns of coverage twists