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

May 24, 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 weekly basis until the various legislative sessions conclude. This reporting is provided exclusively by SIIA.

 CALIFORNIA- Stop-Loss Insurance Legislation

 Since the last report, stop-loss legislation has passed two committees and is on the Senate floor awaiting a final vote.  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.

 SB 161, as amended, would establish a minimum attachment point of $65,000 among other requirements. Senator Hernandez, the bill’s sponsor, once again provided explicit testimony that the purpose of the legislation was not to regulate insurance companies, but rather to “protect” the state’s health insurance exchange, setting the stage for a potential ERISA preemption challenge in federal court.

 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 House Appropriations Committee passed legislation extending the HICA sunset provision for four years, but not adjusting the 1% tax rate.  The legislation will now be considered by full House as early as next week.   It was already passed by the Senate last week, so prospects for enactment are likely.

 Given that the Act’s sunset provision will be likely eliminated through this legislation, 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 – Stop-Loss Insurance Legislation

 Due to North Carolina law, the bill is ineligible for consideration until 2015 because of its failure to be considered by the House by a prescribed deadline.  The bill would have imposed new restrictions on stop-loss policies sold to groups with 20 or fewer employees. Aggregate policies would be prohibited outright and spec policies would be required to have minimum attachment points of $60,000.

RHODE ISLAND – Stop-Loss Insurance Legislation

The Rhode Island House of Representatives has recently passed a substitute bill to HB 5459, and

has been referred to the Senate Commerce Committee. At this time, the bill has not been scheduled for a hearing.   

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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