NSBA Comments on Stop Loss Insurance

July 10, 2012

NSBA has provided comments to the Departments of Labor, Health and Human Services (HHS), and the Treasury regarding the use of stop loss insurance by companies that have self-insurance health plans.

Self-insured plans play an important role in the American health care system. Most large employers self-insure.  But small firms, particularly those with 25 or more employees, are increasingly taking advantage of the significant savings that can be had by self-insuring for employee health care expenses using third-party administrators and stop-loss insurance.  If health care costs continue to climb, as expected, it is likely more small firms will familiarize themselves with this option and adopt it.

State statutes or regulations arbitrarily setting allowable attachment points with the purpose of foreclosing the self-insurance option to small firms and forcing them into the conventional group health insurance market will raise the cost to small employers, reducing the likelihood that they will offer insurance to employees, increasing employee cost-sharing and placing them at a competitive disadvantage compared to large firms.  It will also reduce the competitive pressure on health insurers to offer the lowest possible premiums.

Federal regulators are obviously considering taking steps to limit the availability of stop loss insurance to small firms.

To read NSBA’s comments click here. NSBA Stop Loss Insurance Comments