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Don’t Miss the Most Dynamic Healthcare Industry Event in New England!

On April 4, 2018

Benefest 2018 is less than a month away and I wanted to reach out and let you know about some of the amazing participants we have at the conference this year.  The theme of Benefest 2018 is disruptive innovation and we’re looking at how it's reshaping the entire healthcare industry, from the way employers purchase coverage to the impact of increasing premiums on the economy. 

Carrier panelists will include executives from BlueCross Blue Shield MA, Fallon Health, Harvard Pilgrim Health Plan, Tufts Health Plan, Neighborhood Health Plan, and Aetna. 

Make sure you join us for a series of discussions on the future of the industry! For more details and to register, click here (website).

Additional Details:
The healthcare industry experts and practitioners that MassAHU is showcasing during this one day dynamic program will include:

The data is of the biggest drivers behind wage stagnation and middle class wealth erosion is healthcare. The cost of healthcare is quickly approaching 20 percent of our GDP. We continue to see employee out of pocket shares balloon while premiums increase (which means we are paying more for less). Medical bills account for a staggering number of bankruptcies in the U.S. - with nearly 75 percent of those people having had health insurance. Traditional brokers, showing traditional options, getting paid in traditional ways, are not only failing to solve the problem ... may be facilitating it. In this session, learn about why this is happening in the opening program presented by David Contorno: To Deliver Real Value in this Business - You Have to Become Uncomfortable.

In a world where the healthcare industry is more concerned about how many patients a doctor can see every day, rather than the quality of medicine practiced, we need a change. That change needs to start at the provider level, but it needs to have the insurance industry behind it. Get an introduction to the concept of Direct Primary Care from featured Benefest Speaker, Dr. Jeffrey Gold entitled A Model of Primary Care that is Innovative and Affordable. Learn how making an investment in high-quality primary care along with self-insured plans can reduce cost, improve outcomes, and result in happier employees/employers.

As President Trump approaches his 500th day in office, and we get closer to the 2018 mid-term elections, major changes could still be in store for the employer based health insurance system. States are back in the Court system challenging the constitutionality of the Affordable Care Act, there will soon be new rules governing Association Health Plan, and new players have announced they will be entering the health insurance marketplace. Buckle Your Seats: Preparing Your Clients for A (Potentially) Bumpy Ride Ahead with James Slotnik

Spinning the Web of the Plan Document

On July 7, 2017
By: Kelly Dempsey, Esq.

(No, this isn’t about spiders.)

The date was somewhere around August 25, 1999. The location was my 10th grade biology class. I remember taking in the scenery of a new classroom and looking at all the pictures and quotes my teacher had up on the walls. One in particular caught my eye:

“I know you think you understand what you thought I said, but I’m not sure you realize that what you heard is not what I meant.”

Once your head stops spinning, we can continue…

I’ve since learned this quote is attributed to the former head of the Federal Reserve Board, Alan Greenspan.  The context of this quote is still foreign to me, but I believe it can be applied to just about anything – so let’s apply it to plan documents.  

In general there are several entities involved in the process of administering an ERISA self-funded medical plan document, but ultimately the plan sponsor is responsible for ensuring the terms of the plan document meet the needs of the plan and its members. The plan administrator then has the fiduciary duty to administer the plan in accordance with the terms of the plan document. So when is the last time that you, the plan sponsor, have read the plan document cover to cover?  

Plan documents have to be reviewed and revised for any number of reasons, including regulatory changes – but sometimes plan documents are changed when the plan moves to a different claims administrator (i.e., hires a new TPA to administer claims, or moves from an ASO to a TPA or vice versa). The “rules” each claims administrator sets related to the plan document’s format may vary. Some TPAs will administer the document as-is. Some TPAs prefer to use their own plan document template, which the plan sponsor can either adopt from scratch or conform its existing benefits to.

I’ve written about “gap traps” before, and while this isn’t a really one of those as we typically use the term (which is most often relevant to gaps between a plan document and a stop loss policy), a type of gap arises if a restated document doesn’t mirror the prior plan document. For example, the prior plan document had an illegal acts exclusion that applies for any act that carries with it a potential prison sentence of one year. The restated plan document, however, doesn’t include this specific prison sentence limitation, which means the plan essentially will have to exclude more claims in order to comply with the terms of the plan document (such as, for instance, a DWI, which does not carry with it a sentence of up to one year, but is an illegal act!). While this would comport with the terms of the plan document, it is something for which plan members – and even the plan administrator – may not be prepared.

Another example is a situation where the prior plan contained a medical tourism program that includes many non-U.S. locations, so the plan did not include a foreign travel exclusion. When the two plan documents were “merged” such that the existing document and new format are combined, the new plan document accidentally contained both an international medical tourism program as well as a new exclusion for non-U.S. claims (because foreign travel exclusions are still fairly common). Needless to say, that type of contradiction can cause a slew of problems (including a potential gap with the stop loss policy).

The addition of a new exclusion, or even apparently minor verbiage changes within an existing exclusion (or definition, or benefit, or just about anything else, for that matter), can seem very insignificant, but has the potential for dire consequences if the intent of the plan is not reflected as clearly as possible.   

So, a few questions for employers, TPAs, consultants, brokers, and anyone else involved in plan document drafting:

•    Does the plan document actually say what the plan sponsor wants it to say?
•    Does it clearly outline what is covered?
•    Do the exclusions align with what the plan wants to be excluded?
•    If a plan document has been recently restated, have you confirmed that the terms of the new plan document are the same as the prior plan document?

It’s always best to triple-check these types of things.  Happy reading!

A Call for Defensive Legislation

On May 3, 2017
By: Brady Bizarro, Esq.

On April 5th, the House of Representatives passed the Self-Insurance Protection Act (SIPA; H.R. 1304) by a vote of 400 to 16. This was the third iteration of this bill, originally introduced at the suggestion of the Self-Insurance Institute of America (“SIIA”). This legislation is very important for our industry because it blocks federal efforts to regulate small stop-loss plans as health insurance by excluding the plans from the federal definition of “health insurance coverage.” If you were struggling to think of a federal law which redefines stop-loss as health insurance, that is okay. There is no such federal law on the books. Indeed, there has been no legislative proposal at the federal level to redefine stop-loss insurance in this way. This was defensive legislation, designed to ensure that federal regulators do not try to redefine stop-loss insurance. State legislatures around the country should take notice of this approach before it’s too late.

At the state level, we have already seen numerous efforts (often successful) at redefining stop-loss insurance or placing restrictions on coverage. Why are states pushing this kind of legislation? One development that added fuel to the fire was the U.S. Department of Labor’s Technical Release on November 6, 2014. It expressed the opinion that states should not be concerned that stop-loss regulation restricting policies based on attachment points would be preempted by the Employee Retirement Income Security Act (“ERISA”). Since that time, we have seen efforts to restrict stop-loss coverage in California, the District of Columbia, Maryland, New York, New Mexico, Florida, Delaware, Washington, Connecticut, and Utah.

In states where restrictions have not been put in place, or where the restrictions are not severe, employers and insurers alike should be pushing for defensive legislation to reaffirm that stop-loss insurance is not health insurance.

Pay the Cost to be the Boss!

On April 24, 2017
By: Ron Peck, Esq.

Between Friday and Saturday I was feeling under the weather.  By Easter Sunday, my chest was terribly congested, my nose running, breath wheezing, and more.  My assumption was that on this holiday, I wouldn’t be able to find a provider – and given my breathing issues – I might find myself in the ER.  I contacted my local Urgent Care anyway, and – lo and behold – they were open.  30 minutes later I was being tested for flu, and hooked up to a nebulizer to ease my breathing.  The quality care I received, on this holiday, aside… I want to address the global issue as I see it.  I knew which options were available to me, and made an effort to pursue the option that was best for me AND my employer (as well as our self-funded benefit plan), because we have made efforts to ALIGN THOSE INTERESTS.  I was educated, aware, and incentivized to check the urgent care option before rushing to an emergency room.

Too many employers, that wisely choose to self-fund their health plan, assume that once they pick a claims processor and broker, they are off the hook and some third party will take over.  This dereliction of fiduciary duty saddens me.  Being self-funded means more than funding claims directly.  It means taking ownership over your staff… your team… your second-family (for, indeed, I consider my co-workers to be a second family; who else besides family occupies so much or our time?), and ensuring they understand the options available to them.  Making sure they understand how different choices impact the company, the plan, and their own financial bottom lines needs to be a priority for the employer.

Ask the average American employee if their health plan is self-funded.  They don’t know.  There is a greater than 60% chance they are self-funded, but they will instead quote the name of their network.  Ask how much a visit to the ER costs, compared to their primary care or urgent care, and they will quote the co-pay.

Employers!  Self-funders!  This is a call to action.  Stop passing the buck.  Start explaining how your plan is funded, and take proactive measures to align employee and employer interests.  Information is power.  Furthermore, don’t resort to a high deductible plan – again passing the buck – (this time onto the employee).  How is any employee supposed to “shop around” if they have no access to the cost of care?  As an aside, I think it’s hilarious how we gripe over the ACA, and how “Obama” focused too much on “who” is paying, and not enough on “how much” is being paid… that shifting the burden onto insurance doesn’t solve the issue of cost… and then we turn around and increase deductibles; ignoring the cost and instead shifting the burden.  When we simply pass the buck instead of addressing the cost head-on, we are just as bad as the politicians we complained about!

To that end, transparency is king; regardless of whether the plan is paying dollar number one and incentivizing employee behavior, or the employee is paying the first few thousand dollars via a high deductible.  That’s why I’m excited by organizations like The Free Market Medical Association, and the recent surge in subscription based direct primary care.  By investigating trends like these, educating employees about their plan’s funding mechanism, and actually incentivizing them to behave in a way that benefits them and the plan, we will begin to see real change – just like I did this past Sunday.

U.S. Airways v. McCutchen – Where Are they Now?

On March 29, 2017
By: Chris Aguiar, Esq.

The health benefits industry can feel like a whirlwind, especially for self-funded plans.  We always seem to be running around trying to figure out how to comply with the law, only to have it change and start the cycle all over again.  We are experiencing this as we speak with the Affordable Care Act (a.k.a. Obamacare) and its possible successor, the American Health Care Act.  As a result, we tend to move on from issues more quickly once they seem to be resolved even though perhaps they linger.

Remember McCutchen?  In the subrogation world, U.S. Airways v. McCutchen was a big deal.  It finally answered the question that every benefit plan, TPA, and recovery vendor was fighting over since the beginning of time on their subrogation cases; can a court override the terms of a private, self-funded benefit plan under the purview of ERISA?  U.S. Airways lost the case, but the decision that now clarified and established the law was clear; specific unambiguous plan language rules the day.  Of course, the Montanile decision threw a bit of a curveball into our world, but that’s a blog post for another day. Fast forward almost four years (that’s right, the Supreme Court decision in McCutchen came down in 2013 – can you believe it was already that long ago?); does anyone know what happened to U.S. Airways?  

In addition to what turned out to be the main issue in the McCutchen case, that the plan terms were not good enough for the Third Circuit, there were many more issues to consider when the case was remanded (i.e. sent back) to the lower courts for additional findings.  As it turned out, U.S. Airways utilized BOTH a Summary Plan Description (SPD) and a Plan Document (PD).  That alone was not the kiss of death, but the SPD explicitly provided that the terms in the PD controlled if there was a conflict. Unfortunately for them, there was!  The SPD provided for recovery from McCutchen’s underinsured motorist coverage (UIM), but the PD did not.  Since the PD was the controlling document in that case, U.S. Airways was not entitled to a recovery against the UIM.

So what was the ultimate outcome?  U.S. Airways was entitled to assert its $64,000.00 lien against $10,000.00 in liability coverage rather than against $100,000.00 in UIM coverage.  It is important to know all of the facts and understand all of the factors that might impact your case.  As we saw in U.S. Airways v. McCutchen – language in the SPD and/or PD was deficient and contradictory – and that led to U.S. Airways losing out on recoveries as well as the costs of bringing those actions.  Every case is different, and every entity has its own motivations as to why they engage in litigation, but it is important to make sure you have all your ducks in a row and that you have the tools needed to actually win the fight, or you might get stuck holding the bag.  The McCutchen case helps us in the subrogation world every single day because of what the Supreme Court ultimately held, but the law can change on any given day.  Make sure you are prepared for the whirlwind!

Size Doesn’t Matter- But the Regulators Do

On July 6, 2015

By Adam V. Russo, Esq.

(As published in Thompson Information Services’ Employer’s Guide to Self-Insuring Health Benefits)

What is the perfect size for a self-funded plan?  This is one of my favorite questions and I love to ask it at any conference at which I happen to have the pleasure of attending and speaking.

The answers I receive are pretty funny and actually typical, ranging anywhere from 200 lives to 1,000,000.  Yes, somebody actually stated that the perfect self-funded plan size is 1,000,000 lives.  I almost passed out when he said this as I realized right away that this gentleman is a broker and has clients who place their trust in him.  I started praying for those clients right after that session!  The right answer is surprising to most as it potentially can be just one person.  A self-employed person who happens to have a lot of money and is in great health could easily be self-insured.  It really isn’t the size that matters at all; it is the behavior of the employee population.  That one person can walk into any medical facility and negotiate his or her own bills.  We all know that cash is king!

Think this through…which is the better plan to self-fund?  (This is just a hypothetical, so please do not get upset at this example – I have plenty of friends and family who drive trucks for a living!)  The first plan is the 5,000 employee plan of truck drivers where the average employee is 75-lbs overweight.  The employee population has a major drug addiction issue, loves to drink, smoke, and do some very dangerous activities outside the workplace.  Or would you believe that the plan with 30 yoga instructors who don’t drink, don’t smoke, don’t do drugs, are in better shape than anyone could possibly be in and just overall make everyone else in the country look out of shape?  Who do you think is the better risk for self-funding their benefit plan?  If you are the stop-loss carrier, who would you rather insure?  Exactly.  The size of the employer doesn’t always matter.  The plan demographics, the plan language, the claims data, and potentially the wellness programs are what matter the most.

Making it Happen in Massachusetts

When I look at the self-funded industry as a whole and I attempt to make predictions as to what will occur in the near future, in my opinion, you have to look to Massachusetts as the bellwether state.  What happened in Massachusetts will probably happen everywhere else.  Why do I say it so confidently?  It is because my home state is the first to have a state wide exchange and has had one in existence since 2006.

So as we all know, people were freaked out when the ACA was coming to fruition, yet as I tried to explain to anyone that would listen, I believed it would be a great thing for the self-insured industry.  Look at what has happened to my state since we were the first to the exchange platform.  Overall, 73.8% of workers in Massachusetts were in self-insured plans in 2011, the highest rate in the nation.  Again, this is five years after the exchange was put in place.  Since 2006, when Massachusetts passed its healthcare reform law, the percentage of workers statewide in self-insured plans has increased tremendously.  In firms with 50-99 employees, the percentage that is in self-funded plans went from 54.4% in 2006 to 67.2% in 2011.  In firms with 100-999 employees, it increased from 16.6% to 29.2% and lastly, in firms with 1,000 or more employees, the rate went from 74.1% to 86.4%.  [1]

This is not some insignificant statistical anomaly.  We are talking about an increase of 15 to 25% depending on the size of the employer.  These are employers who had the alternative of not worrying about purchasing healthcare coverage and just allowing their employees to join the state exchange plan.  Why would this be any different for the rest of the country?  In my opinion, it will not be, and based on the proactive approach taken by the regulators to limit self-funding options, they are petrified that I am correct in this assessment.

Stop Loss Concerns

Speaking of the regulators, they are very concerned about the growing trend of self insurance since it potentially means less healthy lives in the exchanges.  The states and the federal government need healthy lives in the exchanges in order to keep the costs from blowing up.  In other words, they need the yoga instructors to leave self-funding opportunities and enter the exchanges.  The easiest way to make this happen is by limiting the availability of stop-loss, since if you reduce the ability to purchase stop-loss coverage; you reduce the ability for an employer to self-fund.  Period.  Plain and simple.

According to federal statistics, self-funded plans cover over 60% of the private sector workforce, totaling almost 90,000,000 workers and dependents. According to a 2012 Kaiser Family Foundation survey, those numbers include 15% of small companies with fewer than 200 workers and 52% of mid-sized companies (200 to 999 workers).[2]

One study finds that without further regulation of stop-loss policies, over 60% of small businesses will self-fund, leaving mainly older, more costly employees in the exchanges and the fully-funded small group market. This could increase premiums in the exchanges and small group market by up to 25%. A review of stop-loss policies marketed to small firms also indicates this potential shift.[3]

This trend was driven primarily by an increase in the number of self-funded large employers. In 2012, 93% of businesses with 5,000 or more employees were self-funded, and of the next largest employers, those with 1,000 employees to 4,999 employees, nearly 80% self-funded.  Based on the new Affordable Care Act requirements, the number of small employers that self-insure will continue to rise, especially if these employers are able to find ways to minimize their risk, such as the ability to purchase stop loss coverage.[4]

Department of Labor’s (DOL’s) Report to Congress

Section 1254 of the Affordable Care Act required the Department of Health and Human Services (HHS) and the DOL to provide an annual report to Congress that compares fully-insured and self-funded plans.  The main focus is on determining the extent to which the new market reforms are likely to encourage small and midsize employers to self-insure.

The sad news is that past reports have portrayed stop-loss as regular health insurance, except with a higher deductible. I have never seen a stop-loss policy insure individuals.  They do not cover employees or their dependants and do not pay claims on behalf of patients.   Seems like a rather big distinction to me.  Who are these people and from where do they get their facts?  They have never read a single column of mine, attended one of my webinars, or called me to ask any questions.  They just do not understand how the self-insured market works.

Past reports have also stated that in a typical stop-loss arrangement, the reinsurer agrees to pay a proportion of medical expenses.  Again, I have reviewed many stop-loss policies – almost all of them that are in existence today – and I have never come across this.  These statements indicate a fundamental misunderstanding of the nature of stop-loss and self-funding in general, which is especially unfortunate given that these are the very entities that are tasked with enforcement and regulation of our industry.  How can you be the police for the industry and not know the rules in place?

Self-funding 101 would tell you that stop-loss is not health insurance as stop-loss pays claims to the plan sponsor and not medical providers. Stop-loss reimburses the self-funded plan for claims that the sponsor has already paid to providers. The risk of loss and the responsibility for paying medical providers remain solely with the self-funded plan.  The actual plan member (the employee and dependants) are unaware of who the stop-loss carrier is or what they do.  I guarantee you if I polled all 150 employees at The Phia Group regarding who the stop-loss carrier is for our benefits plan, less than 5% of them would know.

The fact that the DOL and HHS believe that stop-loss is a form of health insurance, and that it pays all claims beyond the specific deductible is dangerous. That being said, efforts by associations such as the Self Insurance Institute of America (SIIA), have rallied against these misinterpretations, and courts have begun to acknowledge the true nature of stop-loss and the plan sponsor’s risk. However, the battle has just begun and we have a long way to go.

It’s Up to You, New York

In early May, SIIA met with New York legislators and staff and urged them to pass A.1154/S.2366, legislation that would allow companies with 51-100 employees, including those who participate in multiple employer plans, to continue to have access to stop- loss insurance after January 1, 2016.  If SIIA is unsuccessful, then many employers that have between 51 to 100 employees will not have access to stop-loss coverage in New York and basically have no chance to be self-insured.  This would be exactly what state regulators across the country want in order for them to have the control of what these employers can do when it comes to healthcare coverage.  Trust me, every state is watching New York closely as it can set a dangerous precedent in the nation and drastically halt the growth of self-insurance.  Many companies will have no choice other than being fully-insured or joining the exchange.  In either case, they will be under the control of the state insurance commissioner.  Not good.

The Profits Stay with the Plan and so Does the Tailoring

In an era where people are finally paying close attention to their healthcare spending, another major benefit of self-funding is that employees save money by not paying for the major insurance carrier’s CEO’s Ferrari.  A percentage of all insurance premiums in the fully-insured carrier world are allocated to pure profit but with self-funding, employees pay a nominal amount for health benefits coverage and in general, plan sponsors do not make a profit on self-funding.  Funds stay in the benefit plan to pay for future claims.

Another major draw for employers and probably the most significant benefit of self-funding is the ability to customize the plan to suit the employee base or the employer’s own preferences. If the employer has a certain sympathy for individuals in need of weight loss surgery, the employer can tailor its plan to cover that surgery.  If the employer has a very young, healthy employee base, the employer can offer a plan for a low cost to its employees that have a high deductible. In other words, the employer has the ability to structure its plan any way it wants.  The fact remains that the yoga instructors’ health benefit plan should not be the same as the truckers’ plan, yet in the fully-insured world, they are.

The Risks are Worth the Reward

The bottom line is that sponsoring a self-funded plan has its risks, but it also has its rewards.  While self-funding may not be the right fit for every employer, for those employers that want to be able to get creative with their employees’benefits, self-funding is an option that can be very beneficial. While the group may incur unexpectedly catastrophic claims amounts, stop-loss is designed to mitigate those claims.

Our industry is growing, innovation is on the rise and at the end of the day, employee benefit plans sponsored by self-funded employers are offering more benefits with fewer costs.  Let’s hope that the government entities don’t punish our employers for finding better ways to deal with our health insurance crisis.  It’s what America was built on – integrity and innovation.

Texas Prompt Pay Law Not Preempted; Enforceable Against Self-Insured Health Plan TPAs

On June 17, 2015
EBIA Weekly
A federal district court has ruled that ERISA does not preempt the Texas Prompt Payment Act as it applies to TPAs of self-insured benefit plans. The state law generally requires “insurers” to pay benefit claims within 30 or 45 days (depending on the claim’s format), or face penalties. The TPA in this case received a demand letter from two health care providers alleging that the TPA owed them more than ten million dollars each in late-payment penalties. In response, the TPA filed suit seeking a declaratory judgment that the law does not apply to self-insured plans, or, if it does apply, that the law is preempted by ERISA. The court considered only the preemption issue, deferring to an earlier state court determination that the law applies to the TPA with respect to claims administered for self-insured plans.

As background, ERISA generally preempts state laws that “relate to” ERISA plans; certain state insurance laws are not preempted, but those laws generally do not directly apply to self-insured plans. The court focused its analysis on the “relates to” standard and explained that a law relates to an ERISA plan if it (1) addresses an area of exclusive federal concern, such as the right to receive plan benefits; and (2) directly affects the relationship among traditional ERISA entities—the employer, the plan and its fiduciaries, and the participants and beneficiaries. The TPA argued that the Texas law addresses an area of exclusive federal concern because it undermines ERISA’s goal of achieving uniform regulation of ERISA plans. The court disagreed, finding that the imposition of late-payment penalties on a TPA does not affect the underlying plans. The court also rejected the TPA’s argument that the law affects the relationship among traditional ERISA entities, finding that the health care providers are not ERISA entities, nor are they “standing in the shoes” of plan beneficiaries. The court noted that the providers’ demands arose because of their contractual relationship with the TPA and emphasized that ERISA does not prohibit parties on the “periphery” of an ERISA plan from contracting with one another.

EBIA Comment: The court’s decision contrasts with a recent Eleventh Circuit ruling that ERISA preempts a similar prompt payment law in Georgia (see our article). The TPA in this case has filed an appeal with the Fifth Circuit, creating the possibility of a split between the federal appeals courts and eventual review by the U.S. Supreme Court. Self-insured plan sponsors and their TPAs and advisors should continue to monitor ERISA preemption developments as these and other cases make their way through the courts. For more information, see EBIA’s ERISA Compliance manual at Sections XXXIX.C (“State Laws That ‘Relate to’ ERISA Plans Are Generally Preempted”) and XXXIX.H (“Preemption Analysis Applied to Specific State Laws”); see also EBIA’s Self-Insured Health Plans manual at Section V.E (“ERISA Preemption and the Application of State Mandates”)

SIIA State Legislative/Regulatory Update Report

On October 21, 2014
October 21, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at

Colorado- Exchange Assessment Regulations Published
At long last, the Colorado Division of Insurance has published draft regulations addressing outstanding questions about the Colorado exchange’s assessment. The regulations can be viewed here. The link should open the rules in a Word document.

A hearing on the proposed rules has been schedule on November 5th. SIIA will be reviewing the proposed rules to see if it needs to submit comments or questions by this date.

If you have any questions or would like the proposed rule emailed to you, please contact Adam Brackemyre, SIIA’s Director of State Government Relations at

DC- Stop-Loss Legislation
On Friday, October 10th, the Business, Consumer and Regulatory Affairs (BCRA) Committee passed the DC stop loss language contained in B20-0797 to the full DC Council without any changes.

As previously reported, SIIA and other stakeholders testified at a public hearing and met with Department of Insurance Securities and Banking (DISB) staff responsible for writing the legislation and submitted amended language and justifications for those amendments, per DISB staff request. SIIA also worked with other industry lobbyists to request that members of the BCRA committee introduce the amendments, too.

There are still opportunities to seek amendments from the full DC Council. SIIA will continue to work with stakeholders to improve the legislation, which contains a minimum $40,000 individual attachment point and effective prohibition on employers of 50 and fewer from purchasing stop loss.

Illinois- Legislation Repealing Captive Tax Increase Introduced
Since the last SIIA state update, House Bill (HB) 6302, legislation repealing the recent Illinois captive tax increase, has been introduced.

There are two short legislative periods between now and the end of the year and nobody really knows how much will be accomplished because, as one Illinois insider told SIIA, legislative matters are taking a back seat to the close gubernatorial race.

Viewing this realistically, the best chance of repealing the tax will rest with a new legislature and new governor. There are two major barriers for HB 6302 in the lame duck period. First, the legislation is co-sponsored by members of the minority political party. Second, if HB 6302 were to be passed during the lame duck session, the governor would probably veto it, as he recently referred to the tax increase as “closing a loophole” during a recent debate.

In the meantime, SIIA will continue to work with the business community, support the repeal efforts and prepare to work with elected leaders next year who may be more favorable to the business community.

New York State- Advocacy Day in Albany
SIIA has tentatively planned an advocacy day in Albany next February in support of legislation that would protect small business access to stop loss insurance.

While SIIA has professional lobbyist resources in place, we need SIIA members who are New York State residents and business owners to attend. You are the best messenger to discuss how your clients, the legislators’ constituents, would be impacted if businesses with 51-100 covered lives would lose access their current health plan. If you could take one day to travel to Albany and educate legislators, it would be an invaluable service to your clients and your industry.

More information will be coming as the event details are finalized.

SIIA State Legislative/Regulatory Update Report

On September 16, 2014
Exclusive Reporting for the Week of September 10, 2014

September 10, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at

Washington DC- Stop-Loss Legislation
An advocacy plan is taking shape in the District of Columbia to oppose harmful stop-loss legislation.

As part of this effort, SIIA will meet with DC Department of Insurance of Securities, Insurance and Banking (DISB) staff and City Council Members on the Business, Consumer and Regulatory Affairs Committee later this month to communicate industry concerns.

As previously reported, section seven of DC bill B20-0797 would effectively ban stop-loss in the small group market, require a $40,000 minimum individual attachment point and give the DISB commissioner the ability to increase individual and aggregate attachment points at his or her discretion.

NAIC- Stop Loss Paper is Available for Comment
The NAIC ERISA (B) Working Group’s stop-loss paper, available here, is still available for public comment. SIIA members are strongly encouraged to comment on the white paper. Several SIIA members requested a copy of the report last week.

SIIA convened its Government Relations Committee on Wednesday August, 27th and staff is drafting comments. All comments are due by September 16th, unless the NAIC extends the deadline.

If you need any assistance with submitting comments to the NAIC, please contact SIIA’s Director of State Government Relations, Adam Brackemyre, at or 202/595-0641.

Utah- Stop-Loss Law
Another SIIA member has been contacted by the Utah Department of Insurance (DOI), which is actively looking to make its state stop-loss law more attractive for stop-loss carriers.

The DOI is apparently researching why carriers are not selling in the small group market and may be making recommendations to the legislature to increase access to stop-loss insurance. SIIA expects to support such an initiative if it develops.

If your company has been contacted the Utah DOI staff, please let SIIA know so that we may better coordinate our efforts.

SIIA’s 34th Annual Conference
SIIA’s National Conference and Expo is scheduled for October 5-7, 2014 in Phoenix, AZ, which will feature a dedicated Legislative/Regulatory/Legal update session. Conference details, including registration forms, can be accessed on-line at, or by calling 800/851-7789.

State/Legislative Regulatory News

On May 9, 2014
Self-Insurance Institute of America, Inc.

Exclusive Reporting for the Week of May 7, 2014

May 7, 2014 — This is your weekly update of state legislative/regulatory developments affecting companies involved in the self-insurance/alternative risk transfer marketplace. Should you have any questions on information provided in these reports and/or would like to alert SIIA to new state legislative/regulatory activity (health care, workers’ compensation and/or captive insurance matters) we may have missed, please contact Adam Brackemyre, Director of State Government Relations directly at 202/463-8161, or via e-mail at

Connecticut- Assessment is Out of the Latest Budget Bill
The Connecticut House has passed a budget bill without including a previously proposed assessment on self-funded plan covered lives. While the final budget has not been approved, sources close to the Governor’s office and involved in budget negotiations told SIIA that a new self-funded assessment will not appear in the final bill (HB 5596).

SIIA and allied stakeholders had been vigorously opposing the assessment, which was designed to fund a new health care delivery system in that state, on the grounds that it was preempted by federal law and was bad public policy.

Several of the association’s individual members played critical roles in this successful lobbying effort. Brooks Goodison of Diversified Group contacted his clients and brokers, encouraging them to engage and provided them sample letters and updates. Denise Doyle of Stop Loss Insurance Brokers and Bob Madden of Lawley Benefits Group each provided clients with sample letters to send to their legislators. Charlie Barger of Pequot Health Care and Chris Brown of Berkley Accident and Health submitted letters opposing the assessment. Mike Kemp of IHC Risk Solutions alerted his clients and brokers, urging them to oppose the assessment. Rob Melillo at Guardian Life Insurance Company contacted brokers, who in turn, contacted clients urging them to oppose the assessment, too. A special thank you goes to Anita Schepker, a lobbyist retained by Diversified Group, who coordinated with SIIA’s government relations team throughout the effort.

While this was an important win in Connecticut, it has broader implications as additional states are contemplating assessments on self-insured employers and/or TPAs to fund public exchanges or other purposes.

New York – Stop Loss Legislation
The New York Senate’s stop-loss legislation is moving.

On Monday, S. 6917, which will protect the ability of organizations in New York with 51-100 employees/members to purchase stop-loss insurance when the small group market definition changes after January 1, 2016, was reported unanimously from the Senate Insurance Committee to the floor without discussion. SIIA submitted a memorandum of support.

On Wednesday, SIIA’s retained counsel met with high-ranking Assembly staff to discuss companion legislation and begin the push for a successful legislative push in that chamber. The association has also initiated an integrated advocacy strategy including the mobilization of numerous SIIA members who are engaging their smaller self-insured clients in New York to communicate the urgency of this legislation to their elected representatives.

Member companies already actively engaged in the grassroots lobbying effort include Berkley A&H, Lawley Benefits Group, Sun Life, HCC Life Insurance Company, East Coast Underwriters, Standard Insurance, Meritain Health and Gerber Life Insurance.

Please contact Adam Brackemyre right away if you would like to participate as part of this grassroots strike team. Thank you again to everyone who is already helping.

Washington DC- Council Approves Very Broad Insurance Assessment to Fund Exchange
Yesterday, the DC Council approved a new one percent tax on nearly all “health-related” insurance products, which probably includes stop-loss insurance.

Mayor Vincent Gray proposed the tax on Tuesday night as a way to ensure that the DC health insurance exchange had sufficient funding. Originally, the exchange was to assess qualified health and dental plans inside and outside the exchange. But with only 23,000 privately-insured individuals, the city council had to look elsewhere for funding the exchange’s $28 million budget.

Multiple entities are contemplating a legal challenge to the new law. As this situation continues to develop, SIIA will provide additional information.

SIIA’s 34th Annual Conference
SIIA’s National Conference and Expo is scheduled for October 5-7, 2014 in Phoenix, AZ, which will feature a dedicated Legislative/Regulatory/Legal update session. Conference details, including registration forms, can be accessed on-line at, or by calling 800/851-7789.