CWA HEALTH CARE REFORM UPDATE: Stop-Loss Coverage for Self-Insured Health Plans

What is the impact of stop-loss on fully/self insured definition?

Stop-loss insurance is often purchased by self-insured plans to mitigate the risk of catastrophic health care costs. Employers with self-insured group coverage can purchase a stop-loss plan that covers costs in excess of a certain amount every year (called an “attachment point”) or covers particularly high claims by an individual.

Although employers can use generous stop-loss policies to insulate themselves from unpredictable claims costs, these plans are still considered self-insured.

Self-insured status can be valuable for employer plans because fully-insured plans are subject to additional regulations, such as the requirement to cover essential health benefits and the minimum-loss ratio requirement.