Legislation designed to make it more difficult for smaller employers to self-insure by restricting their ability to obtain stop-loss insurance with very low attachment points was signed into law on Oct. 1 by California Gov. Jerry Brown.
S.B. 161, which takes effect Jan. 1, 2014, will prohibit stop-loss insurers in California from issuing policies with specific deductibles below $35,000 for self-funded employer plans. After Jan. 1, 2016, the law increases the minimum specific attachment point to $40,000.
Also under the law, starting Jan. 1, aggregate attachment points cannot be less than $5,000 times the total number of group members, 120 percent of expected claims, or $35,000 ($40,000 after Jan. 1, 2016).
Starting April 1, 2014, and each April 1 thereafter, stop-loss insurers will have 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.
Source: Thompson Information Services.
