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SB 218

Relating to renewable energy facility waste.

2025 Regular Session Introduced by David Smith

NC SB 218 expands stop-loss access for very small employers by lowering the eligible size from under 12 to under 5 employees, widening self-funded options (effective Oct 1, 2025).

In committee upon adjournment.
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Bill Summary · SB 218

SB 218 — Increase Access for Small Employers / Insurance

Status: Passed 1st reading (Introduced Jan 23, 2025)
Subject areas: Insurance; Small business; Health coverage; Reinsurance/stop‑loss

Purpose

The bill amends North Carolina insurance law governing stop‑loss, catastrophic, and reinsurance coverage for small employers. Its stated objective is to increase access for very small employers to these forms of protection by narrowing the statutory definition of employers excluded from offering stop‑loss coverage.

Key provisions

  • Employer-size threshold change

    • Current rule (as rewritten by this bill): insurers and related entities must not provide stop‑loss/catastrophic/reinsurance coverage to "small employers who employ fewer than 5 eligible employees" unless the coverage complies with statutory underwriting and rating standards.
    • In practical terms, this reduces the prior cutoff (fewer than 12 eligible employees) to fewer than 5, allowing insurers greater flexibility to issue stop‑loss to groups with 5–11 eligible employees.

  • Attachment point (individual)

    • Continues the statutory floor for per‑individual annual attachment points at $20,000 (for plan years beginning 2013), with future indexing:
    • Indexed using the Consumer Price Index for Medical Services for All Urban Consumers for the South Region.
    • Rounded to the nearest whole thousand dollars; index factor uses July values (year‑to‑year comparison with July 2012).

  • Aggregate attachment point

    • Aggregate attachment point must be the greater of:
    • 120% of expected claims; or
    • the indexed $20,000 floor (as above).

  • Permitted additional incentives

    • The bill clarifies that insurers may still offer additional incentives to small employers (e.g., programs promoting a medical home, screenings, outcome‑focused or outcomes‑based reimbursement) — these are not prohibited by the stop‑loss rules.

Who is affected

  • Small employers in North Carolina, especially those with 5–11 eligible employees — they may see increased availability of stop‑loss and related products.
  • Insurers, stop‑loss carriers, and reinsurers doing business in the state — regulatory compliance and underwriting practices may change.
  • Employees of small employers could see changes in employer health plan design or stability if employers adopt self‑funding with stop‑loss.

Potential impacts

  • Market access: Likely increases insurer ability to offer stop‑loss to small groups (5–11 employees), potentially expanding options for micro‑employers to use self‑funding or level‑funded arrangements.
  • Premiums & risk: Small-group markets (especially very small employers) can have greater volatility and adverse selection; carriers may charge higher premiums or require stricter underwriting to manage risk.
  • Administrative/regulatory: Insurers will need to ensure policies meet the indexed attachment and aggregate requirements; state regulators may monitor market effects.
  • Employer behavior: Some small employers may shift from fully insured to self‑funded/level‑funded models if stop‑loss becomes more available and affordable.

Effective date and application

  • Effective October 1, 2025.
  • Applies to contracts issued, renewed, or amended on or after that date.

Procedural note

  • As provided in the circulated version, the bill amends G.S. 58‑50‑130(a)(5) to change the small‑employer size threshold and restates the existing attachment‑point/indexing rules; it passed an initial reading and is proceeding through legislative committees.

Compiled from official sources — confirm details with the bill’s official record.

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