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The Wagner Law Group Description 

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. Five 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


  Integrity | Excellence


Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110

Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
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Palm Beach Gardens, FL 33418


San Francisco Office

Tel: (415) 625-0002

Fax: (415) 829-4385

315 Montgomery Street

Suite 902

San Francisco, CA 94104





April 11, 2013 

 State and Federal Law Alert


States Consider Legislation to Limit Stop-Loss Coverage for Self-Funded Health Plans


State legislatures in California, Minnesota, Rhode Island, and Utah have recently proposed bills that would limit stop-loss coverage for self-funded health plans.  In general, the proposals would make self-funding less attractive by raising the minimum deductibles (attachment points) currently allowed under stop-loss policies.


Under self-funded health plans, employers generally pay covered health care expenses from their general assets or an employer-established trust, up to a predetermined amount. After that, the stop loss carrier will reimburse the employer for any additional health care expenses.  Consequently, self-funded arrangements are typically used by large employers with significant financial resources.  However, many insurers have begun to offer stop-loss policies with lower attachment points to smaller businesses in order to make self-funded arrangements viable for these employers.  


Stop-loss policies limit an employer's liability for large claims by paying for medical expenses beyond a specified limit for: (i) each covered individual (i.e., the individual or specific attachment point); and/or (ii) the plan (i.e., the aggregate attachment point).  


Supporters of the proposed legislation argue that self funding merely allows companies to avoid certain state insurance regulation, as well as certain aspects of PPACA, such as the requirement that group health plans cover essential health benefits.  In addition, backers of the proposals claim that insurers are primarily selling stop-loss policies to companies with healthier workers, and that if too many smaller companies use stop-loss policies to self-fund, Health Care Exchanges will be left with primarily older and sicker members.


Critics of the proposals maintain that stop-loss insurance is not ERISA-covered health insurance, and that any law attempting regulate it as such would affect the administration of self-funded group health plans and would therefore be preempted by ERISA.  Opponents also believe that the legislation would make it harder for employers to self-insure their health benefits and thereby steer more lives into the Health Care Exchanges.


The following is a summary of each proposed piece of stop-loss legislation:


California S.B. 161:  California's stop-loss bill would:

         prohibit stop-loss policies written after January 1, 2014, from having specific attachment points of less than $45,000; and

         require aggregate attachment points to be no lower than the greater of: (i) $19,000 multiplied by the total number of covered lives; or (ii) 120% of expected claims.


Minnesota H.B. 647:  Minnesota's proposal would prohibit stop-loss insurers from:

         issuing new policies to self-funded plans of all sizes with specific attachment points below $60,000; and

         issuing policies to employers with 50 or fewer employees with aggregate attachment points less than the greater of: $4,000 multiplied by the number of covered lives; 120% of expected claims; or $20,000.


Rhode Island H.B. 5499:  Rhode Island's proposal would:

         prohibit stop-loss policies with specific attachment points of less than $60,000; and

         bar aggregate attachment points for small employers below the greater of: $15,000 multiplied by the number of covered lives; or 130% of expected claims.


Utah H.B. 160:  Utah's proposal would:

         require stop-loss insurers to cover incurred but unreported claims if a small employer plan terminates; and

         prohibit "lasering," a practice used by stop-loss insurers to set higher specific attachment points for individuals with pre-existing conditions. 


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