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Life Health > Health Insurance

Stop-loss war flares in New York state

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Lawmakers in New York state are trying to save midsize employers’ self-insured health plans.

The lawmakers, state Sen. James Seward, R-Oneonta, N.J., and Assemblyman Kevin Cahill, D-Kingston, N.Y., have introduced bills that would let insurers continue to offer administrative services and stop-loss insurance for employers with 51 to 100 employees.

Seward introduced the state Senate version of the bill, S2366. Members of the Senate Insurance Committee approved S2366 by a 19-0 vote Monday.

Cahill introduced the state Assembly version, A01154.

Earlier, when state officials were implementing the Patient Protection and Affordable Care Act (PPACA), they changed the definition of “small group.” In 2016, the current definition could limit access to the stop-loss market to employers with more than 100 employees, according to Seward and Cahill say. 

Seward, a former president of the National Conference of Insurance Legislators (NCOIL), and Cahill, chair of the NCOIL health committee, say lawmakers made the earlier change by mistake.

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


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