California SB 1431 To Limit Self-Funded Small Group

SB 1431 is currently working its way through the California State Senate. The Bill, authored by California State Senator De Leon, would impose new rules for those small groups under 50 employees who choose to use a self-funded or "stop loss" health insurance programs in lieu of fully-insured plans.

Currently some stop loss plans for small groups have very low attachment levels when compared to large employer self-funded health plans. In some cases the attachment (the dollar cost point where the insurer begins paying claims) for small groups is as low as $5,000 for individual attachment (per employee or dependent). Most large and mid-sized groups have a much higher attachment level--somewhere in the area of $75,000 to $100,000 per individual attachment on average.

SB 1431, if passed and signed into law, would raise the attachment rules for small groups in California to $95,000 individual attachment. Essentially that means that the employer would be responsible for the first $95,000 of an employee or dependent medical care in a plan year before an insurer could start paying claims as an insured contract for that individual. There are also other rules and formulas regarding stop loss levels for small groups in addition to the individual attachment.

Information on SB 1431 can be found at the link below:

SB 1431 De Leon

I will update with news on this bill when appropriate.


May 21 - I have posted an update on SB 1431 available here SB 1431 Update



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