SB 1431 Legislative Summary:

SB 1431 would prohibit the sale of stop-loss policies to employers with fewer than 50 employees that does any of the following:

  • Contains a specific attachment point that is lower than $95,000;
  • Contains an aggregate attachment point that is lower than the greater of one of the following:
    • $19,000 times the total number of covered employees and dependents;
    • 120% of expected claims;
    • $95,000

SIIA’s Concerns:

It is very disconcerting that this legislation would severely limit healthcare options for small businesses. With these restrictions on stop-loss insurance to small groups in place, almost no small business would, or responsibly should, self-insure their employee health plan.

In the wake of the enactment the PPACA’s mandated State Insurance Exchanges, CA is likely being used as a testing ground by the NAIC to implement similar restrictions in other States around the nation. Additionally, once laws such as this are in place, it is highly-probable that thresholds such as group size and minimum attachment points could be raised.