Legislation that would prohibit small employers from self-insuring their employee benefits programs has been proposed in Maine. The proposal, LD 608, would prohibit a stop-loss carrier from issuing a policy to a business fitting the statutory definition of a “small employer,” 50 or fewer employees, in the state.
With all the chaos and expected turmoil surrounding the proposed changes to the Affordable Care Act, and the uncertainty about its replacement, small employers clearly need to be able to take back control of one of their largest expenses. Many employers have seen the merits of self-insuring employee benefits using a Private Insurance Company. Key to this model is purchasing an Excess Loss Policy or Stop Loss to contain the risk of a very large claim.
This proposed legislation in Maine is blatant pandering to the “Big Insurers”, who are alarmed that small employers want to take back control of their employee benefits programs! When you consider that typical insurance carrier expense ratios are 30-40%, there’s a lot of extra expense in the full insurance cost. By using a Private Insurance Company employers are able to create a strategic risk management reserve that can be used to help insure other currently unfunded risks.
Proposals like Maine’s LD608 designed to stop smaller employers doing what the big employers do, is short-sighted and damaging to the small employer’s health. All employers are equal…but maybe some employers are more equal than others?