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Several States Pushing Stop-loss Changes To Discourage Self-funding

04/11/13

  04:38:19 pm, by MedBen5   , 178 words,  
Categories: News, Health Plan Management

Several States Pushing Stop-loss Changes To Discourage Self-funding

In an effort to keep smaller businesses from funding health care benefits for their employees, four states – California, Minnesota, Utah and Rhode Island – have introduced legislature that would limit stop-loss coverage for self-insured plans, Thompson Information Services recently reported.

The Utah bill, which has already passed both Houses and been sent to the governor for approval, would require that stop-loss insurers cover incurred and unpaid claims if a small employer plan terminates – an unprecedented requirement. Several proposals would also raise minimum specific deductibles above the standard $20,000 seen in most enacted laws.

Because ERISA rules forbid states to regulate self-funded plans, changing the stop-loss rules enables states to regulate indirectly, notes Mike Ferguson, chief operating officer of the Self-Insurance Institute of America. And doing so, he believes, will leave some businesses with no choice but to enter into state-run health insurance exchanges – which need healthy individuals to function properly.

“The common denominator [of proposals like these] is an effort try to push as many individuals and small businesses into health-reform exchanges” as possible, Ferguson said.

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