Friday, March 25, 2011

Stop-Loss Insurance, Reinsurance and "Partially Self-Insured" -- We Need to Talk

Forgive me for stating the obvious, but words mean things. I make this seemingly odd comment because I continue to observe a couple words being misused by self-insurance industry professionals on a regular basis and we all need to get on the same page.

Perhaps most aggravating is the term “partially self-insured,” which continues to get tossed around to describe self-insured health plans that utilize stop-loss insurance. Of course there is no such thing as being “partially” self-insured so the term is sloppy at best and can actually be harmful.

I say harmful because from a lobbying perspective, we are continually emphasizing the distinction between fully-insured and self-insured health plans. This “partial” description is often thrown back in our face in attempt to undermine our public policy and legal arguments, so this objection to the term is strictly academic. And those who use it against us have picked it up….from us!

The more subtle yet equally problematic imprecise word choice is when “reinsurance” is used interchangeably with “stop-loss” insurance. Reinsurance involves an insurance contract between two insurance entities, so by saying reinsurance when you really mean stop-loss insurance this implies that self-insured employers are insurance entities, which confuses policy-makers and has created legal uncertainty in some cases. Again, we have only ourselves to blame.

And that concludes our self-insurance vocabulary lesson (and sermon) for the day.

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