Self-Insurance Protection Act

This bill, titled the Self-Insurance Protection Act, aims to clarify and protect the use of medical stop-loss insurance by employers offering self-funded health benefit plans. It addresses concerns that stop-loss coverage, which protects employers from catastrophic claims exceeding a predetermined level, is sometimes misconstrued as direct health insurance for employees. The legislation emphasizes that stop-loss insurance is a financial risk management tool for the employer, not a direct health benefit for participants. A key provision amends the Employee Retirement Income Security Act of 1974 (ERISA) to explicitly state that a stop-loss policy obtained by a self-insured group health plan or its sponsor is not considered "health insurance coverage." This distinction is crucial because stop-loss insurance reimburses the employer for losses, rather than directly paying for employee healthcare services. The legislation also strengthens federal oversight by preempting state laws that might otherwise prevent an employee benefit plan from utilizing stop-loss insurance to manage the financial risks associated with excess or unexpected health plan claims losses.