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SPBA Action For Stop-Loss Defense


SPBA Board Caps One Phase and Opens Next for Stop-Loss Defense

The SPBA Board has submitted a grand summary & reinforcement document to the Departments of HHS, DOL & IRS/Treasury as the finale of a multi-level multi-facet effort to improve and defend Stop-Loss in the Self-Funded market.

SPBA has been intensely focused on the future of Stop-Loss and their interaction with self-funding for over 2 years.  The effort has been on many levels and formats, and with very active participation of the member TPAs and Stop-Loss Service Partners.

>>There were numerous candid brainstorming forums among Stop-Loss concerning problems in the delivery of the product to clients.  Many former problems have been eased or avoided.

>>The SPBA Board convened a Summit Meeting of Stop-Loss Leaders in 2010 to spot and avoid problem areas in the then-new health reform law.  The professionalism was obvious, and the discussion was very frank & constructive.  It set the tone for teamwork.

>>In 2011, there were multiple TPA/Stop-Loss discussions.  Again, mutual understanding of the thinking of the two roles and the mutual desire to avoid legal and other pitfalls for clients has led to visible improvement in the delivery of the product to clients.

>>In 2012, a problem SPBA had forecast in 2009 began to arise.  The “problem” was that the very detailed candid discussions with writers of the evolving health reform law at the SPBA Spring & Fall Meetings exempted self-funded plans from most of the punitive provisions imposed in the law on insurers.  As this reality settled-in with state and some federal government agencies, there was the perception that self-funding was “unregulated”.  As the old joke about government says, “If you can identify something, regulate it.”  That is what has started at the state, NAIC, and then the HHS, DOL, IRS levels.  Since ERISA plans themselves are often pre-empted from state regulation…… Stop-Loss (which is seen as a key component of the ever-growing market for self-funding) became the target for regulation.  Misinformation about Stop-Loss and the self-funded market has been rampant.

>>>The SPBA Spring 2012 Meeting was a major turning point.  SPBA is fortunate to have close contacts at multiple levels of the federal agencies, and SPBA staff serve on various high-level advisory committees of the agencies.  At the 2012 SPBA Spring Meeting, the two top officials with power to steer the fate of Stop-Loss & self-funding had been alerted to the problem.  They asked to come…not to give a canned speech, but to listen & brainstorm directly with the key players.  At one point, one of the officials said that the problem that concerns them is that the Self-Funding market is “rife” with tiny plans with tiny aggregate attachment points. (2 persons & $500 attachment was an example).  SPBA Chairman Robyn Jacobson instantly said that since the majority of the Stop-Loss market was represented in the room “let’s ask them”.  She asked for a raise of hands of those who offered Stop-Loss aggregate attachment points below $5,000 (no hands), $10,000 (no hands), $15,000 (two hands with the comment “only in special circumstances”).  Hands began to appear at $20,000.  The eyes of the officials were wide in amazement.  Here was irrefutable truth that what they had been told or assumed was mythology.

>>>This event paved the way for a new opportunity.  The SPBA Board had already decided to determine what were the questions & misunderstandings in the minds of the federal officials about Stop-Loss & self-funding.  However, the hand-raising reality-check spurred the senior official to direct the three agencies to put their questions out for public comment.  That became the 13 questions, which exposed vast misperceptions.

>>>SPBA first touched base with the officials in each agency and provided a historical background set of answers to the 13 questions.  Then, because the scene of so many members reporting first-hand insight had been so persuasive, SPBA encouraged member TPAs & Stop-Loss to submit their real-world perspectives for the 13 questions.  There was broad participation.

>>> As the wrap-up, the SPBA Board submitted a detailed summary & reinforcement set of answers for the three agencies.  The Board submission was especially noted and appreciated.

>>>In ongoing discussions with federal officials on compliance issues, it was clarified that the federal agencies’ questions about self-funding are not related to Stop-Loss deliberations by the NAIC.  Instead, a requirement of health reform is that relevant federal agencies must issue a formal report to Congress each year about the self-funded market.  Reports have been issued the past two years, and Congress requested more detail & insight this year.  SPBA was happy to provide candid real-world perspective and has provided subsequent insights to help the agencies provide a meaty & accurate report about self-funding to Congress.  In the process, we also dispelled myths & misconceptions, such as explaining that things like Stop-Loss attachment points have little or no relevance, and could even cause ERISA fiduciary concerns.  So, this part of the effort to defend the Stop-Loss & self-funding market ends as good news.


SPBA is the national association of Third Party Administrators (TPAs)

and Stop-Loss Service Partners.  SPBA has earned respect & credibility

for candor & expert insight in employee benefits issues because of its

non-partisan non-political candor and understanding of the real-world

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