Stop-loss Insurance Policy Purchased by an Employer for its Self-insured Health Plan is not a Plan Asset Under Certain Conditions

MyHealthGuide Source: US Dept. Labor, 10/19/2015, DOL Letter

A DOL’s Advisory Opinion says a stop-loss insurance policy purchased by an employer for its self-insured health plan would not be a plan asset under certain conditions.
• “It is the view of the Department, based on the facts and representations contained in your submission, that the Policies would not constitute assets of the Plans. This conclusion is premised on the following facts.
• First, except for the use of participant contributions to partly fund the medical benefit portions of the Plans, the facts surrounding the purchase of the Policies will be identical in all material respects to the facts surrounding the purchase of the stop-loss insurance policy described in Advisory Opinion 92-02A (DOL determined that a stop-loss policy purchased by another employer, in connection with its noncontributory self-insured health plan (i.e., the plan did not allow employee contributions, and the employer paid plan benefits exclusively from its general assets), was not a plan asset.).
• Second, with respect to the use of participant contributions to fund in part the benefits under the Plans, you have put in place an accounting system that ensures that the payment of premiums for the Policies includes no employee contributions.
• Third, the purchase of such insurance will not relieve the Plans of their obligation to pay benefits to Plan participants, and the stop-loss insurer has no obligation to pay claims of Plan participants.
• Fourth, the Policies will reimburse the Plan Sponsors only if the Plan Sponsors pay claims under the Plans from their own assets so that the Plan Sponsors will never receive any reimbursement from the insurer for claim amounts paid with participant contributions.