State Bar Association Publishes Article by Mark Stulmaker on Self-Insurance and the ACA

Mark Stulmaker, a noted Buffalo employee benefits attorney, authored “Self-Insurance and the Affordable Care Act,” for Municipal Lawyer, a publication of the New York State Bar Association.

Click here for a PDF of the article.

Numerous reasons to self-insure

In the article, Mr. Stulmaker discusses the steady growth in the numbers of employees covered by health plans that are self-insured by their employers. He notes, “Rising health care costs, state-mandated coverage requirements, and premium taxes have encouraged many large employers to evaluate their plans and to opt out of the insurance market in favor of the self-funding of their benefit programs. The Patient Protection and Affordable Care Act (ACA) contains additional incentives for employers, both large and small, municipal and private, to self-insure their health benefit programs and will likely accelerate this trend.”

Covering all the issues

Mr. Stulmaker goes on to discuss the financial risks self-insurance raises for any employer and the special considerations faced by municipal employers due New York State law mandates. He provides in the article an overview of self-funded health plans, an outline of the federal mandates and requirements that apply to those plans, and a detailed discussion of changes to come under the ACA. He also covers in depth the special considerations of New York municipalities in connection with offering self-insured health plans, including the funding options available to municipalities for these plans.

Special considerations for public employers

While many public employers may be enticed to consider self-funding their health benefit plans to control costs in the new regulatory environment brought about by the ACA, Mr. Stulmaker warns, “the fiscal controls placed on these employers by New York law make budgeting and planning for these changes difficult and compound the risks that apply to any employer that self-insures.”

“The lack of an established funding mechanism for reserves needed for incurred but unpaid medical claims and possible changes in the stop-loss insurance market should make employers cautious,” Mr. Stulmaker says. “Existing funding arrangements permitted by New York Insurance Law require the employer to affiliate with other employers or unions and may not fit the employer’s needs.”

Mr. Stulmaker, a senior partner in Lipsitz Green Scime Cambria’s Employee Benefits Practice Area, assists clients in the areas of employee benefits and taxation, serving as counsel to trustees of public and private pension and health and welfare benefit plans as well as to closely held businesses. He is also involved in estate planning and administration, especially in connection with charitable trusts, foundations, and large retirement plan distributions.