SPBA has asked TPA members and Stop-Loss Partners to write letters and arrange meetings with people who can assist them to fight against the actions by State Legislatures and NAIC to raise the attachment points for Stop-Loss. We have put together some talking points you may want to consider when writing your letters, or when you meet with your elected officials. Please remember to personalize these materials to include the number of clients that will be impacted if self-funding were no longer available as an alternative to them, the number of lives that your firm represents, etc. All these factors will add additional reality to the gravity of the decision to make these changes. If you do have meetings, please report any comments you receive to Elizabeth Leight at SPBA via email at Elizabeth@SPBATPA.org
I am the president of a Third Party Administration firm located in (State) . Most of our clients are (size of company) with health benefit funds which are self-insured. Those funds cover employees of companies ranging in size up to (number) of employees.
I recently learned that the (State Legislature) or (NAIC) is considering a proposed change to (issue “guidance” regarding attachment points )or (change the attachment points) for stop loss insurance. I am writing to ask that you oppose any change in the stop-loss attachment point.
The increase in individual stop-loss attachment points from $20,000 to $60,000 will significantly impact my clients by ________.
The increase of aggregate attachment points for groups of fifty or fewer employees from 120 percent of expected claims to 130 percent of expected claims will impact my employer clients because ________.
Additional points to make in your letter:
- Third Party Administrators, like myself, administer plans that employ some degree of self-funding and for clients that range from large Taft-Hartley union/management jointly-administered plans, customized plans for single employers of all sizes, and cost-effective plans designed for related groups of employers in trade associations and other multiple employer configurations.
- As public officials responsible for supervising the insurance industry, we urge you to take action to broaden coverage rather than constrict it. As such, I strongly oppose the draft guideline revisions that raise attachment points for stop loss insurance and encourage the NAIC and the ERISA (B) Working Group to retain the attachment points under the current Model Law.
- In 2010, more than 77 million workers and their dependents were covered by self-insured plans. Curtailing the availability of employer self-insured plans by making self-insurance unaffordable could have negative consequences for the millions of consumers who are currently covered through these employer-provided benefits. TPAs play a critical role in assisting employers of all sizes with decisions and administration regarding health care coverage. This assistance involves professional consultation on matters ranging from compliance with applicable federal and state laws to advocacy for employees in the claims process and communications with employees regarding their package of benefits. TPAs serve as the human resources staff to many small employers who lack employee benefits specialists.
- Small businesses need affordable health care options and flexibility to choose the best coverage option for their employee’s needs. Self-insurance, in conjunction with stop-loss insurance coverage, allows many small businesses to provide employee health benefits. Mandating high specific and aggregate attachment points for stop-loss insurance will eliminate the self-insurance option for many small employers and prohibit them from offering health benefits to their employees. Further, setting unreasonable thresholds to be paid in claims makes self-insurance options unaffordable for many small employers.
- NAIC’s action to develop a new stop-loss bureaucracy in which comprehensive state oversight of stop-loss attachment points will add unnecessary market uncertainty and unintended consequences that can harm individuals and businesses that wish to self-fund their health care benefits. These unintended consequences will harm individuals, families and businesses that rely on the low cost of health care provided by self-funded welfare benefit plans as protection against the risks of everyday healthcare needs which can lead to uninsured status, bankruptcy and foreclosures. For this reason, (the ________ Committee) or (State Department of Insurance) should reject the notion of mandating a certain level of stop-loss attachment points.
- ERISA is the ultimate consumer protection law that provides financial oversight, policy content, market conduct, claims and appeals practices and marketing strategies for all welfare benefit plans. Consumer protection is the hallmark of ERISA. Consumer protection must start with the basic understanding that welfare benefits are sacrosanct and that protecting consumer benefits begins with the initial inquiry between the employer and employee, not at the claims adjudication stage. Self-funded welfare benefit plans include factors such as equality of coverage despite losses, sex, age, marital status, medical history, place of residence and any lifestyle choices or “risk management” factors. Welfare benefit plans have a framework that maintains the viability and sustainability of welfare benefit plans under ERISA. Within that framework, are strong consumer protections that instill public confidence in federal agencies like the Department of Labor, Internal Revenue Service and Equal Employment Opportunities Commission that maintain vigilance to ensure that plans are maintained in accordance with Federal law.
- Third party administrators advise and educate employers of their responsibility under ERISA and their business decisions are judged by the prudent person rule, not on risk.
- Today, companies of all sizes, provide a vast array of health coverage products to their employees across state lines. Due to the fact that employers often cross state lines, a national system of supervision is necessary and this is what we have in ERISA. There is no need to harmonize a multi-state patchwork approach to regulation. There is no need to wait for one state to achieve uniformity with another in a particular market when the Federal regulatory mechanism exists already.
- The (NAIC) or (______Committee) should reject stop-loss attachment points. TPAs across the country believe that the change will result in consumer confusion and market uncertainty. The cost of unintended consequences will ultimately harm individuals, families and businesses that rely on self-funding for their health care coverage options. At the very least, this situation can lead to consumer, market and regulatory overlap and confusion and a “race to the bottom” regulatory regime that lowers consumer protection standards rather than strengthens them under a Federal regulatory standard.
- Health care is unique and complex. Consequently, the state-based system has evolved over the years and allowed self-funding to evolve as a way to address the needs of employers who wish to offer their employees unique health care options. As third party administrators, we are accountable to employers and citizen consumers who live in our communities and can more effectively monitor claims handling, pricing and marketing practices as well as pricing.
- As NAIC records indicate, only three states have adopted the model and fewer use the model for guidance. Therefore, we contend that NAIC has not met its own criteria for amendment to the model.
If you are writing to NAIC Commissioners, add the following:
- We have concerns that the NAIC’s adoption of formal guidelines rather than utilizing NAIC’s stricter review and amendment to the Model Act itself leaves little opportunity for the industry most affected to provide responses to the proposed changes. The NAIC guidelines provides that regarding Development of Guidelines:
“If the NAIC Group determines the proposal does not meet the criteria for development of a Model Law, or if the Parent Committee and/or Executive Committee determine the criteria is not met, the NAIC Group may proceed with efforts to address the issue through Guidelines provided these efforts are consistent with the NAIC Group’s charges. Guidelines are not considered Model Laws of the NAIC though they are considered regulatory best practices such as laws, regulations, handbooks, guidance, white papers and/or bulletins.”
- The NAIC standard for a Model Law Development is much stricter for amending model laws and calls for meeting a two-part test as follows:
“(1) The issue that is the subject of the Model Law necessitates a minimum national standard and/or requires uniformity among all states; and
(2) NAIC members are committed to devoting significant regular and association resources to educate, communicate and support a model that has been adopted by the membership.”
Should this Committee adopt the changes to the Model Act as “guidelines”, it will significantly curtail health care coverage for millions of employees. This is an important and timely issue and the impact that the proposed changes would have on the availability of coverage is significant. We believe the changes should not be adopted at this time, as “guidelines” . For that reason, we strongly encourage the NAIC and the ERISA (B) Working Group to retain the attachment points under the current Stop-Loss Model Act.