Which statement about aggregate stop loss policies is NOT true?

Which statement about aggregate stop loss policies is NOT true?

• A. Not legal in CA
• B. Legal but the ER receives no credit against the security deposit
• C. Legal and the excess policy reduces the amount of the security deposit
• D. Not required that the ER include it on the Annual Report

Answer: (A)

Aggregate stop loss policies are allowed with California self-insurance plans and are used to cap the employer’s overall exposure, which regulators often reflect by giving credit against the needed security deposit. Because of this, the idea that such policies are not legal in California is not correct. In practice, an excess/aggregate stop loss policy can reduce the amount of the security deposit the employer must post, aligning with the statement that the policy lowers the deposit. The other points describe aspects of how these policies interact with deposits and reporting, but the central takeaway is that aggregate stop loss is legal in California and can reduce the security deposit requirements.

Aggregate stop loss policies are allowed with California self-insurance plans and are used to cap the employer’s overall exposure, which regulators often reflect by giving credit against the needed security deposit. Because of this, the idea that such policies are not legal in California is not correct. In practice, an excess/aggregate stop loss policy can reduce the amount of the security deposit the employer must post, aligning with the statement that the policy lowers the deposit. The other points describe aspects of how these policies interact with deposits and reporting, but the central takeaway is that aggregate stop loss is legal in California and can reduce the security deposit requirements.