Maryland bill could change the way your company buys health insurance

Maryland legislators are considering a change to health insurance rules that would make it harder for small businesses to self fund, a cheaper alternative to buying a traditional health plan that is increasingly popular.

Self-funding is a type of health insurance in which businesses use a pool of money to cover the cost of employees health costs, instead of buying a health plan through an insurance company. These companies buy what's called stop-loss insurance, which kicks in should an individual employee's health expenses drastically exceed anticipated costs. A bill (SB703) sponsored by Charles County Democrat Sen. Thomas"Mac" Middleton, would change the point at which stop-loss insurance takes over from $10,000 to $40,000. The bill is set for its first hearing Wednesday before the Senate Finance Committee, which Middleton chairs.

The proposed shift comes as more small companies are opting for self-funded health plans. The federal Affordable Care Act now requires businesses with 50 or more full-time employees to buy health insurance or pay a penalty and establishes a host of new rules and regulations tied to what those plans must offer. Self-funded plans — once an option only for large companies that were able to absorb employee's health costs — are becoming increasingly popular among small firms looking to insure their employees amid rising premium prices and mounting regulations on fully funded plans.

More