Multiple States Continue to Target Self-Insurance

Taken From: Self-Insurance Institute of America, INC.  

June 17, 2013 – It continues to be a busy legislative season at the state level with several important developments affecting companies involved in the self-insurance marketplace. Provided below is an update for the week of June 14th on self-insurance legislation that has been introduced this year.

The full text of referenced bills, SIIA comment letters, and related information, can be requested by contacting SIIA Government Relations Coordinator Kevin McKenney at 202/463-8161, or via e-mail at

Watch for additional reports on a weekly basis until the various legislative sessions conclude. This reporting is provided exclusively by SIIA.

CALIFORNIA- Stop-Loss Insurance Legislation

Stop-loss legislation has passed the Senate and is now awaiting committee assignment in the House. SB 161, as amended, would establish a minimum attachment point of $35,000 among other requirements. Many statements have been made that reveal the purpose of the legislation, which was not to regulate insurance companies, but rather to “protect” the state’s health insurance exchange. While the bill continues to advance, it is still uncertain whether it has the necessary support for ultimate passage and enactment. SIIA continues to monitor developments and coordinate grassroots opposition.

COLORADO – Stop-Loss Insurance Legislation

Governor John Hickenlooper received HB 13-1290 from the Senate, and signed it into law. The bill raises minimum stop-loss attachment point requirements ($20,000-spec), imposes new reporting on stop-loss carriers, and empowers the insurance commissioner with additional rule-making authority to further regulate stop-loss insurance.

ILLINOIS – Elimination of Group Self-Insured Workers’ Compensation Funds (SIGs)

SB 1873 was not considered in the Senate by a prescribed deadline, at which time it was referred to the Senate Assignments Committee. There is currently no hearing date. SB 1873 was introduced for the main purpose of dissolving the group insolvency fund and brings all groups under the general guaranty fund. For assessment purposes under the guaranty fund, self-insured groups would be treated as if they were domestic mutual companies. It also would prohibit any new self-insured groups. It appears this applies to all groups, not just governmental pools. 

An amendment to the bill is more concerning, as it appears to propose to eliminate all self-insured groups and convert them to domestic mutual insurance companies by 2015. As domestic mutual companies, they will then be required to meet all requirements of such. Further, at the time of conversion, a group’s financial condition will be evaluated by the director of insurance. Those deemed to not meet the standards for domestic mutual companies will be considered to be in hazardous financial condition and subject to the actions allowed under the law.

While several of these components are troublesome, SIIA has learned that the bill drafters have been made aware of the concerns of our members and other industry stakeholders. They are reportedly working on another amendment to alter the bill in a favorable way.

MICHIGAN – Amendments to Health Insurance Claims Assessment Act

Governor Rick Snyder signed Senate Bill 335 (Public Act 58) on June 11. The bill extends the Health Insurance Claims Assessment (HICA) Act, enacted in 2011 to fund Medicaid after a use tax on Medicaid managed care organizations was disallowed under federal law.

It is likely that the tax was extended because of a miscalculation regarding revenues to be received. The state claims it did not anticipate the volume of claims from outside the state, which are not subject to the tax.

Given the prospect that the sunset provision has been eliminated, SIIA’s legal challenge to the Act is even more critical. The association’s federal lawsuit is current pending before the Sixth Circuit Court of Appeals, with a ruling expected later this year. Support this effort by contributing to SIIA’s Legal Defense Fund at

MISSOURI – Second Injury Fund Legislation

This bill eliminates permanent partial disability payments from the state’s Second Injury Fund (SIF). It also doubles the cap on the SIF surcharge, and creates new benefits for toxic disease claims. A new mesothelioma “pool” to cover the new mesothelioma benefits was also created. SIIA has learned that this bill passed the Missouri legislature this week and will go to Governor Nixon for signature. A concerting section of this bill is the effect on subrogation rights with the creation of the aforementioned mesothelioma pool.

Though the bill contains problematic features, SIIA partners in Missouri were able to include a fix for a recently issued worker’s compensation regulation that undermined an employers’ ability to cover employers’ liability.

NORTH CAROLINA – Stop-Loss Insurance Legislation

HB 649 recently passed the North Carolina Senate, and has been sent back to the House to reconcile the Senate’s changes. The bill would change the definition of a small employer from up to 50 eligible employees to up to 100 eligible employees effective starting 2016.  Under existing North Carolina law, any carrier seeking to issue a stop-loss policy to a small employer must meet several cumbersome requirements that have made the availability of coverage next to impossible.   

RHODE ISLAND – Stop-Loss Insurance Legislation

The Rhode Island legislature has recently passed stop-loss legislation (HB 5459) and sent the bill to the governor’s office. The bill imposes a $20,000 minimum individual attachment point requirement and a 120% aggregate attachment point. It also grants limited authority for the insurance commissioner to promulgate new rules affecting stop-loss insurance, in addition to yearly reporting requirements. 

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