Tension Between the ‘Savings Clause’ and the ‘Deemer Clause’ under ERISA

Russell B. Korobkin of the University of California, Los Angeles – School of Law has written a paper on the use of self-insured plans and the purchase of “stop-loss insurance” to avoid state mandates and insurance risk through the “deemer clause” under 29 U.S.C. section 1144(b)(2)(B) of ERISA: “The Battle Over Self-Insured Health Plans, or ‘One Good Loophole Deserves Another.”‘ The paper suggests that states may through the loophole of the “savings clause” under 29 U.S.C. section 1144(b)(2)(A) of ERISA regulate such arrangements by prohibiting “insurance companies from selling any stop-loss coverage for losses associated with health care costs unless the underlying coverage includes the list of state mandated benefits that state insurance companies must provide.”