SIIA Educates Treasury/IRS Officials on Stop-Loss
MyHealthGuide Source: Self-Insurance Institute of America, 5/25/2011, www.SIIA.org
A team of SIIA representatives met last week in Washington, DC with a group of senior officials from the U.S. Department of Treasury and Internal Revenue Service in response to a recent IRS notice seeking comments on how stop-loss insurance should be defined relative to health insurance.The comment request is in connection with a provision in the health care law limiting the tax deduction companies that sell fully-insured health insurance plans may take for compensation they pay to certain employees. The IRS has expressed a specific interest in whether stop-loss insurance with low attachment points should be construed as health insurance.
“This was an extremely valuable opportunity to educate key tax policy-makers about stop-loss insurance and why it should not be confused with traditional health insurance,” said SIIA Chief Operating Officer Mike Ferguson. “While we filed a comment letter articulating our position, there is no substitute to having a face-to-face discussion with the people who actually write the rules.”
According to Ferguson, the SIIA team highlighted various legal precedents as well as recent PPACA regulatory guidance to support its position that stop-loss should not be construed as health insurance regardless of attachment levels. The concern is that the IRS could create a new federal definition of stop-loss insurance that would have negative ramifications.
During the meeting, the group also talked about whether self-insured health plans should be deemed to provide “minimal essential benefits.” While the legislative intent to include self-insured plans as qualifying plans for this purpose is widely acknowledged, some tax practitioners have taken a more narrow interpretation of the legislative language, which has prompted additional review. SIIA obviously supported the broader legislative intent interpretation.
In addition to association lobbyists, the SIIA team included:
- Jay Ritchie, senior vice president with HCC Life Insurance Company;
- Rob Melillo, national sales consultant with Sun Life Financial Assurance Company;
- Horace Garfield, president of AEGON Alliances, Inc., and
- Carolyn Smith, attorney with Alston & Bird, LLP.
“At issue is how stop-loss insurance figures into new tax rules mandated by the health care reform law restricting the tax deduction health insurance companies can take for compensation paid to certain employees.” said Ferguson in his blog on May 26, 2011.
“More precisely, Treasury/IRS is suspicious that self-insured health plans with low attachment point stop-loss policies are really fully-insured plans in disguise. This was made clear in a meeting this week with senior Treasury Department and IRS officials when Treasury’s point person on the issue commented that ‘obviously products that look, smell and breathe like health insurance have our attention.’”
“Stop-loss was clearly a new animal to them and my sense was that they were truly interested to understand it better.”
The meeting is a part of an ongoing dialogue with Treasury/IRS officials on the development of new PPACA tax code rules. This is a developing story so watch for additional updates from SIIA.
About SIIA
The Self-Insurance Institute of America, Inc. (SIIA) is a dynamic, member-based association dedicated to protecting and promoting the business interests of companies involved in the self-insurance/alternative risk transfer (ART) industry, both domestically and internationally. Visit www.SIIA.org.
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