Within an environment of increased federal and state regulatory emphasis on health insurance related issues arising due to the passage by the U.S. Congress of the Patient Protection and Affordable Care Act of 2010, the Texas Department of Insurance (“TDI”) has drafted new and potentially transformative rules relating to medical stop-loss insurance policies issued in connection with self-funded employer health benefit plans. The purpose of the TDI posting is to obtain public and stakeholder input regarding an informal draft of proposed regulatory changes affecting employer health plans. Although many of the proposed changes are of a technical or evolutionary nature for health benefit plans themselves, the most significant proposal may be a new comprehensive regulatory framework contemplated for medical stop-loss insurance policies. With Subchapter F of its draft rules, TDI intends to establish criteria for the specific terms of coverage offered under stop-loss insurance policies issued to employer-sponsored self-funded health benefit plans, confirm that such policies are indeed covered by the Texas Life and Health Guaranty Association and directly regulate insurance forms and policy wording used by insurers for their medical stop-loss insurance products. TDI’s position has long been that medical stop-loss insurance is considered direct insurance in Texas, as opposed to a form of unregulated reinsurance. The proposed regulations would significantly enhance TDI’s direct oversight of medical stop-loss insurance products and potentially lead to an entirely new regulatory framework for this type of increasingly common insurance coverage.
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