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The Wagner Law Group

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 


Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.





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The Wagner Law Group


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December 10, 2015


 Health and Welfare Law Alert




   DOL Says Certain Stop-Loss Insurance Policies Are Not Plan Assets





The DOL, in Advisory Opinion 2015-02A, has determined that a stop-loss insurance policy purchased by an employer for its self-insured health plan is not a plan asset, even though part of the plan's costs are paid through employee contributions.



Background.  Under a stop-loss insurance policy, the employer remains responsible for paying plan benefits, and the insurance reimburses the employer for claim payments above certain stated thresholds (i.e., attachment points).  Employers with self-insured health plans frequently purchase stop-loss insurance to guard against the risk of large, catastrophic benefit claims.



The DOL had previously ruled in Advisory Opinion 1992-02A that a stop-loss insurance policy purchased by an employer for its noncontributory (i.e., no employee contributions required) self-insured health plan was not a plan asset.  DOL made this determination based on the following:


  1. The insurance proceeds were only payable to the   employer who was the named insured under the policy;
  2. The employer had all rights of ownership under the policy, and the policy was subject to the claims of the employer's creditors;
  3. Neither the plan nor any participant or beneficiary had a preferential claim against the policy or beneficial interest in the policy;
  4. The policy was not used to provide plan benefits or as security for payments of benefits; and
  5. Plan benefits were not limited or governed by the amount of insurance proceeds received by the employer.


Advisory Opinion 2015-02A.  The DOL has now said that a stop-loss policy purchased by an employer for its self-insured contributory health plan (i.e., employee contributions required) was not a plan asset, despite the fact that part of the plan's costs would be paid with mandatory employee contributions, when:       

1.      The stop-loss policy satisfies the criteria identified  in Advisory Opinion 1992-02A, except for the required employee contributions.

2.      The employer uses an accounting system for the plan that prevented employee contributions from being used to pay stop-loss policy premiums.

3.      The arrangement requires the plan, not the stop-loss insurer, to pay participants' benefit claims.

4.      The stop-loss policy provides for the employer to be reimbursed only if it paid participants' benefit claims from its general assets so that the employer never received reimbursement from the insurer for claim amounts paid with participant contributions.


Takeaway for Employers.  It is not clear from Advisory Opinion 2015-02A whether DOL requires all of the factors outlined above to be present for a stop-loss policy to avoid plan-asset status.  Therefore, employers that sponsor self-insured contributory health plans should consult with qualified employee benefit professionals to determine whether its stop-loss insurance arrangement is a plan asset.




Advisory Opinion 2015-02A is available at: http://www.dol.gov/ebsa/pdf/AO2015-02A.pdf.




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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.