Insurance Commissioner Dave Jones has announced the passage of a bill for the regulation of stop-loss coverage to small businesses.
Jones has given his applause for this change to the California insurance industry, as the state Senate Health Committee passed SB 1431, which places a minimum number of aggregate and individual attachment points and which bans the exclusion of workers on the grounds of health status during the sale of stop-loss coverage for self-insured employers of 2-50 people.
The bill passed by a 5 to 3 vote.
It was authored by Senator Kevin de Leon (D-Los Angeles) and had the sponsorship of both the Department of Insurance as well as Commissioner Jones, who said “I am pleased that the Senate Health Committee has passed this important legislation which will help preserve the viability of the small group health insurance market as we move toward full implementation of the Affordable Care Act in 2014.”
About this change to California insurance, he also said that it will assist in preventing adverse selection and will help to maintain more stable pricing for small businesses. Instead of banning the sale of this form of coverage altogether – as has been the case in some other states – it will still provide self-insuring options.
Some of the changes made by SB 1431 include the following:
• Stop-loss insurers must offer the coverage to all of a small business’s workers and their dependents. They are not permitted to exclude any worker or dependent on the grounds of an expected or actual factor related to health status.
• At the small business’s option, these insurers must renew all of the policies.
• A minimum has been set for both aggregate and individual attachment points when stop-loss coverage is sold. This minimum is based on the average attachment points in the current marketplace. There is also an individual attachment point of $95,000 in the bill.
At the moment, there are fifteen other states that have minimum attachment points regulations that are similar to the California insurance system’s new rules for stop-loss policies for small businesses. There are also three states – Delaware, Oregon, and New York – which have entirely banned the sale of this type of coverage to small groups.