Multiple States Continue to Target Self-Insurance – Weekly SIIA Update

May 31, 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 the latest updates as of this week.

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 kmckenney@siia.org.

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

Since the last report, SB 161 has been further amended so that minimum specific attachment is $35,000 and will be automatically raised to $40,000 in 2016.  Yesterday, the bill passed the Senate and it was sent to the Assembly for consideration.  The response has been mixed among Industry stakeholders to the latest version of the bill.

COLORADO – Stop-Loss Insurance Legislation

After moving through the House of Representatives and the Senate Health Committee, HB 13-1290 was voted on by the Senate and passed a recorded vote. The bill has now been sent to Governor Hickenlooper’s office for signature. HB 13-1290 would raise minimum stop-loss attachment point requirements ($20,000-spec), impose 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 – Amendment to Health Insurance Claims Assessment Act (HICA)

This week, the Legislature agreed to eliminate the sunset provision on the 1% HICA tax, effectively extending it until 2018. 

Given that the Act’s sunset provision will be eliminated upon signature by the governor, SIIA’s legal challenge is even more critical. The association’s federal lawsuit is currently 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 www.siia.org/legaldefense.

MISSOURI – Workers’ Compensation Second Injury Fund Legislation

Missouri has passed a bill that 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 it went through the 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 – Changes to Small Group Health Insurance

HB 649 was passed by the House and is now pending before the Senate Insurance Committee.  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.  

SIIA is coordinating an approach to the bill with other industry stakeholders and will keep members informed.

RHODE ISLAND – Stop-Loss Insurance Legislation

This week, the Senate Commerce Committee recommended passage of the legislation previously passed by the House.  The bill will now be considered by the entire Senate.  No date has currently been set for the bill to be heard.

The substitute bill reduced the minimum spec attachment point requirement from $60,000 to $20,000 and provides more limited authority for the insurance commissioner to promulgate new rules affecting stop-loss insurance.

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