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Texas Supreme Court Holds Sale of Stop-Loss Insurance is Subject to State Insurance Code Regulation

In a recent decision, the Texas Supreme Court held that an insurer?ÇÖs sale of stop-loss insurance to a self-funded group health plan is subject to taxes and other regulatory requirements under the Texas State Insurance Code (?Ç£Code?Ç¥). The court of appeals previously held that the employer?ÇÖs self-funded group health plan was an insurer under the Code and thus the plan?ÇÖs purchase of stop-loss insurance was reinsurance that was beyond the regulatory scope of the Texas Department of Insurance. The insurer argued that stop-loss insurance fell within the Code?ÇÖs exception for reinsurance, but the Supreme Court reversed the decision of the court of appeals and found that stop-loss insurance sold to the self-funded employee health plan is not reinsurance, but rather direct insurance subject to regulation under the Code. Texas Dept. of Insurance v. American National Insurance Co., No. 10-0374 (Tex. May 18, 2012).

The lawyers of our Employee Benefits and Executive Compensation Practice Group are readily able to assist companies on a nationwide basis with implementing sophisticated benefit plans and providing answers to their most challenging compensation issues. Additionally, our lawyers are well aware of the daily employee benefits challenges facing companies of all sizes and are capable of helping in-house lawyers and human resources personnel with the day-to-day advice and guidance necessary to properly administer employee benefits plans.

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June 2012