According to media reports, California Insurance Commissioner Dave Jones will introduce legislation shortly that will set minimum permissible amounts for stop-loss policies to self-insured small businesses.  While the minimum amount has not been finalized, it is anticipated that it will be set at $40,000 per employee.   As a result, employers will be required to pay claims of up to $40,000 before the insurer becomes responsible for any excess amounts.  Currently, insurers are offering stop-loss policies in California with minimums of $10,000 and $20,000 per employee.

According to California Deputy Insurance Commissioner Janice Rocco, “The goal of the legislation is to help ensure the success of the small group market as significant healthcare reforms are going into effect.  There’s a concern carriers are selling a product that’s not really appropriate for small groups.”  Meanwhile, insurers providing these policies argue that they are responding to a market demand for more affordable coverage, and the flexibility of these plans allow for to small businesses to better control costs and have the opportunity to benefit from instituting employee wellness programs.

We will continue to follow this issue and post any important updates on InsureReinsure.com.