Some employers have turned to self-insurance with stop-loss coverage as a way to avoid health insurance increases and some of the regulations that apply to fully-insured employers. These regulations are increasing during implementation of the Affordable Care Act. Democratic legislators fear that companies with young and healthy employees will self-insure to avoid the Affordable Care Act’s minimum coverage standards, while carriers will be left with an older and sicker population. This population is expensive to insure and will drive up costs for other companies and those seeking coverage on the exchange.
States like California, recently passed laws limiting the attachment point for stop-loss insurance to $35,000. Thus, an employer would be liable for up to $35,000 of employee medical costs before stop-loss insurance began to pay the remainder of claims.
In response, self-insurance trade associations and large business groups have created the Self-Insurance Defense Coalition to fight these “attacks” on self-insurance. Mike Ferguson, the president of the Self-Insurance Institute of America, said they were “not afraid” to go to court if needed.