Wis. Admin. Code Office of the Commissioner of Insurance Ins 8.11

Current through October 28, 2024

Section Ins 8.11 - County and school district self-insured employee health care benefits: excess or stop-loss insurance requirements

(1) PURPOSE. This section interprets ss. 59.52(11) (c) and 120.13(2) (c), Stats., for the purpose of prescribing detailed requirements for excess or stop-loss insurance for self-insured employee health care benefit plans provided by counties or school districts.

(2) SCOPE. This section applies to any county or school district that alone or together with one or more counties or one or more school districts provides employee health care benefits on a self-insured basis to less than 1,000 covered employees.

(3) DEFINITIONS. In this section:

(a) "Aggregate claims" means total actual claim amounts incurred under the employee health care benefit plan during a benefit period.

(b) "Aggregate deductible" means the aggregate amount of liability specified in the excess or stop-loss insurance contract at or below which the county or school district remains liable for payments for eligible claims.

(c) "Benefit period" means a twelve-month accounting or reporting period of the employee health care benefit plan.

(d) "Coinsurance" means a fixed percentage of each claim established in the employee health care benefit plan which the county or school district is obligated to pay for each person covered in the plan.

(e) "Covered employees" means employees participating in an employee health care benefit plan.

(f) "Employees eligible to participate" means employees who are eligible to be covered employees under the terms of the employee health care benefit plan.

(g) "Employee health care benefit plan" means a self-insured plan established by one county or school district or jointly by 2 or more counties or 2 or more school districts to provide health care benefits to employees eligible to participate in the plan.

(h) "Expected claims" means the most accurate actuarial estimate of aggregate claims during a benefit period.

(i) "Incurred" means to have provided or furnished a service or item to an employee or dependent covered under an employee health care benefit plan for which a charge for a covered expense is made.

(j) "Maximums" means the largest total amount of claims per person established by the employee health care benefit plan which the county or school district is obligated to pay.

(k) "Paid basis" means the application of a claim payment to the aggregate deductible for the benefit period in which the payment is actually made, regardless of when the claim is incurred.

(L) "Quota share reinsurance" means insurance purchased for the employee health care benefit plan which pays the plan a predetermined fixed percentage of each claim.

(4) EXCESS OR STOP-LOSS INSURANCE REQUIREMENTS.

(a) Excess or stop-loss insurance required by s. 120.13(2) (c), Stats., shall provide coverage for all claims incurred during the term of the policy or contract at a level at which an actuary has certified that the probability that aggregate claims will exceed 125% of expected claims is less than 5%.

(b) Each employee health care benefit plan shall be covered by one excess or stop-loss insurance policy that satisfies par. (a), regardless of the number of counties or school districts participating in the plan.

(c) Notwithstanding par. (a), a county or school district that self-insures employee health benefits under a plan in which an actuary has certified that the probability that aggregate claims will exceed 125% of expected claims is less than one-half percent need not purchase excess or stop-loss insurance.

(5) EXCESS OR STOP-LOSS INSURANCE PROVIDED ON A PAID BASIS.

(a) Excess or stop-loss insurance required by s. 120.13(2) (c), Stats., may provide coverage on a paid basis.

(b) Upon termination for any reason of an excess or stop-loss insurance policy that provides coverage on a paid basis, the policy shall apply all claims incurred but not paid prior to the termination of the policy to the aggregate deductible of the benefit period in which the service or item was provided or furnished to an employee or dependent under the self-insured employee health care benefit plan.

(6) ACTUARIAL CERTIFICATION.

(a) Every county or school district with a plan that is subject to s. 120.13(2) (c), Stats., shall file with the commissioner of insurance within 30 days after the effective date of the self-insured employee health care benefit plan, every 3 years thereafter and whenever a material change occurs to the plan, an actuarial certification that includes information on:

1. The number of employees eligible to participate in the plan and the number of covered employees in the plan.

2. A description of the plan's coverage including but not limited to an outline of benefits provided, deductibles, coinsurance, maximums and quota share reinsurance, if any.

3. A statement that the plan satisfies the excess or stop-loss insurance requirements specified in sub. (4).

4. Except for a county or school district with a plan subject to s. 641.08, Stats., a copy of the excess or stop-loss insurance contract and of the plan for self-insuring.

Note: A county or school district with a plan subject to ch. 641, Stats., must already file this information with the commissioner.

Note: Chapter 641, Stats., was repealed by 2003 Wis. Act 261.

(b) The actuarial certification required in par. (a) may be filed by an actuary employed by the excess or stop-loss insurer or by an actuary independent of the excess or stop-loss insurer.

(c) Two or more counties or 2 or more school districts that jointly establish an employee health care benefit plan shall designate the individual who will file the actuarial certification required in par. (a). Only one actuarial certification shall be filed for the plan.

Note: The commissioner of insurance will utilize the following tables to evaluate actuarial certifications for accuracy and compliance with this section. The following example illustrates the application of the tables. This example only gives a basic description of how to use the following tables. It may be necessary to extrapolate or interpolate from the information given in the tables in order to apply the tables to a particular plan. An actuary or other qualified person should be consulted to be certain that a plan meets the requirements of sub. (4). Also note that no table provides a description of dental or vision plan benefits. Under sub. (4) (c), many dental or vision plans may not need to purchase stop-loss insurance.

Ins 8.11 Note Example

Ins 8.11 Note Assume a school district has a self-insured employee health care benefit plan that covers 250 employees and family members. The plan offers individual specific stop-loss of $25,000 and provides benefits with a $500.00 deductible per person, 80% coinsurance and $1,000.00 out-of-pocket limit per person.

Ins 8.11 Note The plan's stop-loss coverage and benefit package are the same as that used in Table 7. Therefore, use Table 7 for determining whether the plan meets the requirements in sub. (4).

Ins 8.11 Note In Table 7, use the 125 percent of mean line. Since sub. (4) (a) deals with "125% of expected claims," refer to the 125% of mean line when using any of the tables.

Ins 8.11 Note To determine whether the probability that aggregate claims will exceed 125% of expected claims is less than 5%, subtract the decimal numbers shown in the tables from the number "1". For example, for a plan offering the benefits described in Table 7 and having 25 employees, the probability that aggregate claims will exceed 125% of expected claims is 28% (1 minus .72= .28). It is 26% for 50 employees (1 minus .74), 23% for 100 employees (1 minus .77), etc.

Ins 8.11 Note In this example, the plan covers 250 employees. Table 7 shows that at 250 employees, the probability that aggregate claims will exceed 125% of expected claims is 18% (1 minus .82).

Ins 8.11 Note In order to comply with the rule, this probability must be less than 5%. In this example, the probability is 18%. Therefore, the school district or county must purchase aggregate stop-loss insurance at a level sufficient to bring this probability down to less than 5%. Stop-loss insurance is sold at various levels, including a level at which the probability that aggregate claims will exceed 125% of expected claims is less than 5%. At a minimum, the school district or county should purchase stop-loss insurance at this level.

Table 8.11-1

STATE OF WISCONSIN

Distribution of Medical Claim Individual

Specific Stop Loss Level: $5,000

July 1, 1987

Probability that Medical Claims are Less Than

a Given Percent of Mean

$0 Deductible, 100 Percent Coverage

Percent of Mean	Employees
	100	250	500	1,000	5,000
50%	.04	.01	.00	.00	.00
75	.19	.14	.06	.01	.00
100	.53	.52	.51	.51	.51
105	.60	.61	.63	.70	.86
110	.67	.69	.74	.84	.96
115	.73	.77	.83	.92	.99
120	.78	.83	.89	.97	1.00
125	.83	.87	.94	.99	1.00
130	.86	.90	.96	1.00	1.00
150	.95	.98	1.00	1.00	1.00

Table 8.11-2

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop Loss

Level: $10,000 July 1, 1987 Probability that Medical Claims

are Less Than a Given Percent of Mean $0 Deductible, 100

Percent Coverage

Percent of Mean	Employees
	100	250	500	1,000	5,000
50%	.05	.01	.00	.00	.00
75	.21	.14	.06	.01	.00
100	.53	.52	.52	.51	.51
105	.60	.61	.63	.69	.85
110	.66	.69	.74	.83	.96
115	.72	.76	.83	.91	.99
120	.77	.82	.89	.96	1.00
125	.82	.86	.93	.99	1.00
130	.85	.90	.96	1.00	1.00
150	.94	.98	1.00	1.00	1.00

Table 8.11-3

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop Loss

Level: $25,000 July 1, 1987 Probability that Medical Claims

are Less Than a Given Percent of Mean $0 Deductible, 100

Percent Coverage

Percent of Mean	Employees
	100	250	500	1,000	5,000
50%	.06	.01	.00	.00	.00
75	.24	.15	.07	.01	.00
100	.54	.53	.53	.52	.52
105	.60	.61	.63	.68	.83
110	.66	.70	.73	.82	.95
115	.71	.75	.81	.90	.99
120	.76	.80	.87	.95	1.00
125	.80	.85	.92	.98	1.00
130	.83	.89	.95	.99	1.00
150	.92	.97	1.00	1.00	1.00

Table 8.11-4

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop Loss

Level: Unlimited July 1, 1987 Probability that Medical

Claims are Less Than a Given Percent of Mean $0

Deductible, 100 Percent Coverage

Percent of Mean	Employees
	100	250	500	1,000	5,000
50%	.07	.02	.00	.00	.00
75	.29	.19	.10	.02	.00
100	.59	.56	.56	.55	.53
105	.63	.63	.64	.68	.80
110	.69	.70	.73	.79	.93
115	.73	.75	.80	.87	.98
120	.76	.79	.85	.92	1.00
125	.80	.84	.89	.95	1.00
130	.83	.87	.92	.97	1.00
150	.91	.95	.98	1.00	1.00

Table 8.11-5

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop

Loss Level: $5,000 July 1, 1987 Probability that Medical

Claims are Less Than a Given Percent of Mean $500

Deductible Per Person, 80% Percent Coinsurance $1,000

Out-of-Pocket Limit Per Person

Percent of Mean	Employees
	25	50	100	150	250	500
50%	.22	.13	.06	.05	.01	.00
75	.39	.32	.23	.21	.16	.07
100	.57	.55	.53	.52	.52	.52
105	.60	.60	.60	.60	.61	.63
110	.63	.64	.66	.66	.69	.73
115	.66	.68	.71	.72	.76	.81
120	.69	.72	.76	.77	.81	.88
125	.72	.74	.80	.82	.85	.92
130	.74	.77	.83	.84	.89	.95
150	.82	.87	.92	.94	.97	1.00

Table 8.11-6

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop

Loss Level: $10,000 July 1, 1987 Probability that Medical

Claims are Less Than a Given Percent of Mean $500

Deductible Per Person, 80% Percent Coinsurance $1,000

Out-of-Pocket Limit Per Person

Percent of Mean	Employees
	25	50	100	150	250	500
50%	.25	.16	.07	.05	.02	.00
75	.42	.34	.25	.23	.17	.08
100	.58	.55	.55	.53	.53	.53
105	.60	.60	.60	.60	.61	.63
110	.64	.64	.65	.66	.68	.73
115	.67	.67	.70	.72	.74	.80
120	.70	.71	.75	.76	.79	.86
125	.71	.74	.78	.80	.84	.91
130	.74	.77	.82	.84	.89	.94
150	.81	.85	.91	.93	.96	.99

Table 8.11-7

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop

Loss Level: $25,000 July 1, 1987 Probability that Medical

Claims are Less Than a Given Percent of Mean $500

Deductible Per Person, 80% Percent Coinsurance $1,000

Out-of-Pocket Limit Per Person

Percent of Mean	Employees
	25	50	100	150	250	500
	50%	.29	.19	.08	.06	.02	.00
75	.47	.39	.30	.26	.19	.10
100	.61	.58	.56	.55	.54	.53
105	.64	.61	.61	.61	.61	.63
110	.66	.64	.65	.66	.67	.71
115	.68	.68	.70	.70	.73	.78
120	.70	.70	.73	.74	.79	.85
125	.72	.74	.77	.79	.82	.89
130	.74	.76	.80	.82	.86	.93
150	.80	.83	.89	.92	.95	.99

Table 8.11-8

STATE OF WISCONSIN

Distribution of Medical Claim Individual Specific Stop

Loss Level: Unlimited July 1, 1987 Probability that

Medical Claims are Less Than a Given Percent of Mean

$500 Deductible Per Person, 80% Percent Coinsurance

$1,000 Out-of-Pocket Limit Per Person

Percent of Mean	Employees
	25	50	100	150	250	500
50%	.35	.24	.12	.09	.04	.00
75	.53	.53	.37	.32	.25	.15
100	.67	.66	.61	.59	.58	.57
105	.69	.68	.65	.64	.64	.64
110	.71	.71	.68	.68	.69	.72
115	.72	.72	.72	.72	.73	.78
120	.74	.75	.75	.75	.77	.83
125	.76	.76	.78	.79	.81	.87
130	.77	.78	.80	.81	.84	.90
150	.82	.84	.88	.89	.92	.96

(7) ACTUARY QUALIFICATIONS. The actuarial certification specified in sub. (6) shall be signed by an actuary who satisfies the requirements of s. Ins 6.12.

Wis. Admin. Code Office of the Commissioner of Insurance Ins 8.11

Cr. Register, April, 1988, No. 388, eff. 5-1-88; correction in (1) made under s. 13.93(2m) (b) 7, Stats., Register October 2002 No. 562.