California Gov. Jerry Brown on Tuesday signed into law legislation that would make it more difficult for that state’s small employers to self-insure their health benefits by restricting the availability of stop-loss insurance.
The law, which takes effect for policies issued after Jan. 1, prohibits stop-loss insurers from issuing policies with specific deductibles below $35,000.
In addition, aggregate attachment points cannot be less than one of the following: $5,000 times the total number of group members; 120% of expected claims; or $35,000.
After Jan. 1, 2016, the law increases the specific attachment point to $40,000.
Beginning on April 1, 2014, and on April 1 annually thereafter, the law requires stop-loss insurers to report to the California Department of Insurance the number of small employer stop-loss polices they had issued that were in effect as of Dec. 31 of the previous year.
The law applies to stop-loss policies issued to groups that have between 1 and 100 employees.
The Self-Insurance Institute of America Inc., which has come out in opposition to legislation in any state that would restrict stop-loss sales to small employers, issued a statement Tuesday responding to the signing of California’s S.B. 161, saying it is reviewing this development and will provide additional comments in a subsequent communication.
In the meantime, copies of the legislation are available by contacting SIIA government relations director Kevin McKenney at 202-463-8161 or email@example.com.