The Self- Insurance Protection Act bill could free employers' stop-loss insurance policies from federal health benefits rules as well as from state health benefits mandates, according to analysts at the Congressional Budget Office.
Employers with self-insured health plans use stop-loss insurance to protect their plans against catastrophic losses.
The SIPA bill would exclude stop-loss insurance from the definition of health insurance coverage given in the Employee Retirement Income Security Act of 1974, according to the CBO analysts.
The bill would "preempt state laws that prevent group health plans from obtaining stop-loss policies," and the bill also would "exclude those policies from being regulated by ERISA," the CBO analysts wrote.
The CBO is an arm of Congress that helps lawmakers understand how proposed and existing policies affect federal revenue, federal spending and federal program performance. Analysts there put their interpretation of the bill in a document reviewing how the SIPA bill might affect the federal budget.
The backdrop: ERISA preempts state regulation of big, multistate plans, and, traditionally, employers and plan administrators have proceeded on the assumption that it exempts most self-insured employer health plans from state health benefits oversight.
Ten years ago, most stop-loss insurance users were employers with large self-insured health plans.
Today, many stop-loss users are small employers that are trying to escape from the impact of state benefits mandates on health coverage costs by setting up small self-insured plans.
Some states are trying to level the regulatory playing field by setting minimum employer sizes for stop-loss insurance providers or applying at least some small-group health insurance requirements to small stop-loss plans.
The SIPA bill: Rep. Robert Onder Jr., R-Mo., introduced the SIPA bill in April 2025 in an effort to keep states from imposing mandates on small stop-loss plans, or stop-loss plans of any size, by keeping stop-loss insurance out of the ERISA insurance definition.
The text of the bill states that the ERISA definition of the term "health insurance coverage... shall not include a stop-loss policy obtained by a self-insured group health plan or a plan sponsor of a group health plan that self-insures the health risks of its plan participants to reimburse the plan or sponsor for losses that the plan or sponsor incurs in providing health or medical benefits to such plan participants in excess of a predetermined level set forth in the stop-loss policy obtained by such plan or sponsor."
A second provision states that ERISA provisions "shall preempt state laws insofar as they may now or hereafter prevent an employee benefit plan that is a group health plan from insuring against the risk of excess or unexpected health plan claims losses."
But another section indicates that states would continue to have the authority to "regulate the availability and the coverage terms of stop-loss insurance coverage" and that "tates must reasonably regulate stop-loss insurance to assure its availability to both large and small employers."
What it means: If the SIPA bill becomes law and works as the CBO analysts expect, any employers that use stop-loss insurance would still be subject to ERISA.
States could still regulate the solvency of stop-loss insurance issuers.
But neither states nor the U.S. Department of Labor could apply state health insurance benefits rules or federal ERISA health insurance rules to stop-loss providers.
The legislative process: The SIPA bill has two co-sponsors. Both are Republicans.
The House Education and Workforce Committee is the only House committee with jurisdiction over the bill.
The committee voted 21-15 at markup held June 25, 2025, to support the bill.
All Republicans who participated voted to support the bill, and all Democrats who participated voted to oppose the bill.
The budget impact "score": Budget analysts at the CBO and the Joint Committee on Taxation, an arm of Congress that helps members of Congress understand federal tax rules and tax revenue streams, predicted in the new bill review that implementing the bill as written would have little or not impact on federal revenue and federal spending.
The CBO score showing that implementing the SIPA bill would have no noticeable impact on federal finances could help supporters get it through Congress using strategies available to proposals that will have little or no impact on federal finances.
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