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DFR defends Vermont stop‑loss rules, keeps attachment points amid market stress
Summary
Commissioner Kai Samson explained Vermont's stop‑loss framework to a committee, saying the state retains a $40,000 individual attachment point and 120% aggregate threshold for small groups and declined a recommended raise to $52,000 to avoid pushing small nonprofits back into the fully insured market.
Commissioner Kai Samson (Department of Financial Regulation) outlined Vermont's stop‑loss rules and the department's recent decisions on attachment points during committee testimony.
Samson said stop‑loss insurance protects employers that self‑insure by covering catastrophic individual claims and aggregate excess claims. He described two attachment points: an individual threshold and an aggregate level set as a percentage of expected claims. "For us in Vermont... that's 120% of expected claims," he said, and noted the individual attachment point for small groups is currently $40,000.
Samson testified that regulators contracted Oliver Wyman, which recommended raising the small‑group individual attachment to $52,000. Regulators opted not to adopt that change this year because increasing attachment points could force some nonprofits and small employers out of self‑insurance and back into the small‑group market, potentially raising costs for those organizations.
He also described how stop‑loss interacts with federal ERISA preemption: states can set minimum attachment points to reduce the attractiveness of going self‑insured purely to avoid state consumer protections, but ERISA limits states' ability to directly regulate employer benefit design.
Samson said Vermont's approach is within the mid‑to‑conservative range among states and that the department performs a statutory review of attachment points every three years; it can change the thresholds sooner if needed. He promised to share the final study and underlying charts with the committee.
The committee did not take formal action on stop‑loss thresholds during the session; Samson asked regulators and the care board to continue coordinating on how rate‑setting and attachment‑point decisions will affect premiums, hospitals and taxpayers.
