Guidance on Stop-Loss Insurance Policies

On May 6, 2019, the Insurance Department published Bulletin HC-126. The bulletin relates to stop-loss insurance policies in Connecticut. According to the bulletin, the department will not approve stop-loss policies that have an annual attachment point for claims incurred per individual that is lower than $20,000. For groups of 50 or fewer, the department will not approve polices that have an annual aggregate attachment point that is lower than the greater of $4,000 times the number of group members, 120% of expected claims, or $20,000; for groups of 51 or more, that aggregate attachment point must be higher than 110% of expected claims. Lastly, the department will not approve polices that provide direct coverage of health care expenses of an individual.

The bulletin also outlines several provisions in stop-loss policies that will not be allowed, including claims denials that the employer is legally obligated to pay under the health plan, medical necessity and usual or customary determinations, experimental or investigational determinations, case management requirements and mandated provider networks, or benefits incentives for enrollees. The bulletin includes a full list of such prohibited provisions. The bulletin also states that lasering (the practice of assigning different attachment points or deductibles, or denying coverage for, individual employees or dependents with pre-existing, high cost medical conditions) is allowed during the stop-loss process, but that no attachment point for an enrollee can exceed three times the attachment point for the policy. Finally, the bulletin states that retiree-only stop-loss policies are not subject to the above restrictions, but that the department will review each such policy on a case-by-case basis.

While directed to stop-loss carriers, employers with self-insured plans that use a stop-loss policy issued in CT should be aware of the bulletin. Such employers can work with their adviser or carrier on any questions regarding the bulletin.

Bulletin HC-126 »