Stop-Loss Insurance Under the Microscope of Federal Regulators

The Self-Insurance Institute of America, Inc. (SIIA) today obtained an advance copy of a Request for Information (RFI) notice regarding stop-loss insurance to be officially issued by The Departments of Labor, Treasury and Health and Human Services on May 1. The Departments’ stated intent for the request for comments is to contribute to the Departments’ understanding of the current and emerging market for stop-loss products.

This is the latest development in the heightened focus of federal and state regulators on the self-insurance marketplace, and more specifically the use of stop-loss insurance, which SIIA has been reporting on for the past year.

SIIA is currently reviewing the RFI in detail and will respond accordingly, but provided below is a summary of the content. The complete RFI can be accessed through the members’ only section of the SIIA website by clicking here.

The Departments’ informational request addresses the following topics:

• How common is the use of stop-loss insurance in connection with self-insured arrangements?
• What are common attachment points for stop-loss insurance policies, and what factors are used to determine these attachment points?
• Are employee-level (“specific”) attachment points more common, or are group-level (“aggregate”) attachment points more common?
• How do insurers work with small employers to integrate stop-loss insurance protection with self-insured group health plans?
• For a given attachment point, what percentage of total medical costs incurred by the employees is typically paid for by the employer and what percentage is typically paid for by the stop-loss insurance policy?
• What are the administrative costs to employers related to stop-loss insurance purchased for the employers’ self-insured group health plans?
• Is stop-loss insurance more prevalent in certain industries or sectors?
• What types of entities issue stop-loss insurance? How many small entities issue stop-loss insurance policies?
• Do stop-loss issuers increase fees for groups below a certain size or exclude those groups?
• How do stop-loss insurers evaluate the plans seeking coverage and how is this evaluation reflected in the coverage or premiums offered?
• How do stop-loss insurers evaluate the plans seeking coverage and how is this evaluation reflected in the coverage or premiums offered?
• How do States regulate stop-loss insurance?
• What effect does the availability of stop-loss insurance with various attachment points and other particular provisions have on small employers’ decisions to offer insurance to employees?
• What impact does the use of stop-loss insurance by self-insured small employers have on the small group fully insured market?

Please watch for additional exclusive reporting from SIIA on this developing story. Should you have any questions or comments in the meantime, please contact SIIA Government Relations Director Jay Fahrer at 202/463-8161, or via e-mail at jfahrer@siia.org.