Bulletin No. LH 2018-02: Stop Loss Insurance Coverage aka Excess Loss, Excess Risk Coverage

Oklahoma Insurance Department State of Oklahoma BULLETIN NO. LH 2018-02 & PC 2018-02 TO: All Life & Health Insurers Licensed in the State of Oklahoma All P&C Insurers Licensed in the State of Oklahoma All Rating and Advisory Organizations All Joint Underwriting Associations All Third Party Administrators Licensed in Oklahoma RE: Stop Loss Insurance Coverage aka Excess Loss, Excess Risk Coverage FROM: John D. Doak, Insurance Commissioner DATE: August 1, 2018 This bulletin will supersede Oklahoma Insurance Department’s Bulletin LH 2013-03/PC 2013- 11 dated November 25, 2013, regarding Stop Loss Insurance Coverage, aka Excess Loss or Excess Risk Coverage, used in conjunction with self-funded employer benefit plans under ERISA. All companies writing casualty and accident and health stop loss coverage must file their policy forms with the Oklahoma Insurance Department for prior approval. We do not consider these policies to be a form of reinsurance; therefore, they are not exempt from our approval. All Insurers must comply with this bulletin and shall file their forms for approval with the Rate and Form Compliance Division. The following requirements shall be met for the coverage to be considered a stop loss policy: 1. The policy must be issued to, and insure, the sponsor of the plan, or the plan itself, not the employees, members or participants. 2. Payment by the insurer must be made to the sponsor of the plan or the plan itself, not the employees, members, participants, or providers. 3. The individual stop-loss amount, (i.e. retention or attachment point), must be at least $10,000. 5 Corporate Plaza, 3625 NW 56th Street. Suite 100, Oklahoma City, OK 73112 • OKLAHOMA CITY, OK 73152-3408 • (405) 521-2828 • IN STATE 1-800-522-0071 Bulletin LH 2018-02, PC 2018-02 Page 2 4. The aggregate stop-loss amount, (i.e. aggregate retention or attachment point), shall be, at a minimum, 110% of expected paid claims. 5. If the Excess Loss Excess Risk Coverage is applicable for the Small Employer Health Reform Act pursuant to 36 § 6512, the Appendix FF. Small Employer Stop Loss Disclosure pursuant to 36 § 7401 is applicable. 1 If all of the above requirements are met, then pursuant to the authority granted to the Commissioner by 36 O.S. §3612(A), the policy will not be required to comply with Oklahoma’s mandated health benefit laws. If a policy fails any one of the above requirements, then the coverage will be considered a group accident and health policy, and will be subject to all group accident and health statutes and rules. All filings shall verify that each of the above requirements that apply has been met. Also verify that the plan or plan sponsor’s bankruptcy or insolvency will not relieve the insurer from the payment of any claim covered by the policy. Stop loss policies sold through surplus lines companies shall be expected to meet all of the requirements of this bulletin. Questions or comments applicable to this bulletin should be directed to: Oklahoma Insurance Department Cuc Nguyen, Five Corporate Plaza, 3625 NW 56th Suite 100 Oklahoma City, OK 73112 The Oklahoma Insurance Department encourages readers of this notice to periodically check the Department’s web site http://www.oid.ok.gov/ for news and updates to Bulletins and other relevant material. 5 Corporate Plaza, 3625 NW 56th Street. Suite 100, Oklahoma City, OK 73112 P.O. BOX 53408 • OKLAHOMA CITY, OK 73152-3408 • (405) 521-3681 • IN STATE 1-800-522-0071 • FAX (405) 522-3761 1 Requirement 5 applies only to health stop loss coverage