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Minn., R.I. bills would limit medical stop-loss insurance sales

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Legislation has been introduced in Minnesota and Rhode Island that would restrict some sales of medical stop-loss insurance to self-funded employers.

H.B. 647, introduced this week in Minnesota, and H.B. 5499, introduced last week in Rhode Island, would preclude medical stop-loss insurers from selling policies to self-insured employers of all sizes with specific deductibles less than $60,000.

In addition, the Minnesota proposal would not permit stop-loss insurers to issue medical stop-loss policies to employers with 50 or fewer lives with an aggregate attachment point lower than the greater of $4,000 times the number of group members; 120% of expected claims; or $20,000. The bill requires stop-loss policies sold to groups with more than 51 lives to have annual aggregate attachment points of at least 110% of expected claims.

The Rhode Island proposal would prohibit stop-loss policies from being sold to groups with 50 or fewer lives with aggregate attachment points lower than the greater of $15,000 times the number of groups members; 130% of expected claims; or $20,000. And like the Minnesota bill, the Rhode Island measure would not allow stop-loss policies to be sold to groups with 51 or more lives that have annual attachment points lower than 110% of expected claims.

The Minnesota bill would only apply to stop-loss policies issued or renewed after July 1, 2012, while the Rhode Island legislation would apply to policies issued on or after Jan. 1, 2014.

The Minnesota legislation would give the state insurance commissioner the authority to amend the dollar amounts yearly based on the medical portion of the consumer price index. No such escalation feature is included in the Rhode Island proposal.

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The introduction of these bills shows that states are entertaining legislation that would make it harder for employers to self-insure their health benefits, with the intent of steering more lives into the federal and state health care exchanges slated to come on line Jan. 1, 2014, asserted the Self-Insurance Institute of America in a statement.

Rhode Island and Minnesota are the second and third states, respectively, to introduce legislation restricting the sale of stop-loss coverage to self-funded employers.

Earlier this month, similar legislation was introduced in California, reigniting a major lobbying fight by SIIA that resulted in similar legislation being shelved during the last term.